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 |
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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 Pursuant to
ss.240.14a-12 |
ArcBest
Corporation
(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 computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11. |
(1) Title of each class of securities to
which transaction applies: |
(2) Aggregate number of securities to which
transaction applies: |
(3) Per unit price or other underlying value
of transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which
the filing fee is calculated and state how it was
determined): |
(4) Proposed maximum aggregate value of
transaction: |
(5) Total fee
paid: |
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Fee
paid previously with preliminary materials. |
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing. |
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(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
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arcb.com/investor-relations |
ArcBest / 2021 PROXY STATEMENT |
APRIL 29, 2021
8:00 a.m. Central Daylight
Time
Virtual Only Meeting
Register at www.proxydocs.com/arcb
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NOTICE
of Annual Meeting of Stockholders
ArcBest Corporation
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TO THE STOCKHOLDERS OF ARCBEST CORPORATION:
You are cordially invited to attend the Annual
Meeting of Stockholders of ArcBest Corporation (“ArcBest” or the “Company”). Taking into consideration
the public health impact of the coronavirus outbreak (“COVID-19”), and to support the health and wellbeing of the employees,
directors, partners and stockholders of the Company, we are conducting a virtual-only meeting that will allow you to listen to
the proceedings, ask questions, and vote your shares. To attend, go to www.proxydocs.com/arcb and register using the control number
on your Notice of Internet Availability, proxy card, or voting instruction form.
The annual meeting is being convened for the following
purposes:
I. |
To elect nine directors for a one-year term to expire at the 2022 Annual Meeting of Stockholders; |
II. |
To conduct an advisory vote on executive compensation; |
III. |
To approve the Second Amendment to the Amended and Restated Ownership Incentive Plan; |
IV. |
To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2021; and |
V. |
To act upon such other matters as may properly be brought before the meeting affecting the business and affairs of the Company. |
By Order of the Board of Directors, March 16,
2021.
Michael Johns
Vice President—General Counsel and Corporate
Secretary
RECORD DATE; PROXIES
Only stockholders of record at the close of business
on March 1, 2021, are entitled to notice of and to vote at the meeting or any adjournment(s) or postponement(s) thereof. Even if
you plan to attend the meeting, please follow the instructions to vote by Internet or by telephone, or complete, sign, date and
return your proxy card if you received one, as promptly as possible. It is important that your shares be represented at the meeting.
For more information about how to attend the annual meeting virtually, see “Information About the Meeting” on page 67
of this Proxy Statement. If you hold your shares in “street name” through a brokerage firm or bank, then your brokerage
firm or bank is responsible for voting on your behalf based on your instructions. The Board of Directors urges you to contact the
person responsible for your account today and instruct them to execute a proxy considering the recommendations of the Board, which
are described in this Proxy Statement. If you hold your shares in street name and you wish to personally vote at the meeting, you
must obtain a legal proxy issued in your name from the broker, bank or other nominee that holds your shares. For more information
on how to vote, see “Information About the Meeting.”
Important Notice Regarding
the Availability of Proxy Materials for the Stockholder Meeting to be held on April 29, 2021: The Proxy Statement, proxy card
and 2020 Annual Report are first being made available at www.proxydocs.com/arcb beginning on or about March 16, 2021.
8401 MCCLURE DRIVE / P.O. BOX 10048 / FORT SMITH,
ARKANSAS 72917-0048 / 479-785-6000
ArcBest
/ 2021
PROXY STATEMENT |
4 |
PROXY SUMMARY
THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION FROM
THIS PROXY STATEMENT AND DOES NOT CONTAIN ALL THE INFORMATION THAT YOU SHOULD CONSIDER. YOU SHOULD READ THE ENTIRE PROXY STATEMENT
BEFORE VOTING YOUR SHARES. FOR MORE COMPLETE INFORMATION REGARDING ARCBEST’S 2020 PERFORMANCE, PLEASE REVIEW OUR ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2020.
Annual Meeting Information
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WHEN |
WHERE |
RECORD
DATE |
Thursday, April 29, 2021,
at 8:00 a.m. (CDT) |
www.proxydocs.com/arcb |
March 1, 2021 |
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Meeting Agenda
This Proxy Statement is furnished to the stockholders
of the Company in connection with the solicitation of proxies on behalf of the ArcBest Board of Directors (the “Board”)
to be voted at the Annual Meeting. The matters we will act upon at the Annual Meeting are:
Proposal |
Board Voting Recommendation |
Where to Find More Information |
Elect nine directors for a one-year term |
FOR all nominees |
Page 8 |
Approve, on an advisory basis, the Company’s executive compensation |
FOR |
Page 51 |
Approve the Second Amendment to the Amended and Restated Ownership Incentive Plan |
FOR |
Page 52 |
Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2021 |
FOR |
Page 63 |
(1) |
Documents referenced or hyperlinked in this proxy statement are not and will not be incorporated by reference unless expressly indicated otherwise. Such documents may contain information from various sources and our assumptions thereon and may also contain hypothetical or adverse scenarios and assumptions that may not necessarily be representative of current, actual or expected risks or results. You are cautioned not to place undue weight on such information. |
ArcBest
/ 2021
PROXY STATEMENT |
5 |
Director Nominees
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Committees |
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Director |
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Other
Public |
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Nominating/Corporate |
Name |
Occupation |
Age |
Since |
Independent |
Directorships |
Audit |
Compensation |
Governance |
Eduardo
F. Conrado |
Executive Vice President and Chief Strategy and Innovations Officer for Ascension |
54 |
2016 |
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Fredrik
J. Eliasson |
Executive Vice President and Chief Financial Officer for Change Healthcare Inc. |
50 |
2019 |
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Stephen
E. Gorman |
Retired Chief Executive Officer for Air Methods Corporation |
65 |
2015 |
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1 |
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Michael
P. Hogan |
Retired President of Tax Smart Innovation for Blucora, Inc. |
61 |
2016 |
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Kathleen
D. McElligott |
Retired Executive Vice President, Chief Information Officer and Chief Technology Officer for McKesson Corporation |
65 |
2015 |
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Judy
R. McReynolds
Chair |
President and Chief Executive Officer for ArcBest |
58 |
2010 |
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1 |
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Craig
E. Philip |
Professor, Vanderbilt University |
67 |
2011 |
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Steven
L. Spinner
Lead Independent
Director |
President and Chief Executive Officer for United Natural Foods, Inc. |
61 |
2011 |
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1 |
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Janice
E. Stipp |
Retired Senior Vice President, Chief Financial Officer and Treasurer for Rogers Corporation |
61 |
2012 |
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3 |
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Member |
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Chair |
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Audit Committee Financial Expert |
ArcBest / 2021 PROXY STATEMENT |
6 |
Our nine nominees represent a diverse range of
skills:
2020 Performance
The COVID-19 pandemic presented many challenges
in 2020. During the unprecedented circumstances, we implemented measures to manage costs in an uncertain environment while continuing
to execute on our strategy to better serve our customers. Despite the unpredictability of the COVID-19 pandemic, we saw year-over-year
increases in consolidated operating income, net income and earnings per share, and our stock price remained strong at year-end.
As an essential business, we are proud of the way our people navigated adversity to support the needs of our customers and our
society.
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$98.278M |
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57% |
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OPERATING INCOME,
AN INCREASE OF 54% VS. 2019 |
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TOTAL SHAREHOLDER RETURN IN
2020 VS. 20% FOR RUSSELL 2000 |
Temporary Compensation Actions in 2020
In response to the business impacts of the COVID-19
pandemic, we took steps in the second quarter of 2020 to preserve cash and manage costs in an effort to protect the financial health
of our organization. These measures included reductions in compensation for directors, officers and non-contractual exempt employees
and hours reductions for non-contractual hourly employees, as well as suspension of the company match under our 401(k) plan. After
evaluating our second quarter performance, we were able to reverse these measures in the third quarter. During the fourth quarter,
we repaid exempt employees for reductions in pay and paid a one-time bonus to hourly employees whose hours had been reduced. Our
2020 results are a reflection of our strong, values-driven culture and our employees’ positive response to unprecedented times.
Compensation Highlights
Our executive compensation program strikes a balance
between fixed and variable elements. As shown below, 76% of compensation for our CEO, and 69% of compensation (on average) for
our other Named Executive Officers, was at risk in 2020.
ArcBest / 2021 PROXY STATEMENT |
7 |
PROPOSAL
I.
ELECTION OF DIRECTORS
All of the nominees are currently serving as directors
of the Company. If elected, each nominee will serve until ArcBest’s Annual Meeting of Stockholders in 2022 or until the individual’s
earlier death, resignation or removal from office.
Each nominee has indicated a willingness to serve
as a member of the Board, if elected. If, for any reason, a nominee becomes unable to serve or will not serve, either the number
of the Company’s directors will be reduced or the Board will designate a substitute nominee.
The Company’s bylaws provide that directors
are elected by a plurality of the votes cast by stockholders, in person or by proxy, at a meeting at which a quorum is present.
The Company’s bylaws also require that any director in an uncontested election who does not receive the affirmative vote of a majority
of the votes cast must promptly tender a resignation to the Board. The Nominating/Corporate Governance Committee will consider
any resignation tendered under this policy and recommend to the Board whether to accept or reject it, and the Board will act on
such resignation, taking into account such recommendation, within 90 days following the certification of the election results.
The Nominating/Corporate Governance Committee
in making its recommendation, and the Board in making its decision, may consider any information it deems appropriate, including
any reasons given by stockholders for their WITHHOLD votes, the qualifications of the director, and the director’s contributions
to the Board and the Company. The Board will promptly disclose its decision to accept or reject the resignation and, if rejected,
the reasons for doing so. If a director’s resignation is not accepted by the Board, then such director will continue to serve.
If a director’s resignation is accepted by the Board, then the Board, in its sole discretion, may fill any remaining vacancy
or decrease the size of the Board.
Unless otherwise instructed or unless authority
to vote is withheld, your proxy will be voted for the election of each of the nominees.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
EACH OF THE NOMINEES. |
Director Nominees
A biography of each Director nominee, current
as of January 18, 2021, appears below. There are no family relationships among any of the nominees and executive officers of the
Company or its subsidiaries.
EDUARDO
F. CONRADO |
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Age 54
Director
since: 2016
INDEPENDENT
Committees:
■ Compensation
■ Nominating/
Corporate Governance |
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Key
experience
■ Brand
marketing
■ Corporate
strategy and strategic development
■ Digital
transformation
■ New
business development |
■ Digital
and data strategy
■ Product
innovation
■ Operations |
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Other
directorships
■ Previously
served as a director on the not-for-profit boards of Ascension, Chicago Red Cross, and The Chicago Field Museum. |
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Mr. Conrado is Executive Vice President and Chief Strategy and Innovations Officer for Ascension, the nation’s largest non-profit health system. He joined Ascension in September 2018 as Executive Vice President and Chief Digital Officer. Before that, Mr. Conrado had a 25-year career at Motorola Solutions, Inc., a global provider of communication infrastructure, devices, accessories, software and services, serving in numerous senior executive positions, culminating in his role as Executive Vice President and Chief Strategy & Innovation Officer from August 2015 until December 2017. Mr. Conrado’s previous roles at Motorola Solutions included Senior Vice President and Chief Innovation Officer, Senior Vice President – Marketing & IT, Senior Vice President and Chief Marketing Officer, and Senior Vice President and Chief Marketing Officer for Global Business & Technology Marketing. He also worked in various marketing, distribution and network capacities for Motorola Solutions.
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ArcBest
/ 2021
PROXY STATEMENT |
8 |
FREDRIK J. ELIASSON |
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Age 50
Director since: 2019
INDEPENDENT
Committees:
■ Audit |
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Key
experience
■ Financial
and capital markets
■ Transportation
and logistics
■ Sales
and marketing
■ Operations |
■ Mergers
and acquisitions
■ Innovation
and emerging technologies
■ Cost-structure
transformation and revenue optimization |
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Other
directorships
■ Previously
served on the Jacksonville (Florida) Chamber Board of Directors and as chair of the business recruiting portion of the
chamber, JAXUSA Partnership |
■ Previously
served on the Audit Committee of United Way Jacksonville
■ Previously
served as Executive Member and Finance Committee chair for the Jacksonville Zoo Board of Directors |
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Mr. Eliasson is Executive Vice President and Chief Financial Officer for Change Healthcare Inc., one of the largest independent healthcare IT companies in the United States. He joined Change Healthcare in 2018 after a 22-year career at CSX Corporation, where he served in various executive leadership capacities, including as President in 2017, Executive Vice President and Chief Sales and Marketing Officer from 2015 to 2017, and Executive Vice President and Chief Financial Officer from 2012 to 2015.
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STEPHEN E. GORMAN |
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Age 65
Director since:
2015
INDEPENDENT
Committees:
■ Compensation
(Chair)
■ Nominating/
Corporate Governance |
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Key
experience
■ Strategy
■ Operations
■ Transportation
industry leadership |
■ Marketing
■ Finance |
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Other
directorships
■ Peabody
Energy Corporation (since 2017)
■ ASP
AMC Holdings, Inc., and ASP MSG Holdings, LLC (both private equity firms)
■ Previously
served on the board of Grupo Aeromexico S.A.B. de C.V. (2014 to 2017) |
■ Previously served on the boards of Greyhound Lines, Inc.; Rohn Industries, Inc.; Timco Aviation Services, Inc.; and Pinnacle Airlines Corporation (Chairman of the Board). |
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Mr. Gorman retired as Chief
Executive Officer for privately held Air Methods Corporation, the leading domestic provider in the air medical market, in
January 2020. He joined Air Methods in August 2018, after retiring as Chief Executive Officer for Borden Dairy Co., a fresh
milk and value-added dairy, in July 2017. Prior to his time at Borden Dairy, Mr. Gorman served as Executive Vice President
and Chief Operating Officer for Delta Air Lines, Inc. for over six years until March 2014; Chief Executive Officer and President
for Greyhound Lines, Inc.; and President of the North America Division and Executive Vice President – Operations Support
for Krispy Kreme Doughnuts, Inc. Other prior positions include Executive Vice President – Flight Operations &
Technical Operations for Northwest Airlines Corp., and Vice President – Operations for Aviall, Inc.
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MICHAEL
P. HOGAN |
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Age 61
Director
since: 2016
INDEPENDENT
Committees:
■ Audit |
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Key
experience |
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■ Corporate
strategy
■ IT
■ Marketing
and sales
■ Ecommerce |
■ Multi-channel
and digital business
■ Corporate
governance
■ Digital
products and mobile and consumer electronics products |
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Other
directorships
■ Feed
the Children, a non-profit organization
(Audit Committee chair) |
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Mr. Hogan retired as President of Tax Smart Innovation for Blucora, Inc., a provider of technology-enabled financial solutions in June 2020. Prior to joining Blucora in October 2018, Mr. Hogan served as Executive Vice President – Strategic Business & Brand Development for GameStop Corporation from 2012 until February 2018. From 2008 until 2012, he served as Senior Vice President and Chief Marketing Officer for GameStop. Prior to 2008, Mr. Hogan served as a principal with Strategic Frameworking, a strategic consulting firm; Senior Vice President – Marketing for Dean Foods Company; and Vice President – International Marketing for Frito-Lay, Inc.
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ArcBest
/ 2021
PROXY STATEMENT |
9 |
KATHLEEN
D. MCELLIGOTT |
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Age 65
Director
since: 2015
INDEPENDENT
Committees:
■ Nominating/
Corporate Governance (Chair)
■ Compensation |
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Key
experience
■ Manufacturing
■ Supply
chain and distribution
■ Acquisitions
and divestitures
■ Big
data, cloud computing, cybersecurity and technology strategy |
■ Technology
■ Transportation
■ Enterprise
logistics
■ Strategic
planning |
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Other
directorships
■ Previously
served on the board of Forescout Technologies, Inc. (2019 to Aug. 2020)
■ Previously
served as board president of Connections to Success, a St. Louis-based non-profit organization |
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Ms. McElligott retired in February 2020 as Executive Vice President, Chief Information Officer and Chief Technology Officer for McKesson Corporation, a healthcare services and information technology company. She joined McKesson in July 2015, after serving as Chief Information Officer and Vice President – Information Technology for Emerson Electric Co. from February 2010 to July 2015, and Group Chief Information Officer, Industrial Automation and Vice President for Emerson Power Transmission for over nine years before that. Prior to joining Emerson, Ms. McElligott spent 22 years with General Electric Company in multiple information systems leadership and managerial roles.
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JUDY R. MCREYNOLDS |
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Age 58
Director
since: 2010
Chairman of the Board since: 2016
Committees:
■ None |
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Key
experience
■ Significant industry-specific experience
■ Expertise with respect to both ArcBest
and its transportation and logistics subsidiaries resulting from a 23-year tenure with the Company
■ Operations
■ Finance
■ Customer experience |
■ Strategic
planning
■ Logistics
■ Less-than-truckload
and truckload transportation
■ Talent
management, labor and pension
■ Investment
and corporate banking, financial analysis, capital structures and shareholder value |
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Other
directorships
■ OGE
Energy (since 2011) (Compensation Committee), (Lead Director since Dec. 2020) (Compensation Committee chair, Nominating
and Governance Committee, 2011 to Dec. 2020)
■ American
Transportation Research Institute board (chair)
■ American
Trucking Associations (member of the Executive Committee) |
■ Previously served on the Transportation Industry Council of the Federal Reserve Bank of St. Louis |
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Ms. McReynolds has served as President and Chief Executive Officer for ArcBest since January 2010. Since joining the Company in 1997, she has served as Senior Vice President, Chief Financial Officer and Treasurer; Vice President – Controller; Controller; and Director of Corporate Accounting. Ms. McReynolds is a Certified Public Accountant.
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ArcBest
/ 2021
PROXY STATEMENT |
10 |
DR.
CRAIG E. PHILIP |
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Age 67
Director
since: 2011
INDEPENDENT
Committees:
■ Compensation
■ Nominating/
Corporate Governance |
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Key
experience
■ 40-year
career in the marine, rail and intermodal industries
■ Leadership
experience in various modes of freight transportation |
■ Industrial
marketing
■ Strategic
planning |
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Other
directorships
■ Marine
Board of the Transportation Research Board, a unit of the National Academies of Sciences, Engineering and Medicine |
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Dr. Philip joined the faculty of Vanderbilt University, a private research university, in 2015, as Research Professor in Civil and Environmental Engineering and Director of Vanderbilt Center for Transportation and Operational Resiliency (VECTOR). Dr. Philip retired as Chief Executive Officer for Ingram Barge Company, a barge company and quality marine transporter of dry cargo and one of the top chemical carriers on the river, in 2014. He was President for Ingram Barge from 1994 until 1999, when he was named Chief Executive Officer. Dr. Philip began his transportation career with Conrail in 1980, worked for Ingram Barge for five years, and briefly served as Vice President of the Intermodal Division of Southern Pacific Railroad before returning to Ingram Barge in 1991. He has also held adjunct faculty positions at Princeton University and Vanderbilt University. In 2014, Dr. Philip was elected to membership in the National Academy of Engineering.
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STEVEN
L. SPINNER |
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Age 61
Director
since: 2011
Lead Independent Director since: 2016
INDEPENDENT
Committees:
■ Audit
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Key
experience ■ Senior-level executive management of a public company
■ Logistics
■ Network business |
■ Wholesale food distribution business
■ Operations |
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Other
directorships
■ United
Natural Foods, Inc. (since 2008) (Chairman of the Board since 2016) |
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Mr. Spinner has been President and
Chief Executive Officer for United Natural Foods, Inc., an independent national distributor of natural, organic and specialty
foods and related products, since September 2008. Prior to joining United Natural Foods in 2008, he was a Director and Chief Executive
Officer for Performance Food Group Company (“PFGC”) from October 2006 to May 2008 and PFGC’s President and Chief
Executive Officer for three years before that. He was Senior Vice President and Chief Executive Officer for PFGC’s Broadline
Division from February 2002 to May 2005, and Division President for Broadline from August 2001 to February 2002.
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JANICE
E. STIPP |
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Age 61
Director
since: 2012
INDEPENDENT
Committees:
■ Audit
(Chair) |
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Key
experience
■ Financial and accounting experience with
a variety of industrial companies, both public and private
■ Financial controls, auditing, financial
management and accounting, acquisitions and treasury |
■ Corporate
restructuring
■ Senior-level
executive management |
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Other
directorships
■ Commercial Vehicle Group, Inc. (since
2014) (Audit Committee; Nominating and Governance Committee chair)
■ Sappi Limited (since 2019) (Audit Committee) |
■ Rotork,
plc (since 2020) (Nomination and Audit Committees)
■ Previously
served on the Board of Directors of Ply Gem Holdings, Inc. |
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Ms.
Stipp retired in 2018 from her role as Senior Vice President, Chief Financial Officer and Treasurer for Rogers Corporation, a
global leader in engineered materials solutions. Prior to joining Rogers Corporation in November 2015, Ms. Stipp was
Executive Vice President, Chief Financial Officer and Treasurer for Tecumseh Products Company. She has also previously served
as the Chief Financial Officer for Revstone Industries LLC; Acument Global Technologies, Inc.; and GDX Automotive. Ms. Stipp
began her career in 1981 with Lear Siegler Incorporated, working in corporate audit. From 1984 to 1999, she worked for
General Motors Corp. in a variety of financial roles. She is a Certified Public Accountant and a Chartered Global Management
Accountant.
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ArcBest
/ 2021
PROXY STATEMENT |
11 |
Board Skills Profile
We believe the Board’s membership should
represent a diversity of backgrounds, experiences and skills. To that end, the Nominating/Corporate Governance Committee has established
a matrix, outlining the skills and experiences they believe are most relevant for the Company. This matrix is periodically reviewed
by the Nominating/Corporate Governance Committee and updated as necessary.
Expertise/Qualification |
Conrado |
Eliasson
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Gorman |
Hogan |
McElligott
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McReynolds
|
Philip |
Spinner |
Stipp |
Acquisitions |
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Audit |
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Corporate Governance |
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Current CEO/CFO |
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Entrepreneurial Experience |
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Executive Compensation |
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HR/Labor |
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Technology |
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International |
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Investment Banking/Finance/Private Equity |
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Legal/Regulatory/Gov’t Relations |
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Transportation/Logistics |
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Marketing |
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Other Public Company Board/Management |
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Other Transportation |
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Related Board/Management |
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Risk Management |
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Strategic Planning |
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ArcBest
/ 2021
PROXY STATEMENT |
12 |
GOVERNANCE OF THE COMPANY
Board Leadership Structure
The Board has
determined that a leadership structure with Ms. McReynolds serving in a combined Chairman and Chief Executive Officer role
and Mr. Spinner serving as the Lead Independent Director is in the best interests of ArcBest and its stockholders.
The Board recognizes that there are many viewpoints concerning
a board’s optimal leadership structure, and considered all options in making its decision. The Board reviewed trends in
board practices, recommended best practices for corporate governance, and the board practices of the Company’s peers. The
Board also considered the advantages of having a combined Chairman and Chief Executive Officer. Among other things, a person serving
in this combined role can quickly identify company concerns and communicate this information to other Board members, providing
superior information due to his or her unique insights into the Company’s day-to-day operations.
Chairman of the Board
In deciding to adopt the current leadership structure, the
Board considered Ms. McReynolds’ leadership qualities, management capability, and knowledge of ArcBest’s business
and the transportation and logistics industry; the long-term, strategic perspective she has exhibited as the President and Chief
Executive Officer; and her focus on growing long-term shareholder value. The Board also considered Ms. McReynolds’ tenure
with the Company. The Board believes that serving as both Chairman and President and Chief Executive Officer enables Ms. McReynolds
to more effectively and efficiently execute the Company’s strategic initiatives and respond to key business issues and risks
that she encounters in daily operations.
Lead Independent Director
The Board believes that an executive Chairman should be
balanced by a strong Lead Independent Director with a clearly defined and dynamic leadership role in the governance of the Board.
The Company’s bylaws provide that if the Chairman is not an independent Director, the independent Directors must annually
elect a Lead Independent Director. The bylaws assign to the Lead Independent Director extensive authority and responsibilities
relating to the Board’s governance and functions, including:
■ |
calling and chairing meetings of independent
Directors, and setting agendas for such meetings; |
■ |
liaising between the independent Directors and
the Chairman and communicating with the Chairman after each meeting of independent Directors to provide feedback; |
■ |
chairing all Board meetings where the Chairman
is not present; |
■ |
reviewing, advising on, and approving Board meeting
agendas and meeting schedules; |
■ |
being available for consultation and direct communication
with stockholders, when appropriate; and |
■ |
participating in the annual performance evaluation
of individual members of the Board and the Chief Executive Officer (in consultation with the Nominating/Corporate Governance
Committee). |
The Lead Independent Director’s authority and responsibilities
generally correspond to those performed by an independent Chairman.
Mr. Spinner has been the Lead Independent Director since
2016, and the Board believes he provides a meaningful balance to the executive Chairman. In the Board’s view, Mr. Spinner
possesses the characteristics and qualities necessary to fulfill the Lead Independent Director’s important role of guiding
and facilitating the independent Directors’ participation in the Company’s governance. During his nearly 10 years
on our Board, Mr. Spinner has demonstrated a thorough understanding of the Board’s oversight role and leading corporate
governance practices. Supplementing the Lead Independent Director are Board committees composed entirely of independent Directors.
Management and Outside Advisors
The Company’s leadership structure includes an experienced
management team, upon whose advice, reports and opinions the Board relies. Regularly scheduled management reports and presentations,
based on operational, financial, legal and risk management aspects of the Company’s operations, provide vital information
to the Board. The independent Directors have complete access to, and direct contact with, members of senior management. The Board
also relies on the advice of counsel, accountants, executive compensation consultants, auditors, strategic planning consultants,
risk management consultants, and other expert advisors.
ArcBest
/ 2021
PROXY STATEMENT |
13 |
Independence
The Nominating/Corporate Governance Committee has determined
that all members of the Board except Ms. McReynolds are independent pursuant to applicable independence standards of the Nasdaq
Stock Market (“Nasdaq”). The independent Directors met in executive session two times in 2020. Mr. Spinner, as Lead
Independent Director, presided over those meetings.
How Directors are Selected
The Nominating/Corporate Governance Committee
is responsible for identifying and recommending potential Board members
based on any specific criteria the Board may specify from time to time and such other factors
as it deems appropriate. Relevant considerations include:
■ |
special training or skill |
■ |
experience with businesses and other organizations
that are similar to the Company in size and type |
■ |
experience with or knowledge of businesses or
organizations or technical expertise that is particularly relevant to the Company’s
current or future business plans |
■ |
financial expertise |
■ |
advanced studies and certifications |
■ |
specific industry or transportation experience |
■ |
personal characteristics that bring diversity
to the Board |
The
Nominating/Corporate Governance Committee also considers the interplay of a
candidate’s experience with the experience of the other Directors, whether the candidate has sufficient
time to devote to the responsibilities of a director, and whether the candidate is free
from conflicts of interest or legal issues. There is currently no set of specific
minimum qualifications that must be met by a nominee recommended by the
Nominating/Corporate Governance Committee, as different factors may assume greater or
lesser significance at particular times, and the needs of the Board may vary in light of its composition and the
Nominating/Corporate Governance Committee’s perceptions about future issues and needs. However, the Board has found the
skills and experiences described above under “Board Skills Profile” to be particularly relevant and
desirable.
The Nominating/Corporate Governance Committee believes that
to best evaluate matters the Board oversees, the Board needs a mix of business and personal backgrounds. For that reason, the
Nominating/Corporate Governance Committee periodically reviews a listing of the qualifications and attributes of our current Directors
and potential candidates. Diversity is taken into account when determining how a candidate’s qualities and attributes would
complement the other Directors’ backgrounds.
The Nominating/Corporate Governance Committee may identify
potential candidates from the pool of individuals known by members of the Board and individuals recommended by management, and/or
engage a third party search firm to help identify appropriate candidates.
Stockholders may also suggest candidates for the Board.
Any such candidate will be evaluated using the process and criteria described above. Refer to “How to Submit a Candidate
for the Board” on page 69 for more information.
Board’s Role in Risk Oversight
The Board believes the Company’s current
management structure facilitates risk oversight by combining experienced leadership
with independent review by the Board and its committees. Potential risk factors that are monitored
through this structure include financial, operational, technological, disaster,
environmental, social, cybersecurity, legal and regulatory, fraud/corruption, employment practices,
executive compensation, and reputational and legislative issues. Management
periodically makes presentations to the Board on the Company’s overall enterprise risk
management program, including reports on the Company’s top existing risks, how the
risks have been trending, and how they are addressed by Company
strategy; mitigating activities; emerging risks and circumstances; and the effectiveness of
the security, back-up, and contingency provisions of the Company’s information
systems. The Board’s committees assist with risk oversight within
their respective areas of responsibility, and the Board is regularly informed about each committee’s
activities.
The Audit Committee directly
oversees risk management relating to financial reporting and public disclosure and the steps management has taken to monitor and
control those exposures. In addition, the Audit Committee is responsible for the oversight of general financial risk matters.
The Audit Committee meets regularly with financial management, including the Chief Financial Officer, the Vice President–Controller
and Chief Accounting Officer, and the Vice President–Internal Audit, as well as our independent registered public accounting
firm. The Audit Committee also reviews the activities of the Company’s Risk Management Committee, which consists of several
members of senior management.
The Compensation Committee is
responsible for oversight of risk relating to the Company’s compensation policies and practices for all employees and officers.
Management has evaluated those policies and practices, including our incentive plans, and determined they do not create any risks
that are reasonably likely to have a material adverse effect on the Company. For more information, see “Compensation Discussion &
Analysis—Compensation Risk Assessment.”
ArcBest
/ 2021
PROXY STATEMENT |
14 |
The Nominating/Corporate Governance Committee
is responsible for overseeing risks associated with corporate governance and social and environmental
issues. In connection with this responsibility, the Nominating/Corporate Governance Committee annually reviews the Company’s
Corporate Governance Guidelines and their implementation, and oversees our Environmental, Social & Governance Committee, which
is made up of subject matter experts from across the Company.
Committees of the Board
The Board has established Audit, Compensation, Nominating/Corporate
Governance, and Qualified Legal Compliance Committees to devote attention to specific subjects and to assist in the discharge
of its responsibilities. These committees are described below. The charters for all four committees are available on our website,
arcb.com, in the “Investors—Governance Charters” section.
AUDIT COMMITTEE |
Ms. Stipp (Chair), and Messrs. Eliasson, Hogan,
and Spinner
Meetings in 2020: 6
|
|
The
Audit Committee assists the Board by fulfilling oversight responsibilities relating to:
■ the
integrity of financial reports and related financial information provided by the Company to the public and the Securities
and Exchange Commission (“SEC”);
■ the
Company’s systems of internal controls regarding finance, accounting and compliance with policies, including ethics
policies;
■ the
performance of the Company’s internal audit, accounting and financial reporting functions;
■ the
Company’s risk management policies and processes for identifying, monitoring, and managing significant risk exposures;
and
■ the
Company’s compliance with legal and regulatory requirements.
The Nominating/Corporate Governance
Committee has determined that each member of the Audit Committee meets all applicable
SEC and Nasdaq independence standards and financial literacy requirements that apply to audit committee members.
The Board has determined that Ms. Stipp and Mr. Hogan are audit committee financial experts as defined under
applicable SEC rules.
|
COMPENSATION COMMITTEE |
Messrs. Gorman (Chair) and Conrado, Dr. Philip
and Ms. McElligott
Meetings in 2020: 5
|
|
The
Compensation Committee is responsible for reviewing
and approving executive management compensation and has authority
to make and administer employee awards under the ArcBest Corporation Executive Officer
Incentive Compensation Plan and the Amended and Restated
ArcBest Corporation Ownership Incentive Plan (the “Ownership Incentive Plan”),
including setting performance goals and determining
the extent to which those goals were achieved.
The Nominating/Corporate Governance
Committee has determined that each member of the Compensation Committee meets applicable
Nasdaq independence standards, Internal Revenue Code (“IRC”) Section 162(m) outside director requirements,
and non-employee director requirements of Section 16 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”).
|
NOMINATING/CORPORATE
GOVERNANCE COMMITTEE |
Ms. McElligott (Chair), Messrs. Conrado and Gorman
and Dr. Philip
Meetings in 2020: 4
|
|
The
Nominating/Corporate Governance Committee’s responsibilities include:
■ identifying
individuals believed to be qualified to become Directors;
■ selecting
and recommending to the Board for its approval the nominees to stand for election as Directors or, if applicable, to be
appointed to fill vacancies on the Board;
■ determining
appropriate compensation for Directors;
■ recommending
any changes regarding size, structure, composition, processes and practices of the Board;
■ reviewing
the independence of Directors and assessing whether members are meeting the applicable independence standards for
service on the various Board committees;
■ reviewing
the Company’s Corporate Governance Guidelines;
■ reviewing
environmental, social, and governance (“ESG”) issues relevant to the Company and the adequacy of the Company’s
ESG standards;
■ overseeing
the annual Board evaluation; and
■ making
recommendations regarding succession planning for the Chief Executive Officer.
The Nominating/Corporate Governance
Committee has determined that each member of the committee is independent, as defined
in applicable Nasdaq independence standards.
|
QUALIFIED LEGAL COMPLIANCE
COMMITTEE |
Ms. Stipp (Chair), and
Messrs. Eliasson, Hogan, and Spinner |
|
The Qualified Legal Compliance Committee is responsible
for confidentially receiving, retaining and considering any report of evidence of a material violation of securities law,
a material breach of fiduciary duty, or a similar material violation of any federal or state law by the Company or by any
officer, director, employee or agent of the Company that is made or referred to the Committee by the Chief Executive Officer
or the Company’s chief legal officer or legal advisors. The Audit Committee serves as the Qualified Legal Compliance
Committee. |
ArcBest
/ 2021
PROXY STATEMENT |
15 |
Attendance at Meetings
The Board has five regularly scheduled meetings each year
to review significant developments affecting the Company and to act on matters requiring Board approval. The Board holds special
meetings when action is required between regular meetings. The Board met for its regular meetings five times during 2020. All
members of the Board participated in more than 75% of all regularly scheduled Board and applicable committee meetings held during
the year.
Additionally, the Board met frequently throughout the year, between
regular meetings, to discuss the impact of, and the Company’s response to, the COVID-19 pandemic.
It is the Company’s policy that all members of the Board attend
the annual meeting of its stockholders, except when illness or other personal matters prevent such attendance. All members of
the Board attended the Company’s 2020 Annual Meeting of Stockholders.
Other Board Policies
The Board has imposed a mandatory retirement age for all
Directors. No Director may seek re-election to the Board after attaining age 75. Because we recognize the commitment of time and
energy that a public company board requires, typically no Director is permitted to serve on the boards of more than two other
public companies while serving on the ArcBest Board.
In appropriate circumstances, this restriction may be waived
by the full Board. In 2020, the Board granted a temporary waiver to Ms. Stipp to enable her to serve on three other public company
boards until July 1, 2021, or such earlier date on which her term on one of those boards ends.
Code of Conduct and Corporate Governance Guidelines
The Board has adopted a Code of Conduct that applies broadly
to all Directors, officers, employees, representatives, agents, sub-contractors, vendors, and suppliers of the Company. The Code
of Conduct incorporates the UN Global Compact’s ten principles in the areas of human rights, labor, the environment and
anti-corruption.
The Company intends to post on its website any amendment
to, or waiver of, a provision of the Code of Conduct that applies to its Chief Executive Officer, Chief Financial Officer, Principal
Accounting Officer, Controller, or any person performing similar functions and that relates to any of the following elements of
the Code of Conduct: honest and ethical conduct; disclosure in reports or documents filed with the SEC and other public communications;
compliance with applicable laws, rules and regulations; prompt internal reporting of code violations; and accountability for adherence
to the Code of Conduct.
Acting on the recommendation of the Nominating/Corporate Governance Committee,
the Board developed and adopted Corporate Governance Guidelines to promote the functioning of the Board and its committees and
to set forth a common set of expectations as to how the Board should fulfill its responsibilities. Among other things, the Corporate
Governance Guidelines address the composition of the Board, including independence standards; the selection, term and expectations
for Directors; the conduct of meetings and executive sessions; and the composition and primary objectives of the Board’s
committees.
The full texts of the Code of Conduct and the Corporate
Governance Guidelines are posted in the Investors section of
the Company’s website, arcb.com.
Related Party Transactions
Annually, as part of the Company’s proxy preparation,
all Directors and executive officers who are subject to related party transaction disclosure are instructed to report in writing
any such transactions to the Company, and to report to the Company any such transactions that may be planned or that occur during
the year. In determining whether to approve or ratify a related party transaction, the Audit Committee considers all of the relevant
facts and circumstances available, including (if applicable): (i) whether there is an appropriate business justification for the
transaction; (ii) the benefits that accrue to the Company as a result of the transaction; (iii) the terms available to unrelated
third parties entering into similar transactions; (iv) the impact of the transaction on a director’s independence (in the
event the related party is a director, an immediate family member of a director, or an entity of which a director is a partner,
shareholder or executive officer); (v) the availability of other sources for comparable products or services; (vi) whether it
is a single transaction or a series of ongoing, related transactions; and (vii) whether entering into the transaction would be
consistent with the Company’s Code of Conduct.
ArcBest
/ 2021
PROXY STATEMENT |
16 |
DIRECTOR COMPENSATION
The Nominating/Corporate Governance Committee is responsible
for reviewing and awarding compensation to the non-employee Directors, and has retained Meridian Compensation Partners, LLC, an
independent compensation consultant, to assist in fulfilling that responsibility. The Nominating/Corporate Governance Committee
sets the levels and forms of non-employee Director compensation based on its experience, review of the compensation paid to directors
of comparable publicly traded companies, and Meridian’s advice.
We offer a combination of cash and stock-based compensation
to attract and retain qualified candidates to serve on the Board.
In December 2019, Meridian conducted a review
of director compensation, including compensation paid to directors of the Company’s
executive compensation peer group as well as compensation paid to directors of similarly sized
general industry companies. Following this
review, the Nominating/Corporate Governance Committee
decided not to make any changes to the compensation structure for 2020.
Cash Compensation
The following table shows the standard cash compensation
for non-employee Directors for 2020. Retainers are cumulative, meaning that each non-employee Director receives a “Member
Retainer” plus the appropriate retainer fee for any other positions held.
Annual
Retainers (Paid in Monthly Installments) |
|
|
Members |
$ |
80,000 |
Lead Independent
Director |
|
25,000 |
Audit
Committee Chair |
|
20,000 |
Compensation
Committee Chair |
|
15,000 |
Nominating/Corporate
Governance Committee Chair |
|
10,000 |
The Board of Directors implemented a voluntary 15% reduction
in cash retainer fees for May through July of 2020 in response to the COVID-19 pandemic. Actual cash compensation paid to Directors
in 2020 is reflected in the “2020 Director Compensation Table”.
Equity-Based Awards
The target equity grant value for non-employee Directors
in 2020 was $110,000. Awards were made in the form of restricted stock units (“RSUs”) in an amount determined by dividing
the grant value by the closing price of ArcBest common stock on the date of grant and rounding to the nearest hundred shares.
Equity grants for the non-employee Directors typically are approved during the Board’s second-quarter meeting with an effective
grant date that is five business days following the Company’s quarterly earnings release, unless a different date is approved
by the Board.
RSU awards granted to non-employee Directors vest one year
from the date of grant. All of the RSU awards are subject to accelerated vesting in the event of a Director’s death or disability
or a change in control of the Company. Accelerated vesting for RSUs also occurs when a Director attains normal retirement
eligibility (i.e., age 65 with five years of service as a Director). Mr. Gorman, Ms. McElligott, and Dr. Philip are currently
eligible for normal retirement. A Director who attains early retirement eligibility (i.e., three years of service as a Director)
is eligible for accelerated vesting of a pro rata number of shares based on the number of whole months since the award date. Messrs.
Conrado, Hogan and Spinner and Ms. Stipp are currently eligible for early retirement.
Vested RSU awards are paid in shares of ArcBest common stock
on the earlier to occur of the normal vesting date applicable to the award or the Director’s termination of service with
the Company, unless payment is deferred by the Director under the provisions of the Ownership Incentive Plan.
Miscellaneous Compensation Items
We typically provide transportation for Directors to attend
Board meetings, pay for their hotel stays, and provide meals. Upon request, we will reimburse some or all of the cost of an educational
conference and related travel.
ArcBest
/ 2021
PROXY STATEMENT |
17 |
STOCK OWNERSHIP POLICY FOR
NON-EMPLOYEE DIRECTORS
The
Nominating/Corporate Governance Committee believes that the Directors should maintain a level of equity holdings in the
Company that will further align their interests with those of the Company’s stockholders. The Board adopted a Stock
Ownership Policy requiring Directors to own shares with a total value equal to six times their annual member retainer.
Directors are not permitted to sell any shares of Company stock (except to pay the taxes generated as a result of the vesting
of equity grants) until they satisfy the stock ownership requirement, and then may only sell the shares that exceed the stock
ownership requirement. RSUs and stock owned outright count toward the stock ownership requirements.
The Nominating/Corporate Governance Committee monitors ownership
levels annually. As of the review completed in 2020, all of the Directors have met their ownership requirements except for Mr.
Eliasson, who did not join the Board until the end of 2019.
ArcBest
/ 2021
PROXY STATEMENT |
18 |
2020 DIRECTOR COMPENSATION TABLE
The table below summarizes the compensation paid by the
Company to non-employee Directors for the year ended December 31, 2020.
Name(1) |
Fees
Earned or
Paid in Cash(2) |
Stock
Awards(3,4) |
All
Other
Compensation |
Total |
Eduardo F. Conrado |
$ 77,000 |
$ 108,108 |
$ - |
$ 185,108 |
Fredrik J. Eliasson(5) |
77,000 |
215,644 |
- |
292,644 |
Stephen E. Gorman(8) |
91,438 |
108,108 |
- |
199,546 |
Michael P. Hogan |
77,000 |
108,108 |
- |
185,108 |
William M. Legg(6) |
32,333 |
- |
25,000 |
57,333 |
Kathleen D. McElligott(8) |
86,625 |
108,108 |
- |
194,733 |
Craig E. Philip |
77,000 |
108,108 |
- |
185,108 |
Steven L. Spinner(7) |
101,063 |
108,108 |
- |
209,171 |
Janice
E. Stipp(8) |
96,250 |
108,108 |
- |
204,358 |
(1) |
Judy R. McReynolds, the Chairman,
President and Chief Executive Officer of the Company, is not included in this table since she is an employee of the Company
and thus received no compensation for her service as a Director. The compensation received by Ms. McReynolds as an officer
of the Company is shown in the Summary Compensation Table on page 37. |
(2) |
The Board of Directors implemented a voluntary
15% reduction in cash retainer fees, beginning in May 2020 through July 2020, as part of the Company’s proactive measures
in response to the COVID-19 pandemic. The values reflected in the Fees Earned or Paid in Cash column reflect this reduction
from the standard annual cash compensation for non-employee Directors. |
(3) |
Reflects the aggregate grant date fair value
of RSU awards made during 2020, computed using the grant date fair value ($20.02 per share), in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) determined without
regard to estimated forfeitures and adjusted for present value of dividends (to reflect that dividend equivalents are not
paid with respect to unvested RSU awards). All non-employee Directors received an award of 5,400 RSUs under the Ownership
Incentive Plan on May 12, 2020 (computed using a stated annual value of $110,000 and the grant date closing stock price of
$20.34 per share). No dividends or dividend equivalents are paid to non-employee Directors on RSUs granted after December
31, 2014, except for RSUs that vest but are deferred by the Director under the terms of the plan. See Note K to the consolidated
financial statements in the Company’s 2020 Annual Report for additional detail on share-based compensation. |
(4) |
As of December 31, 2020, each non-employee
Director had the following aggregate number of RSUs outstanding, although only the value of the 2020 RSU award is provided
in the Stock Awards column, above. |
|
|
|
Name |
Vested
but Subject to
Transfer Restrictions(i) |
Unvested |
Total
RSUs Outstanding |
|
Eduardo
F. Conrado |
14,350 |
2,250 |
16,600 |
|
Fredrik
J. Eliasson |
- |
10,100 |
10,100 |
|
Stephen
E. Gorman |
5,400 |
- |
5,400 |
|
Michael
P. Hogan |
14,350 |
2,250 |
16,600 |
|
William
M. Legg |
- |
- |
- |
|
Kathleen
D. McElligott |
11,600 |
- |
11,600 |
|
Craig
E. Philip |
5,400 |
- |
5,400 |
|
Steven
L. Spinner |
3,150 |
2,250 |
5,400 |
|
Janice
E. Stipp |
3,150 |
2,250 |
5,400 |
|
(i) |
The balance in the Vested but Subject
to Transfer Restrictions column includes shares deferred under the terms of the equity plan. |
(5) |
Mr. Eliasson joined the Board in
December 2019. On February 6, 2020, as a new Board member, he received an award of 4,700 RSUs, with a grant date fair value
of $107,536. |
(6) |
Mr. Legg retired from the Board at the 2020
Annual Meeting on May 1, 2020, and received a prorated retainer for his service as a Director during the year. A director
legacy gift was made to the Ocean Reef Community Foundation in the amount of $25,000 in Mr. Legg’s honor upon the occasion
of his retirement from the Board. |
(7) |
Lead Independent Director: Mr. Spinner. |
(8) |
Committee Chairpersons: Ms. Stipp, Audit Committee
and Qualified Legal Compliance Committee; Mr. Gorman, Compensation Committee; and Ms. McElligott, Nominating/Corporate Governance
Committee. |
ArcBest
/ 2021
PROXY STATEMENT |
19 |
EXECUTIVE OFFICERS OF THE COMPANY
We would like to introduce the current executive officers
of the Company and its subsidiary, ABF Freight System, Inc. There are no family relationships among Directors and executive officers
of the Company or its subsidiaries.
|
|
JUDY R. MCREYNOLDS, age 58, is Chairman,
President and Chief Executive Officer and a
Director of the Company. Her full biography
appears above under “Directors of the Company.” |
|
|
|
|
|
|
|
|
DENNIS L. ANDERSON II, age 40, has been Chief
Customer Officer since April 2020 and was Chief
Customer Experience Officer from January 2017
through March 2020. Mr. Anderson was Vice
President – Strategy from February 2014 through
December 2016. Prior to that, Mr. Anderson served
as Director of Strategy from June 2011 through
January 2014. For ABF Freight, Mr. Anderson was
Senior Pricing Analyst for three years and Manager
of Pricing before that. He holds a bachelor’s
degree in industrial engineering from the
University of Arkansas. |
|
|
|
|
|
|
|
|
DAVID R. COBB, age 55, has been Chief Financial
Officer since January 2015. He previously served
as Vice President and Controller for over eight
years, and Chief Accounting Officer for four years.
Before joining the Company, Mr. Cobb was
employed by Smith International, Inc., a publicly
traded international oilfield service company
acquired by Schlumberger Limited, as Vice
President and Controller for four years; by Kent
Electronics Corporation, a publicly traded
specialty electronics distributor and network
integrator, for six years; and by Price Waterhouse,
a predecessor of PricewaterhouseCoopers LLP,
for seven years. Mr. Cobb is a Certified Public
Accountant. Mr. Cobb holds a bachelor’s degree in
accounting from Abilene Christian University. |
|
|
|
|
|
|
|
|
ERIN K. GATTIS, age 47, has been Chief Human
Resources Officer since July 2016. She previously
served as Vice President – Human Resources from
October 2011 through June 2016, Chief of Staff
from January 2010 through September 2011, and
Manager of Retirement Services & Executive
Compensation from August 2006 through
December 2009. She joined the Company in 1999
and between 1999 and 2006 worked for both the
Company and ABF Freight as a Retirement
Specialist, Benefits Analyst, Supervisor of
Executive Compensation and Manager of
Executive Compensation. She holds a bachelor’s
degree in economics and finance from Arkansas
Tech University. Ms. Gattis has a Senior
Professional in Human Resources (SPHR) and
SHRM–SCP certification. |
|
|
|
|
|
|
|
|
JAMES A.
INGRAM, age 53, has been Chief
Operating Officer – Asset-Light Logistics since
January 2017 and was President of the Company’s
subsidiary ABF Logistics from August 2013
through December 2016. He has served the
Company in many capacities since 2008, including
Senior Vice President – Strategy, Vice President –
Strategic Development, and Vice President –
Market Development. Prior to 2008, Mr. Ingram
served as Vice President – Market Development for
ABF Freight and as ABF Freight’s Director –
Quotation Services. He held positions in ABF
Freight’s Pricing Department for almost ten years
before that. Mr. Ingram holds a bachelor’s degree
in industrial engineering and a master’s degree
from the University of Arkansas. |
|
|
|
|
|
|
|
|
MICHAEL R. JOHNS,
age 62, has been Vice
President – General Counsel and Corporate
Secretary since April 2007. For sixteen years
before joining the Company, he was a partner in
the law firm of Dover Dixon Horne PLLC in Little
Rock, Arkansas. Mr. Johns was a practicing
attorney in two other Little Rock law firms for
seven years, including Rose Law Firm, prior to
1991. Mr. Johns is a member of the American Bar
Association, Sebastian County Bar Association,
and Arkansas Society of Certified Public
Accountants. Mr. Johns is a Certified Public
Accountant and holds a bachelor’s degree from the
University of Arkansas and a law degree from
Southern Methodist University. |
ArcBest
/ 2021
PROXY STATEMENT |
20 |
|
|
STEVEN
LEONARD, age 46, has been Chief Sales and Customer Engagement Officer for the Company
since April 2020. Mr. Leonard previously served as Vice President – Customer Solutions from January 2017 through March 2020.
Mr. Leonard previously served as Vice President – Global Forwarding for the Company’s subsidiary, Panther Premium Logistics®,
from November 2014 through December 2016. Mr. Leonard joined the Company in 2001 as a quotation analyst for ArcBest brand
U-Pack®, and has held positions that include Manager of Quotation Services, Manager of TimeKeeper Pricing, Director
of Strategic Planning, and Divisional Vice President. He holds a bachelor’s degree in business administration from the University
of Arkansas. |
|
|
|
|
|
|
|
|
DANIEL E. LOE, age 46, has been Chief Yield
Officer since January 2017, and President,
Asset-Light Logistics since September 2020. Mr.
Loe previously served as Vice President –
Enterprise Customer Solutions from May 2014
through December 2016. From 2010 through April
2014, Mr. Loe served as Vice President – Yield
Management for ABF Freight. He previously served
ABF Freight as Director of Marketing & Public
Relations for six years, and Senior Pricing Analyst
for four years. Mr. Loe joined the Company in 1997,
working as an analyst in the Pricing Department.
He holds a bachelor’s degree in industrial
engineering from the University of Arkansas. |
|
|
|
|
|
|
|
|
MICHAEL E. NEWCITY, age 51, has been Senior
Vice President – Chief Innovation Officer for the
Company, and President of the Company’s
subsidiary ArcBest Technologies, Inc., since
January 2015. He previously served the Company
as Chief Financial Officer and Chief Information
Officer from August 2013 through December 2014,
Vice President – Chief Financial Officer from June
2010 through July 2013, and Director – Economic
Analysis from November 2007 through May 2010.
Prior to that he served as Director – E-Systems &
Emerging Technologies for ABF Freight for two
years, and in several managerial positions with
ABF Freight that spanned marketing, information
technology and business development for over
five years. He began his career with the Company
in 1993 at its subsidiary, ArcBest Technologies,
Inc., leading e-commerce development initiatives
for six years. Mr. Newcity holds a bachelor’s degree
in computer information systems from the
University of Arkansas and a master’s degree from
the Walton College at the University of Arkansas. |
|
|
|
|
|
|
|
|
TRACI L. SOWERSBY, age 51, has been Vice
President – Controller and Chief Accounting
Officer since April 2015. Prior to joining the
Company, Ms. Sowersby spent 17 years with Ernst & Young LLP, where she most recently served as
Executive Director in the firm’s Phoenix office.
Ms. Sowersby’s service for Ernst & Young LLP
included roles from Audit/Assurance Staff through
Executive Director, providing expertise in the
areas of technical accounting, internal controls,
and financial reporting. She holds a bachelor’s
degree in accounting from Indiana
University–Purdue University of Fort Wayne.
Ms. Sowersby is a Certified Public Accountant and
has served in the United States Army Reserves.
|
|
|
|
|
|
|
|
|
TIMOTHY D. THORNE, age 59, has been President
of ABF Freight since October 2014. Mr. Thorne has
served ABF Freight in many capacities, including
Vice President – Linehaul Operations from
April 2013 to October 2014 and Regional Vice
President of Operations in the Midvale, Utah and
Reno, Nevada regional offices from May 2006
through March 2013. Mr. Thorne worked as Service
Center Manager at four ABF Freight service
centers for 13 years. He joined ABF Freight as a
Supervisor Assistant in 1990, and also served as
Sales Representative. Mr. Thorne holds a
bachelor’s degree in business administration from
the University of Oklahoma and a master’s degree
from the University of North Alabama. He was a
captain in the United States Army. |
ArcBest
/ 2021
PROXY STATEMENT |
21 |
EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
This Compensation Discussion &
Analysis (“CD&A”) describes our executive compensation programs and the compensation decisions made during the
year regarding our Named Executive Officers. The Board’s Compensation Committee (the “Compensation Committee” or
“Committee”) determines compensation and reviews, approves, and oversees the administration of plans and programs for
our Named Executive Officers. This discussion should be read in conjunction with the compensation tables and narrative disclosures
that begin on page 37.
The Named Executive Officers for 2020 were:
JUDY R. MCREYNOLDS |
|
TIMOTHY D. THORNE |
|
DAVID R. COBB |
|
MICHAEL E. NEWCITY |
|
JAMES A. INGRAM |
ArcBest Chairman,
President and Chief
Executive Officer |
|
ABF Freight President |
|
ArcBest Chief
Financial Officer |
|
ArcBest Senior Vice President–Chief
Innovation Officer and ArcBest
Technologies President |
|
ArcBest Chief
Operating Officer,
Asset-Light Logistics |
On January 11, 2021, Mr. Thorne
announced that he will be retiring effective June 30, 2021. Mr. Seth Runser, currently ABF Freight Chief Operating Officer, will
become ABF Freight President upon Mr. Thorne’s retirement.
ArcBest / 2021
PROXY STATEMENT |
22 |
Executive Summary
Company Performance
The table below summarizes our key 2020 and 2019 financial
results.
During the unprecedented year
of 2020, the global pandemic has caused uncertainty and disruption across all aspects of life, but our focus remains on meeting
the evolving demands of our customers in any environment. To achieve this goal, we have a multi-year strategy, which our management
team has been executing on with the oversight and guidance of our Board. We believe that by diversifying our business, significantly
expanding our service offerings, investing in new technologies and strengthening relationships with our customers, we have the
opportunity to create long-term, sustainable value for our shareholders. In order to capitalize on the opportunities available
to us in this dynamic market and successfully execute our plan, we need to coninue to attract and retain best-in-class talent.
The talent, character and hard work of our employees has enabled us to turn the challenges of the pandemic into opportunities,
and as a result of their efforts, ArcBest delivered one of our best years of the past decade.
In 2020, consolidated operating
income was $98.3 million, an increase of more than 50% compared to 2019, which in turn resulted in increases of both net income
and diluted earnings per share. Our operating ratio, which is expressed as a percentage of revenues, improved 1.2 percentage points,
reflecting the positive effects of yield strategies and enhanced operational technologies in our Asset-Based segment, as well as
capacity constraints in the marketplace which increased demand for our Asset-Light services in the second half of 2020.
Executive Compensation Relative
to Company Performance
Operating income and net income
improved by 54.1% and 77.8%, respectively, resulting in an increase in total cash compensation for our Named Executive Officers
in 2020, compared to 2019. We believe that this dynamic reflects the strong pay-for-performance structure of our incentive compensation
programs for our executives.
Annual Incentive Compensation
For 2020, the annual cash incentive
was based on operating income and Return on Capital Employed (“ROCE”). Strong Company performance against pre-established
plan goals resulted in a payout of 197.8% of the target incentive opportunity, as outlined further in “Annual Cash Incentive
Compensation,” beginning on page 29.
Long-Term Incentive Compensation
The 2018-2020 cash long-term
incentive compensation plan (“C-LTIP”) was based on Total Shareholder Return (“TSR”) compared to our peer
group and pre-established ROCE goals. Actual Company performance generated a payout of 118.9% of the target incentive opportunity
under the 2018-2020 plan, as outlined further in “Long-Term Incentive Compensation” and “Long-Term Cash Incentive
Compensation,” beginning on page 31.
The RSU awards granted in 2015
(the “2015 RSU awards”) fully vested and settled on May 11, 2020. All of the shares issued for the 2015 RSU awards at
final vesting are free of vesting and ownership restrictions. The vesting parameters for the 2015 RSU awards are described in our
2016 Proxy Statement.
ArcBest / 2021
PROXY STATEMENT |
23 |
Pay for Performance
Our executive compensation program provides a strong
relationship between pay and Company performance. The following chart illustrates how the average annual incentive plan cash payout
to Named Executive Officers in a given year has tracked the Company’s operating income. Correlating cash incentive payments
to improvements in operating income reinforces the Company’s emphasis on profitable growth.
AVERAGE NEO AIP PAYOUTS VS.
OPERATING INCOME
Overview of our Compensation Program
The primary elements of direct compensation awarded
to the Named Executive Officers are shown below.
|
Compensation Element |
How Paid |
Features |
For More
Information |
FIXED |
Base salary |
Cash |
Reviewed annually and reflects executive’s experience, the scope and complexity of
the executive’s position, current objectives and responsibilities, internal equity, the executive’s performance,
retention needs, and market factors |
Page 29 |
AT RISK |
Annual incentive (AIP) |
Cash |
Based on annual goals for operating income and return on capital employed (ROCE), weighted
equally |
Page 29 |
AT RISK |
Long-term incentive |
Cash (C-LTIP) (50% of target) |
Based on three-year goals for relative TSR and ROCE, weighted equally |
Page 31 |
Time-vested
restricted stock units (RSUs) (50% of target) |
Cliff vest four years after grant date |
Page 32 |
ArcBest / 2021
PROXY STATEMENT |
24 |
Key Compensation Governance Policies
The Committee continually reviews the Company’s
executive compensation program to ensure our practices promote stockholders’ best interests. Some of our key policies are
summarized below.
What We Do: |
|
What We Don’t Do: |
|
We tie pay to performance. The majority of executive pay is at risk. |
|
|
NO tax gross-up payments for any amounts considered excess parachute payments. |
|
We use four-year cliff vesting for our restricted stock units to encourage retention and
a long-term perspective. |
|
|
NO single-trigger payments upon a change in control. |
|
Named Executive Officers and Directors are subject to significant stock ownership requirements. |
|
|
NO excessive perquisites. |
|
We have a robust clawback policy. |
|
|
NO hedging or pledging of Company stock. |
|
|
|
|
|
|
We conduct annual risk assessments of our compensation plans. |
|
|
NO employment agreements with our Named Executive Officers. |
|
We have an independent Compensation Committee. |
|
|
NO re-pricing of stock options without shareholder approval. |
|
The Compensation Committee has an independent compensation consultant. |
|
|
NO guaranteed bonuses. |
|
We benchmark our compensation practices to peers with which we compete for talent. |
|
|
|
Compensation Philosophy and Objectives
The primary objectives of the Company’s executive
compensation program are to:
■ |
attract and retain highly qualified executives; |
■ |
motivate the Company’s leaders to work together as a team
to deliver superior business performance; |
■ |
encourage balance between short-term results and the long-term
strategic decisions needed to ensure sustained business performance over time; and |
■ |
ensure that the interests and risk tolerance of the Company’s
leaders are closely aligned with those of our stockholders. |
As discussed in the sections
that follow, we use a variety of compensation vehicles to reflect this compensation philosophy and meet the Company’s objectives.
The Compensation Committee does not prescribe a targeted allocation for the various compensation components. Both internal and
external influences on our compensation program fluctuate periodically, and we believe it is in the best interest of the Company,
our stockholders, and the Named Executive Officers for the Committee to have the flexibility to design a compensation program appropriate
to the current market environment and the Company’s goals.
Our compensation program is designed
to retain and secure the continued leadership of our existing managerial talent as well as to attract future leaders for the Company.
Each Named Executive Officer is a long-term employee of the Company, with tenures ranging from 14 to 31 years, resulting in a management
team that is very knowledgeable about the Company and the transportation industry. This experience is extremely valuable, and our
executives can be targets for recruitment by other companies, especially in the transportation and logistics industry. Other factors
we consider when determining executive compensation include scope and complexity of the position, current objectives and responsibilities,
internal equity, relative compensation within the peer group, and the executive’s performance.
ArcBest / 2021
PROXY STATEMENT |
25 |
2020 At Risk vs. Fixed Compensation
One of the primary
considerations in implementing our compensation philosophy and objectives is striking the proper balance between fixed and
at-risk (variable) compensation. Fixed compensation ensures that an executive receives a minimum level of pay irrespective of
Company performance, which is important for retention and risk reduction. Variable compensation ties the executive’s
compensation to Company performance, aligning the executive’s interests with those of the Company’s stockholders.
The following charts show the significant portion of the Named Executive Officers’ 2020 target compensation that was at
risk and based on either reaching certain performance goals or the value of the Company’s common stock.
Response to 2020 Say on Pay Vote
In 2020, the Company held its tenth annual stockholder
advisory vote on the compensation paid to our Named Executive Officers, earning approximately 95% support. The Committee considered
this strong support expressed by stockholders as well as many other factors in evaluating the Company’s executive compensation
programs. These factors include the Committee’s assessment of the alignment of our compensation programs with our corporate
business objectives, evaluations of our programs by external consultants, and review of data from a select group of peers. Based
on these considerations, the Committee did not make any changes to our executive compensation program, policies or pay levels as
a result of the 2020 “say on pay” advisory vote. The Committee and Company value feedback from our stockholders, and
we will continue to consider this feedback when evaluating decisions regarding our executive compensation programs in the future.
Roles and Responsibilities in Determining Executive
Compensation
Role of the Compensation Committee
The Compensation Committee is
responsible for overseeing and approving compensation levels and incentive plans for the Named Executive Officers. The Compensation
Committee has determined and reviewed the value and forms of compensation for Named Executive Officers and other officers based
on Committee members’ knowledge and experience, competitive proxy and market compensation information, periodic review and
analysis from an independent compensation consultant, and management recommendations. The Committee approves salary levels, incentive
plan performance metrics, performance goals, target and maximum payouts, equity awards, and the peer group used for benchmarking.
The Committee also evaluates the need for, and the provisions of, severance arrangements for the Named Executive Officers; reviews
risks associated with compensation plans; and administers the Company’s clawback policy.
Role of the Independent Compensation Consultant
The Compensation Committee directly
engages Meridian Compensation Partners, LLC as its independent executive compensation consulting firm. Meridian reviewed executive
compensation practices, including compensation design issues, proxy disclosure, market trends and technical considerations, and
provided ongoing consulting assistance to the Compensation Committee throughout the year. In particular, Meridian has assisted
the Committee by evaluating the Company’s compensation programs and award levels, participated in Committee meetings when
requested, and reviewed Committee materials.
Other than executive and director
compensation consulting to the Board, the Compensation Committee and the Nominating/Corporate Governance Committee, Meridian does
not provide any other services to the Company. The Compensation Committee has the final authority to hire and terminate the independent
compensation consultant and
ArcBest / 2021
PROXY STATEMENT |
26 |
evaluates the consultant periodically.
The Compensation Committee also approves the fees paid to the consultant. The Compensation Committee has assessed the independence
of Meridian under SEC rules and concluded that Meridian’s work for the Board, the Compensation Committee and the Nominating/Corporate
Governance Committee does not raise any conflict of interest.
The Company has retained Mercer
LLC to provide additional consulting services at the request of management and to assist with management’s recommendations
for selecting our peer group and executive compensation. Mercer assists management with market analysis, plan design, proxy disclosure
review and review of corporate governance practices. The Company has assessed the independence of Mercer under SEC rules and concluded
that Mercer’s work for management does not raise any conflict of interest. At the Company’s request, Mercer conducted
a compensation review for Named Executive Officers in July 2019. This study helped inform compensation decisions for 2020.
Role of Management
The Company’s Chairman,
President and Chief Executive Officer, Vice President–General Counsel and Corporate Secretary, and Chief Human Resources
Officer are routinely invited to attend Committee meetings in order to provide analysis and recommendations on compensation issues
and other matters the Committee is considering. At certain meetings, Ms. McReynolds presents pay recommendations for her direct
reports. Ms. McReynolds does not make recommendations regarding her own compensation. No executive participates in discussions
concerning his or her own pay or attends Committee executive sessions, except to the extent requested by the Committee.
Management formulates its recommendations
with assistance from Mercer. The Committee considers management recommendations and discusses proposals with Meridian before making
decisions on compensation to be awarded to the executives. The Committee believes these discussions provide valuable insight, but
the Committee is solely responsible for approving all pay decisions for the Named Executive Officers.
The Compensation Committee delegates
to management the implementation and record-keeping functions related to the various elements of compensation it has approved,
to the extent permissible. The Committee may not and does not delegate its authority to review and determine the form or value
of compensation for Named Executive Officers.
Determining Appropriate Pay Levels
Total direct compensation for the Named Executive
Officers is divided into two general categories: short-term cash compensation and long-term incentive compensation.
Although the Committee also reviews retirement, perquisites,
and other benefits such as the 401(k) plan and health and welfare benefits, these benefits are not referenced against market data
or used in determining direct compensation levels. For more information, see “Retirement and Other Benefits” and “Perquisites”
in this CD&A.
ArcBest / 2021
PROXY STATEMENT |
27 |
Peer Group
The Committee compares the Company’s
compensation levels with the compensation of executives at similar entities in our industry to determine whether our compensation
is competitive. The peer group is also used to gauge the Company’s performance for the relative TSR component of the long-term
cash incentive plan.
The peer group is designed to
include the companies with which we compete in the transportation and logistics industry and for executive talent. Each year, with
input from Meridian, the Committee reviews our current peer group using criteria such as market capitalization and revenues. Management
also makes recommendations for our peer group, with input from Mercer.
Our peer group for market compensation
benchmarking in 2020 was the same peer group we used in 2019 and disclosed in our 2020 proxy statement. This is also the performance
peer group that was applicable to the relative TSR portion of the awards granted in 2020. In January 2021, following the announcement
by XPO Logistics, Inc. of the spinoff of its logistics segment, the Committee evaluated whether XPO Logistics, Inc. should remain
in the Company’s peer group. Based upon this review, the Committee determined it appropriate to remove XPO Logistics, Inc. from
the peer group for C-LTIP awards granted for the 2018-2020, 2019-2021 and 2020-2022 performance periods. Our peer group for 2020,
after removal of XPO Logistics, Inc., is listed below.
Company
Name |
Revenue
in 2020
($ millions) |
ArcBest Corporation |
2,940 |
Echo Global Logistics, Inc. |
2,512 |
Forward Air Corporation |
1,270 |
Hub Group, Inc. |
3,496 |
J.B. Hunt Transport Services, Inc. |
9,637 |
Knight-Swift Transportation Holdings, Inc. |
4,674 |
Landstar System, Inc. |
4,133 |
Old Dominion Freight Line, Inc. |
4,015 |
Roadrunner Transportation Systems, Inc. |
1,848(1) |
Saia, Inc. |
1,822 |
Schneider National, Inc. |
4,553 |
Werner Enterprises, Inc. |
2,372 |
Yellow Corporation (f/k/a YRC Worldwide Inc.) |
4,514 |
Peer Group and Industry Comparisons
For base salary, the Company
targets the 50th percentile of the peer group for Named Executive Officers. Annual incentives are designed to deliver total annual
compensation (salary plus annual incentives) exceeding the 50th percentile of the peer group only when the Company performs above
target performance levels. Total direct compensation (base salary, annual incentives, long-term cash incentives and equity awards)
also is designed to be above the 50th percentile of the peer group only when the Company performs above target performance levels.
All of our incentive compensation is designed to pay out below the 50th percentile when the Company performs below target performance
levels. Although the Committee considers these market benchmarks, compensation for a given executive may vary from market based
on the executive’s experience, the scope and complexity of the executive’s position, the executive’s current
objectives and responsibilities, internal equity, the executive’s performance, and retention needs.
Due to the strong performance
orientation of the annual and long-term cash incentives, the Committee is satisfied that above-median total cash and total direct
compensation will only be realized when the Company performs above market levels. In setting performance goals for the incentive
plans, the Committee references the historical ROCE of the S&P 500 companies. We believe the S&P 500 is an appropriate
performance benchmark because it is a broad-based group of U.S. companies in leading industries and reflects the risk and return
characteristics of the broader market on an on-going basis. While the S&P 500 primarily includes companies that are larger
than the Company, the performance of these companies reflects stable, well-managed organizations. The Committee believes that performance
at or above the level of the S&P 500 companies is acceptable performance and worthy of performance-based incentive payments.
In addition, for long-term incentives, the Company uses TSR relative to our industry peer group to more directly align the long-term
cash incentive plan with shareholder value creation.
(1) |
Roadrunner’s 2019 revenue is included for purposes of this table
because its 2020 revenue was not available as of the date of filing of this Proxy Statement. |
ArcBest / 2021
PROXY STATEMENT |
28 |
Components of Compensation
Base Salary
Base salary is a fixed component of compensation paid
for performing specific job duties and functions. Base salary is an important component of compensation and is crucial to our ability
to attract and retain key talent. The Compensation Committee reviews base salaries for Named Executive Officers annually, considering
the following:
■ |
the Company’s compensation philosophy and objectives, including
consideration of the executive’s experience, the scope and complexity of the executive’s position, the executive’s
current objectives and responsibilities, internal equity, the executive’s performance, and retention needs; |
■ |
market analysis; |
■ |
input from the Committee’s independent compensation consultant; |
■ |
economic and inflationary factors; |
■ |
the Company’s recent and historical financial performance; |
■ |
the Company’s strategic plans; |
■ |
the Company’s resources; and |
■ |
the Chairman, President and Chief Executive Officer’s recommendations (regarding executives
other than herself). |
The Committee does not assign
a specific weighting to any of these factors. In considering any increase in base salary, the Committee takes into account the
effect such an increase would have on the Named Executive Officer’s potential annual incentive, because compensation under
those awards is calculated based on a percentage of the individual’s base salary.
Based on the Committee’s
annual review and the strong performance of the Named Executive Officer team, the Committee increased base salary levels to generally
reflect the 50th percentile of the peer group effective January 1, 2020. The following chart shows the current annual base salary
rate in effect as of December 31 for each Named Executive Officer for 2019 and 2020.
| |
Base Salary at December 31,
2019 | | |
Base Salary at December 31,
2020 | |
Judy R. McReynolds | |
$ | 744,471 | | |
$ | 800,000 | |
Timothy D. Thorne | |
| 456,750 | | |
| 468,425 | |
David R. Cobb | |
| 420,027 | | |
| 430,500 | |
Michael E. Newcity | |
| 381,913 | | |
| 391,550 | |
James A. Ingram | |
| 374,423 | | |
| 383,350 | |
In April 2020, we implemented
a 15% base salary reduction for all Named Executive Officers in anticipation of expected longer-term declines in our business levels
and operating results due to COVID-19. Following an evaluation of our second quarter operating results, we reinstated the original
2020 base salary levels for the Named Executive Officers retroactive to July 1, 2020. We later repaid the 15% salary reduction
in November, following evaluation of our strong third quarter operating results.
Annual Cash Incentive Compensation
PERFORMANCE METRICS
The annual cash incentive for
2020 was based on the Company’s ROCE and operating income. As in prior years, the two performance metrics were equally weighted.
Operating income
is generally determined based on the operating income shown by the Company’s consolidated
financial statements, adjusted for nonrecurring or unusual items and other items set forth in the ArcBest Corporation Executive
Officer Incentive Compensation Plan. The use of operating income reinforces the Company’s emphasis on profitable growth.
Return on capital
employed, or ROCE, is generally calculated by dividing net income (adjusted for nonrecurring
or unusual items and other items set forth in the ArcBest Corporation Executive Officer Incentive Compensation Plan) by average
adjusted debt plus average equity for the applicable period. As discussed earlier, our ROCE goal is based on the historical average
ROCE of the S&P 500 companies over longer periods of time. The Committee and management believe that ROCE keeps participants
focused on the profitable use of Company resources, which increases the value of the Company to its stockholders. We use a historical
average ROCE of the S&P 500, typically over a period of at least ten years, so the performance target does not reflect short-term
market volatility.
ArcBest / 2021
PROXY STATEMENT |
29 |
TARGET AWARDS
Each Named Executive Officer’s
target annual incentive opportunity is expressed as a percentage of base salary. The following table shows the incentive targets
for 2020.
|
Annual Target Incentive
(% of Base Salary) |
Judy R. McReynolds |
100% |
Timothy D. Thorne |
70% |
David R. Cobb |
70% |
Michael E. Newcity |
65% |
James A. Ingram |
65% |
No changes were made to the annual incentive opportunity
for any Named Executive Officer for 2020.
PERFORMANCE GOALS
The following tables show the goals and associated
payouts for the two performance metrics utilized for the 2020 annual incentive.
* |
The payout earned for performance at levels between those indicated is calculated using straight-line
interpolation, except that no payout is earned for performance below the Threshold performance levels. |
PERFORMANCE RESULTS
Actual operating income achieved for 2020 as measured
under the annual plan was $149.2 million, greater than the maximum performance amount, resulting in a payout of 200% for the operating
income portion of the annual incentive. ROCE for the year was 15.4%, resulting in a payout of 195.6%. Combining the two payouts,
weighted 50% each, produced a total payout of 197.8% of the target incentive opportunity. Actual payouts for 2020 performance are
shown below:
| |
2020 Target Annual Incentive Opportunity | | |
2020 Actual Annual Incentive Plan Payout | |
Judy R. McReynolds | |
$ | 800,000 | | |
$ | 1,582,400 | |
Timothy D. Thorne | |
| 327,898 | | |
| 648,581 | |
David R. Cobb | |
| 301,350 | | |
| 596,070 | |
Michael E. Newcity | |
| 254,508 | | |
| 503,416 | |
James A. Ingram | |
| 249,177 | | |
| 492,873 | |
ArcBest / 2021
PROXY STATEMENT |
30 |
Long-Term Incentive Compensation
TARGET AWARDS
Our long-term compensation target
incentive opportunity consists of two components: (i) a three-year cash incentive opportunity, and (ii) a time-vested RSU award.
In prior years, the target opportunities were expressed as a percentage of base salary. Beginning in 2020, the target opportunity
for these components is expressed as a fixed dollar value to prevent escalation of long-term compensation targets as salaries increase.
The following table shows the targets for long-term incentive compensation opportunities awarded in 2020 for the 2020-2022 cash
incentive compensation plan and the 2020 RSU award.
| |
Total Long-Term Compensation Target Incentive Opportunity (Fixed Dollar Amount) | | |
2020-2022 C-LTIP Target Value | | |
2020 RSU Grant Value | |
Judy R. McReynolds | |
$ | 1,720,000 | | |
$ | 860,000 | | |
$ | 860,000 | |
Timothy D. Thorne | |
| 800,000 | | |
| 400,000 | | |
| 400,000 | |
David R. Cobb | |
| 650,000 | | |
| 325,000 | | |
| 325,000 | |
Michael E. Newcity | |
| 535,000 | | |
| 265,000 | | |
| 270,000 | |
James A. Ingram | |
| 540,000 | | |
| 270,000 | | |
| 270,000 | |
The value of the long-term target
incentive opportunity established for each Named Executive Officer was based, in large part, on the respective officers’
positions within the Company.
Because half of the target award
is delivered in the form of RSUs, the Committee also considers the number of shares available for grant, the number of previously
granted awards currently outstanding, the burn rate, and potential shareholder dilution.
LONG-TERM CASH INCENTIVE COMPENSATION
The Committee has awarded long-term
cash incentive opportunities since 2006. Over the past 17 years, we have observed that these awards, which are exclusively performance-based,
appropriately reward management and drive performance with respect to the Company’s key financial metrics. The three-year performance
cycle encourages a long-term perspective, while the fact that the payout opportunity is determined by relative TSR and ROCE incentivizes
sustainable value creation relative to our peers along with profitability and capital efficiency. The fact that these awards are
cash-based also mitigates the dilutive effect of solely offering long-term equity compensation. In February 2020, the Committee
granted a three-year cash incentive award for the performance period from January 1, 2020, through December 31, 2022, using the
same two metrics we have used in recent years: ROCE and relative TSR, each weighted 50%.
Relative TSR
rewards participants when the Company outperforms our peer group and directly aligns executives’
interests with shareholder value creation relative to our peers.
The payout opportunity for the
relative TSR component is based on the percentile rank of the Compounded Annual Growth Rate (“CAGR”) of our TSR relative
to our peer group over the three-year measurement period. For these purposes, we calculate TSR as the annualized rate of return
reflecting price appreciation between the beginning 60-day average share price (ending December 31 of the year immediately prior
to the beginning of the measurement period) and the ending 60-day average share price (ending December 31 of the final year of
the measurement period), adjusted for dividends paid and the compounding effect of reinvested dividends. CAGR converts the total
return into a value that indicates what the return was on an annual basis for the three-year period. For information on the performance
peer group for the relative TSR component of the 2020-2022 cash long-term incentive plan, refer to page 28.
ROCE for the
three-year performance period measures the efficient use of corporate assets to create
profitable growth and aligns executives’ interest with our profitability and appropriate employment of capital.
For the ROCE component, the three-year
average goal is based on historical averages for S&P 500 companies over longer periods of time, as discussed on page 28. ROCE
is generally calculated by dividing net income (adjusted for nonrecurring or unusual items and other items set forth in the ArcBest
Corporation Executive Officer Incentive Compensation Plan) by average adjusted debt plus average equity for the applicable period.
ArcBest / 2021
PROXY STATEMENT |
31 |
The tables below show the goals and associated payouts
for the two performance metrics utilized for the 2020-2022 long-term cash incentive plan. Payments for the 2020-2022 long-term
cash incentive plan, if any, will be made in early 2023.
Relative TSR | |
Payout Earned for Relative TSR (% of target earned)* | |
ROCE % Achieved | |
Payout Earned for ROCE (% of target earned)* |
<25th percentile | |
0% | |
<8% | |
0% |
25th percentile (threshold) | |
25% | |
8% (threshold) | |
50% |
50th percentile | |
100% | |
13% | |
100% |
≥75th percentile | |
200% | |
≥18% | |
300% |
* |
The payout earned for performance at levels
between those indicated is calculated using straight-line interpolation, except there is no payout for performance below the
threshold level. |
LONG-TERM EQUITY INCENTIVE COMPENSATION
The Company grants RSU awards
to help align the executives’ interests with those of our stockholders. In 2020, Named Executive Officers were granted time-vested
RSUs as shown in the table below.
Named Executive Officer | |
Target Award Value | | |
RSUs Granted in 2020* | |
Judy R. McReynolds | |
$ | 860,000 | | |
| 42,300 | |
Timothy D. Thorne | |
| 400,000 | | |
| 19,700 | |
David R. Cobb | |
| 325,000 | | |
| 16,000 | |
Michael E. Newcity | |
| 270,000 | | |
| 13,300 | |
James A. Ingram | |
| 270,000 | | |
| 13,300 | |
* |
The number of RSUs granted is based on the target award value
established by the Committee divided by the closing stock price of the Company’s common stock on the date of grant, and rounded
to the nearest 100 units. |
The Committee believes the award
of RSUs with time-based cliff vesting makes it easier for the Named Executive Officers to accumulate an equity interest in the
Company and comply with our Stock Ownership Policy, and also helps to retain key talent. RSUs awarded prior to 2018 are subject
to five-year cliff vesting. To more closely align our awards with peer group practices, the Committee established a four-year cliff
vesting schedule for RSUs granted beginning in 2018. Stock will be issued in settlement of the RSUs on the vesting date, or earlier
if the Named Executive Officer experiences a qualifying termination of employment. See “Outstanding Equity Awards at 2020
Fiscal Year-End” for additional information regarding these awards.
Cash Long-Term Incentive Awards for the 2018-2020
Performance Period
The performance period for the
2018-2020 long-term cash incentive compensation plan ended on December 31, 2020. The Company’s actual TSR percentile rank
was 39th and ROCE was 11.77%, resulting in an aggregate payout of 118.9% of the target incentive opportunity, as reflected in the
table below. The individual incentive targets were calculated using base salary during the performance period. The original performance
payout tables for the 2018-2020 awards can be found in our proxy statement for our 2019 Annual Meeting of Stockholders.
| |
2018-2020 Target Cash Long-Term Incentive Plan Opportunity | | |
2018-2020 Actual Cash Long-Term Incentive Plan Payout | |
Judy R. McReynolds | |
$ | 788,722 | | |
$ | 938,080 | |
Timothy D. Thorne | |
| 362,713 | | |
| 431,399 | |
David R. Cobb | |
| 306,388 | | |
| 364,407 | |
Michael E. Newcity | |
| 256,655 | | |
| 305,256 | |
James A. Ingram | |
| 260,819 | | |
| 310,209 | |
ArcBest / 2021
PROXY STATEMENT |
32 |
Compensation Risk Assessment
Management has evaluated our compensation policies
and practices, including our incentive plans, to determine whether any create risks that are reasonably likely to have a material
adverse effect on the Company. The primary responsibility for this evaluation is assigned to the Company’s Risk Management
Committee, which is made up of several members of senior management. Based on this evaluation, management concluded that the Company’s
compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. Management’s
evaluation, including the conclusions reached by the Risk Management Committee, was discussed with the Compensation Committee.
The information used by management and the Risk Management
Committee and provided to the Compensation Committee included a framework of potential risk factors for certain compensation plans
and identified how the Company’s existing processes and compensation programs mitigate those risks. Mitigating factors for
potential risks included:
■ |
a combination of short- and long-term compensation;
|
■ |
a combination of equity- and cash-based compensation; |
■ |
multiple performance metrics; |
■ |
relative performance metrics; |
■ |
robust financial control policies and audit practices; |
■ |
caps for potential amounts earned under annual and long-term
incentive plans; |
■ |
a robust clawback policy; |
■ |
a prohibition against hedging transactions or pledging of shares;
|
■ |
multi-year vesting periods for equity awards; |
■ |
stock ownership requirements for senior officers; |
■ |
retention of an independent compensation consultant to advise
the Compensation Committee; |
■ |
approval of performance criteria and performance results by the
Compensation Committee, which consists of only independent Directors; and |
■ |
review of peer groups by an independent compensation consultant
and the Compensation Committee. |
The most recent risk management
evaluation was provided to the Compensation Committee in January 2021. Based on the information provided and the Compensation Committee’s
knowledge of the Company’s compensation policies and practices, the Compensation Committee agreed with management’s
conclusion that the risks arising from our compensation plans and practices are not reasonably likely to have a material adverse
effect on the Company.
Other Compensation Policies
OWNERSHIP AND RETENTION POLICY
The Committee believes the Named
Executive Officers should maintain meaningful equity holdings in the Company to align their interests with those of the Company’s
other stockholders. The Board adopted a Stock Ownership Policy for Named Executive Officers that requires them to own stock with
a value equal to or greater than an established multiple of their base salary, as shown in the table below.
Position Title |
Stock Ownership Multiple |
ArcBest Chairman, President and CEO |
5 x base salary |
Other Named Executive Officers |
3 x base salary |
Participants are prohibited from selling any Company
stock (except to pay the taxes generated as a result of equity grant vesting) until the ownership requirement is attained. Stock
owned in a Company-sponsored retirement plan, RSUs, and stock owned outright all count toward the ownership requirement. The Committee
reviews ownership levels annually. As of the most recent review in April 2020, all Named Executive Officers have met or exceeded
their ownership multiple requirement.
The Nominating/Corporate Governance Committee administers
the Stock Ownership Policy and considers changes related to employees as recommended by the Committee. The Nominating/Corporate
Governance Committee reserves the right to amend or terminate this policy at any time or waive the restrictions for any individual
in its sole discretion.
Any shares issued in the future upon exercise of a
stock option or stock appreciation right (should any be granted under the Ownership Incentive Plan) may not be sold before the
earlier of (i) twelve months following the date of exercise and (ii) the date of termination of the applicable employee’s
employment.
EQUITY AWARD PRACTICES
The Company’s policy for granting equity awards
states:
■ |
the Compensation Committee is responsible for granting
equity-based compensation for all employees; |
■ |
the award dates for each grant are five business days following
the Company’s applicable quarterly earnings release, unless a different date is approved by the Board; |
■ |
the exercise price or value of a grant is determined by reference
to the closing price of the Company’s common stock on the specified award date; |
■ |
the number of shares/units awarded will be based on a fixed dollar
value for each participant unless otherwise approved by the Board; and |
■ |
any award that does not conform to these policy requirements
must be approved by the Board. |
ArcBest / 2021
PROXY STATEMENT |
33 |
CLAWBACKS
The Committee has implemented
a policy for the “clawback” of any bonus or incentive compensation awarded to any executive officer, including a Named
Executive Officer, under certain circumstances. The Board amended the policy in January 2020 to broaden the scope of events that
may trigger a clawback. Under the terms of the revised policy, the Committee may require reimbursement of any cash, equity or equity-based
award or payment made under any incentive plan to an executive officer in the event of:
■ |
a material restatement of the Company’s financial
statements due to non-compliance with any financial reporting requirement under applicable securities laws, regardless of
the existence of misconduct or fault; |
■ |
an overpayment as the result of an error, including errors in
determination of performance metric results or in the calculation of an officer’s covered compensation; or |
■ |
an Act of Misconduct (as such term is defined in the clawback
policy) by the officer. |
ANTI-HEDGING AND PLEDGING POLICIES
All Company officers, including
Named Executive Officers, and certain other employees, as well as non-employee Directors, are subject to the Insider Trading Policy,
which prohibits certain transactions in the Company’s securities, including the purchase or sale of puts, calls, options
or other derivative securities based on the Company’s securities. The Insider Trading Agreement also prohibits monetization
transactions, such as forward sale contracts (in which a stockholder continues to own the underlying security without having all
the risks or rewards of ownership, executes a short-sale of Company securities, or “sells against the box”—failing
to deliver sold securities), as well as any other hedging or pledging transaction involving the Company’s securities. This
policy does not include ArcBest stock options exercised in accordance with the terms of the Company’s equity plan. The Company
does not have any outstanding stock option awards.
Retirement and Other Benefits
The Named Executive Officers
are eligible to participate in retirement and benefit programs as described below. The Committee generally reviews the overall
cost to the Company of the various programs on an annual basis or when changes are proposed. The Committee believes the benefits
provided by these programs continue to be important factors in attracting and retaining the overall officer group, including the
Named Executive Officers.
Prior to 2009, the Company provided
Named Executive Officers with the predominant portion of their long-term compensation through post-employment payments under the
Supplemental Benefit Plan (the “SBP”) and Deferred Salary Agreements (“DSA”) described on page 43. All
benefits under these plans have been frozen, and officers now receive a significant portion of their long-term compensation through
the long-term incentive cash and equity compensation previously described. Ms. McReynolds is the only Named Executive Officer with
a frozen SBP or DSA benefit. The other Named Executive Officers were promoted or hired after the freeze and therefore are not participants
in those plans.
Following are the various benefit
programs in which the Named Executive Officers have either active or frozen participation.
ACTIVE PLANS
401(k) and DC Retirement Plan
The Company maintains the ArcBest
401(k) and DC Retirement Plan for eligible non-contractual employees. The Named Executive Officers can participate in this plan
on the same basis as all other eligible employees. The Company matches 50% of each employee’s contributions up to a maximum
of 6% of the employee’s eligible earnings subject to the Internal Revenue Service (“IRS”) annual compensation
limit.
The Company also makes Discretionary
Defined Contributions under the 401(k) and DC Retirement Plan account, which are determined annually based on the Company’s
operating results. The amount of the Discretionary Defined Contribution is based on a percentage of annual eligible compensation
(as defined under the plan).
Health and Welfare Plans
The Company provides medical,
dental, vision, life insurance and disability benefits to all eligible non-contractual employees. The Named Executive Officers
can participate in these benefit plans on the same basis as all other eligible non-contractual employees.
Officer Life Insurance
Corporate officers and certain
other subsidiary officers, including the Named Executive Officers, are provided with life insurance coverage of $1 million in the
event they suffer accidental death while traveling on Company business.
Post-Employment Supplemental Medical Policy (“Executive
Medical Policy”)
Corporate officers and certain
other subsidiary officers, including the Named Executive Officers, and their eligible dependents have lifetime health coverage
under the Company’s Executive Medical Policy following their termination of employment after age 55 with 10 years of service.
The health coverage is provided through a fully insured third party-provided health plan. Eligible retired officers from age 55
to 60 pay a premium to the Company, equivalent to the then-current COBRA rate applicable to qualifying former employees. From age
60 to 65, a retired officer is required to reimburse the Company an amount equivalent to $250 per individual covered per month,
up to a maximum of $500 per month. For retired officers age 65 and over, reduced premiums are charged by the Company for continued
retiree coverage. Participation in this plan was frozen in 2017. All of our current Named Executive Officers are eligible participants.
The Executive Medical Policy
provides that coverage will be forfeited if the officer becomes an employee, consultant or director of, or has an ownership interest
in, any competitor of the Company.
ArcBest / 2021
PROXY STATEMENT |
34 |
FROZEN PLANS
Supplemental Benefit Plan
Prior to 2010, the Company maintained
a noncontributory, unfunded supplemental pension benefit plan (“SBP”) that supplemented benefits under the Company’s
legacy Pension Plan. Under the SBP, the Company paid sums in addition to amounts payable under the Pension Plan to eligible officers,
including eligible Named Executive Officers. The SBP has been frozen since December 31, 2009. Ms. McReynolds has a frozen benefit
under the SBP. See “2020 Pension Benefits” for more information.
Deferred Salary Agreements
The Company and ABF Freight have
unfunded, noncontributory DSAs with certain of their officers. No Named Executive Officers are active participants in a DSA, but
Ms. McReynolds has a frozen benefit under a DSA. See “2020 Pension Benefits” for more information.
PERQUISITES
Perquisites provided by the Company
are generally limited to situations where there is some related business benefit to the Company, such as personal travel cost associated
with spousal attendance at Company or industry events. See the “Summary Compensation Table” for a listing of the reportable
perquisites for the Named Executive Officers.
Employment Agreements and Change in Control
Provisions
None of our Named Executive Officers
is party to an employment agreement with the Company. However, the Named Executive Officers do participate in the 2012 Change in
Control Plan for certain senior officers of the Company. The Committee believes this plan serves the best interests of our stockholders
since it is designed to help retain executives during uncertain times leading up to and immediately following a change in control.
By providing fair compensation in the event of termination following a change in control, the plan is designed to allow the executives
to reasonably evaluate potential actions without concern over how it may impact them financially.
The benefits under the 2012 Change
in Control Plan are intended to provide the officer participants with a reasonable severance package that is based on the value
the officers have created and is realized by the Company’s stockholders in the event of a change in control. The Company
does not gross up for taxes a Named Executive Officer may owe on change in control benefits, including any excise taxes under IRC
Section 4999. Under the terms of the 2012 Change in Control Plan, a best-net calculation will be performed to determine whether
change in control benefits due to the Named Executive Officers should be reduced (so no excise tax will be imposed) or should be
paid in full (with any resulting excise taxes to be paid in full by the Named Executive Officer). See “Potential Payments
upon Termination or Change in Control” for additional information regarding the provisions of the 2012 Change in Control
Plan.
Tax Considerations
Deductibility of Executive Compensation
Section 162(m) of the IRC limits
the tax deductibility of annual compensation paid to certain executives to $1 million. As a result, the Company will not receive
a federal income tax deduction for any compensation paid to its Named Executive Officers in excess of $1 million except to the
extent awards are “grandfathered” for purposes of the “performance-based” exception. The Committee believes
that shareholder interests are best served by not restricting its flexibility in structuring compensation programs, even if those
programs result in non-deductible compensation expenses.
IRC Section 280G applies to payments
made to executives of a company in connection with a change in control and prohibits the deduction of any “excess parachute
payment.” Benefits payable under the 2012 Change in Control Plan, as well as accelerated vesting of equity awards and annual
and long-term cash incentives, could result in “excess parachute payments” that are not deductible by the Company.
For more information regarding amounts payable and benefits available upon the occurrence of certain changes in control, see “Executive
Compensation – Potential Payments upon Termination or Change in Control.”
Non-Qualified Deferred Compensation
The Company designs and operates its nonqualified
deferred compensation arrangements in a manner that is intended to be exempt or compliant with Section 409A of the IRC and the
final regulations issued thereunder.
ArcBest / 2021
PROXY STATEMENT |
35 |
Compensation Committee Report
The Compensation Committee has reviewed and discussed
the Compensation Discussion & Analysis with management, and based on the review and discussions, the Compensation Committee
recommended to the Board that it be included in the Company’s 2020 Annual Report and the Company’s 2021 Proxy Statement.
|
Committee Members |
|
|
Stephen E. Gorman, Chair
Eduardo F. Conrado
Kathleen D. McElligott
Craig E. Philip |
|
Compensation Committee Interlocks and Insider Participation
None of the Compensation Committee
members is an officer or employee or former officer or employee of the Company. No executive officer of the Company serves as a
member of the board of directors of any other entity, or the compensation committee of any other entity, that has one or more executive
officers serving as a member of the Company’s Board or Compensation Committee. Messrs. Gorman and Conrado, Dr. Philip and
Ms. McElligott served on the Compensation Committee in 2020.
Ms. McElligott, a member of the
Company’s Compensation Committee since February 4, 2020, was also the Executive Vice President, Chief Information Officer
and Chief Technology Officer for McKesson prior to her retirement in February 2020. In January 2020 through February 3, 2020, McKesson
made ordinary course of business payments to one or more ArcBest subsidiaries for freight services in the aggregate amount of $270,621.
ArcBest / 2021
PROXY STATEMENT |
36 |
Summary Compensation Table
The following table sets
forth compensation paid for the years indicated for our 2020 Named Executive Officers.
Name
and
Principal Position |
Year |
|
Salary
($) |
|
Stock
Awards
($)(1) |
|
Non-Equity
Incentive Plan
Compensation
($)(2) |
|
Change
in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings
($)(3) |
|
All
Other
Compensation
($)(4) |
|
Total
($) |
Judy
R. McReynolds
ArcBest Chairman, President
and CEO |
2020 |
|
|
$ 800,000 |
|
|
$ 806,238 |
|
|
$ 2,520,480 |
|
|
$ 27,653 |
|
|
$ 20,237 |
|
|
$ 4,174,608 |
2019 |
|
|
744,471 |
|
|
748,773 |
|
|
831,689 |
|
|
33,559 |
|
|
65,222 |
|
|
2,423,714 |
2018 |
|
|
709,020 |
|
|
726,002 |
|
|
2,584,736 |
|
|
6,531 |
|
|
49,089 |
|
|
4,075,378 |
Timothy
D. Thorne
ABF Freight President |
2020 |
|
|
468,425 |
|
|
375,482 |
|
|
1,079,980 |
|
|
- |
|
|
20,252 |
|
|
1,944,139 |
2019 |
|
|
456,750 |
|
|
373,005 |
|
|
379,316 |
|
|
- |
|
|
24,838 |
|
|
1,233,909 |
2018 |
|
|
435,000 |
|
|
338,504 |
|
|
1,145,746 |
|
|
368 |
|
|
39,434 |
|
|
1,959,052 |
David
R. Cobb
ArcBest CFO |
2020 |
|
|
430,500 |
|
|
304,960 |
|
|
960,477 |
|
|
- |
|
|
20,130 |
|
|
1,716,067 |
2019 |
|
|
420,027 |
|
|
301,167 |
|
|
354,589 |
|
|
- |
|
|
18,380 |
|
|
1,094,163 |
2018 |
|
|
375,024 |
|
|
271,694 |
|
|
943,725 |
|
|
- |
|
|
20,924 |
|
|
1,611,367 |
Michael
E. Newcity ArcBest
Senior Vice President–CIO and ArcBest Technologies
President |
2020 |
|
|
391,550 |
|
|
253,498 |
|
|
808,672 |
|
|
- |
|
|
20,130 |
|
|
1,473,850 |
2019 |
|
|
381,913 |
|
|
245,907 |
|
|
302,902 |
|
|
- |
|
|
18,380 |
|
|
949,102 |
2018 |
|
|
367,224 |
|
|
240,516 |
|
|
911,130 |
|
|
- |
|
|
20,681 |
|
|
1,539,551 |
James
A. Ingram
ArcBest COO, Asset-Light Logistics |
2020 |
|
|
383,350 |
|
|
253,498 |
|
|
803,082 |
|
|
- |
|
|
20,245 |
|
|
1,460,175 |
2019 |
|
|
374,423 |
|
|
251,433 |
|
|
307,574 |
|
|
- |
|
|
21,620 |
|
|
955,050 |
2018 |
|
|
360,022 |
|
|
244,970 |
|
|
918,169 |
|
|
- |
|
|
36,821 |
|
|
1,559,982 |
(1) |
The amounts reflect
the aggregate grant date fair value of RSU awards granted to the Named Executive Officers on May 12, 2020, under the
Ownership Incentive Plan, computed in accordance with FASB ASC Topic 718, determined without regard to estimated forfeitures
and adjusted for present value of dividends (to reflect that dividend equivalents are not paid with respect to RSU awards).
The actual value realized by the officer as a result of these awards will vary based on a number of factors, including the
Company’s performance, stock price fluctuations and applicable vesting. No dividends or dividend equivalents are paid
to Named Executive Officers on RSUs granted after December 31, 2014. See Note K to the consolidated financial statements in
the Company’s 2020 Annual Report for additional detail regarding share-based compensation. |
|
|
(2) |
Reflects cash compensation earned during 2020, paid in January 2021, from the annual incentive plan (“AIP”), and cash compensation earned from the 2018-2020 cash long-term incentive plan (“C-LTIP”), paid in January 2021. See the “2020 Grants of Plan-Based Awards” table and the CD&A for additional information on the 2020 AIP and the C-LTIP. |
|
|
|
|
McReynolds |
|
Thorne |
|
Cobb |
|
Newcity |
|
Ingram |
Annual Incentive Plan |
$ |
1,582,400 |
$ |
648,581 |
$ |
596,070 |
$ |
503,416 |
$ |
492,873 |
C-LTIP |
|
938,080 |
|
431,399 |
|
364,407 |
|
305,256 |
|
310,209 |
Total |
$ |
2,520,480 |
$ |
1,079,980 |
$ |
960,477 |
$ |
808,672 |
$ |
803,082 |
|
|
(3) |
Reflects the increase in actuarial present value during 2020 of each Named Executive Officer’s accumulated benefit under the Company’s legacy SBP and DSAs. The values reported are determined using the same assumptions as used by the Company for financial reporting purposes for the Company’s SBP and DSAs. See “2020 Pension Benefits” for additional information on these plans. The 2020 change in actuarial present value by plan is as follows: |
|
|
|
|
McReynolds |
|
Thorne |
|
Cobb |
|
Newcity |
|
Ingram |
Supplemental
Benefit Plan |
$ |
19,707 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
Deferred
Salary Agreement |
|
7,946 |
|
- |
|
- |
|
- |
|
- |
Total
Increase |
$ |
27,653 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
Earnings with respect
to outstanding vested RSUs are not above market and are not included in this column. See “2020 Non-Qualified Deferred Compensation”
for additional information on outstanding vested RSUs.
ArcBest
/ 2021
PROXY STATEMENT |
37 |
(4) |
All Other Compensation for 2020 consists of the following: |
|
|
|
|
McReynolds |
|
Thorne |
|
Cobb |
|
Newcity |
|
Ingram |
401(k) Company Match |
$ |
8,550 |
$ |
8,550 |
$ |
8,550 |
$ |
8,550 |
$ |
8,550 |
DC Contribution |
|
11,400 |
|
11,400 |
|
11,400 |
|
11,400 |
|
11,400 |
24-Hour Accidental Death Premiums |
|
180 |
|
180 |
|
180 |
|
180 |
|
180 |
Perquisites(i) |
|
- |
|
- |
|
- |
|
- |
|
- |
Gross-Ups(ii) |
|
107 |
|
122 |
|
- |
|
- |
|
115 |
Total
Other Compensation |
$ |
20,237 |
$ |
20,252 |
$ |
20,130 |
$ |
20,130 |
$ |
20,245 |
|
|
|
|
(i) |
No Named Executive Officer received perquisites in excess of $10,000 during 2020, and therefore no value is reported here. |
|
|
|
|
(ii) |
Tax gross-ups for Ms. McReynolds and Messrs. Thorne and Ingram are for gifts related to the Company’s annual President’s Club event. |
ArcBest
/ 2021
PROXY STATEMENT |
38 |
2020 Grants of Plan-Based Awards
The following table provides
information related to non-equity and equity-based awards made to the Named Executive Officers for 2020:
|
|
|
|
|
|
|
Estimated
Future Payouts
Under Non-Equity Incentive Plan Awards(2,3) |
|
All Other Stock Awards |
Name |
Award
Type(1) |
|
Approval
Date(2,3,4) |
|
Grant
Date |
|
Threshold
($) |
|
Target
($) |
|
Maximum
($) |
|
Number of
Shares of
Stock or
Units(#) |
|
Grant Date
Fair Value of
Stock
Awards
($)(4) |
Judy R. McReynolds |
AIP |
|
02/21/2020 |
|
02/21/2020 |
|
$ |
300,000 |
|
$ |
800,000 |
|
$ |
2,000,000 |
|
|
|
|
|
|
RSU |
|
04/30/2020 |
|
05/12/2020 |
|
|
|
|
|
|
|
|
|
|
42,300 |
|
$ |
806,238 |
|
C-LTIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
322,500 |
|
|
860,000 |
|
|
2,150,000 |
|
|
|
|
|
Timothy D. Thorne |
AIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
122,962 |
|
|
327,898 |
|
|
819,744 |
|
|
|
|
|
|
RSU |
|
04/30/2020 |
|
05/12/2020 |
|
|
|
|
|
|
|
|
|
|
19,700 |
|
|
375,482 |
|
C-LTIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
150,000 |
|
|
400,000 |
|
|
1,000,000 |
|
|
|
|
|
David R. Cobb |
AIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
113,006 |
|
|
301,350 |
|
|
753,375 |
|
|
|
|
|
|
RSU |
|
04/30/2020 |
|
05/12/2020 |
|
|
|
|
|
|
|
|
|
|
16,000 |
|
|
304,960 |
|
C-LTIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
121,875 |
|
|
325,000 |
|
|
812,500 |
|
|
|
|
|
Michael E. Newcity |
AIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
95,440 |
|
|
254,508 |
|
|
636,269 |
|
|
|
|
|
|
RSU |
|
04/30/2020 |
|
05/12/2020 |
|
|
|
|
|
|
|
|
|
|
13,300 |
|
|
253,498 |
|
C-LTIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
99,375 |
|
|
265,000 |
|
|
662,500 |
|
|
|
|
|
James A. Ingram |
AIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
93,442 |
|
|
249,177 |
|
|
622,944 |
|
|
|
|
|
|
RSU |
|
04/30/2020 |
|
05/12/2020 |
|
|
|
|
|
|
|
|
|
|
13,300 |
|
|
253,498 |
|
C-LTIP |
|
02/21/2020 |
|
02/21/2020 |
|
|
101,250 |
|
|
270,000 |
|
|
675,000 |
|
|
|
|
|
(1) |
Award Types: |
|
AIP = annual incentive compensation plan |
|
RSU = restricted stock units granted under the Ownership Incentive Plan |
|
C-LTIP = three-year cash long-term incentive compensation plan (2020-2022 performance period) |
(2) |
The performance criteria for the 2020 AIP award were approved by the Committee on February 21, 2020. Amounts shown in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column with respect to the 2020 AIP award represent the threshold, target and maximum payment levels of the 2020 AIP. The target amount reflected is calculated based on base salary earned in 2020. Awards under the annual incentive plan are described in greater detail in the narrative following this table and in “Compensation Discussion & Analysis – Components of Compensation – Annual Cash Incentive Compensation.” The actual amount of the AIP award paid for 2020 performance with respect to each Named Executive Officer is set forth in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” |
(3) |
The performance criteria for the 2020-2022 C-LTIP award were approved by the Committee on February 21, 2020. Amounts shown in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column represent the threshold, target and maximum payment levels with respect to C-LTIP awards granted in 2020. Awards under the cash long-term incentive compensation plan are described in greater detail in the narrative following this table and in “Compensation Discussion & Analysis –Components of Compensation – Long-Term Cash Incentive Compensation.” |
(4) |
The RSU award was approved by the Committee on April 30, 2020. As provided in the equity award policy, the grant date for the award was five business days following the quarter’s earnings release. Value shown reflects the grant date fair value ($19.06 per share) of RSU awards made under the Ownership Incentive Plan on May 12, 2020, computed in accordance with FASB ASC Topic 718, determined without regard to forfeitures and adjusted for present value of dividends (which are not payable with respect to RSUs granted to Named Executive Officers). |
ArcBest
/ 2021
PROXY STATEMENT |
39 |
Narrative Disclosure to Summary Compensation
Table and Grants of Plan-Based Awards Table
Non-Equity Incentive Compensation
Annual Incentive Compensation Plan
Annual incentive compensation
plan (“AIP”) awards earned are generally paid as soon as administratively practicable following the date the awards
are calculated and approved, but no later than March 15 of the year following the year to which the performance goals relate. Participants
generally must be employed on the payment date in order to receive payment of their earned AIP awards. However, if a participant
terminates during the plan year due to early retirement (age 55 with 10 years of service), normal retirement (age 65), death or
disability, such participant remains eligible to receive a prorated AIP award, provided, in the case of early or normal retirement,
the individual has been a participant for at least 90 days during the plan year. Upon any other termination, a participant’s
award will be forfeited, unless the Committee, in its discretion, decides that a prorated award should be paid. Payment of a prorated
incentive, if any, is made at the end of the measurement period and based upon actual performance results. The 2012 Change in Control
Plan provides for immediate payment of an earned award upon a qualified termination following a change in control, except where
payment must be delayed six months for certain key employees as required by Section 409A of the Internal Revenue Code (“IRC”).
Target incentive levels and information on performance goals are set forth in “Compensation Discussion & Analysis –
Components of Compensation – Annual Cash Incentive Compensation.” Additional information regarding the treatment of
these awards upon termination or a change in control is provided in “Potential Payments upon Termination or Change in Control.”
Cash Long-Term Incentive Compensation Plan
Generally, participants
in the cash long-term incentive compensation plan (“C-LTIP”) must remain employed through the end of the measurement
period in order to receive payment of any earned award. However, if a participant has at least 12 months of employment during a
measurement period, such participant is eligible for a prorated benefit upon early retirement (age 55 with 10 years of service),
normal retirement (age 65), death or disability, with payment determined based on base salary received during the measurement period
(or target value for awards starting in 2020), and payment, if any, is made at the end of the measurement period based upon actual
performance results. Additional detail regarding the 2020 awards granted under the C-LTIP can be found in “Compensation Discussion & Analysis – Components of Compensation – Long-Term Cash Incentive Compensation.”
Stock Awards under the Ownership Incentive
Plan
RSUs were granted under
the Company’s Ownership Incentive Plan on May 12, 2020. Vesting and settlement of RSUs generally occurs on the earlier of
(i) (a) the fifth anniversary of the award date for RSUs awarded prior to 2018, (b) the fourth anniversary of the award date for
RSUs awarded in 2018 or later, or (ii) the date the participant experiences a qualifying termination from employment with the Company.
Upon a participant’s eligibility for normal retirement (age 65) or termination due to death or disability, the RSUs will
fully vest. If termination of the participant occurs for good reason or without cause within 24 months of a change in control of
the Company (as defined in the 2012 Change in Control Plan), the participant’s outstanding RSUs awarded become fully vested
and will be distributed as soon as administratively possible, except where payment must be delayed for six months for certain key
employees as required by Section 409A of the IRC. Upon early retirement eligibility (age 55 with 10 years of service), if a minimum
of 12 months have elapsed since the award date, the participant becomes vested in a pro rata number of RSUs based on the number
of whole months since the award date. The remaining shares subject to the RSUs will continue to vest with respect to 1/60 of the
total number of shares each month for awards prior to 2018, and 1/48 of the total number of shares each month for awards in 2018
or later. In each case, pro rata vesting will continue through the earlier of (i) participant’s normal retirement eligibility
date, (ii) the participant’s termination from employment, or (iii) the end of the vesting period. A participant does not have to
terminate employment in order to vest upon normal or early retirement eligibility, but no RSUs will be distributed until actual
termination or, if earlier, the applicable anniversary of the award date (the fifth anniversary for awards prior to 2018, and the
fourth anniversary for awards in 2018 or later). All RSUs granted following a participant reaching normal retirement eligibility
will be vested in full upon grant. No dividends are paid to Named Executive Officers on RSUs granted after December 31, 2014.
ArcBest
/ 2021
PROXY STATEMENT |
40 |
Outstanding Equity Awards at 2020 Year-End
The following table provides
information related to any equity-based awards outstanding for the Named Executive Officers, as of December 31, 2020:
Stock
Awards |
Name |
Grant
Date |
Number
of Shares or Units of
Stock that
Have Not Vested
(#)(1) |
Market
Value of Shares or Units of
Stock that
Have Not Vested
($)(2) |
Judy
R. McReynolds |
05/06/2016(3) |
1,980 |
$ |
84,487 |
|
05/12/2017(4) |
7,920 |
|
337,946 |
|
08/01/2018(5) |
6,452 |
|
275,307 |
|
05/09/2019(6) |
15,808 |
|
674,527 |
|
05/12/2020(7) |
42,300 |
|
1,804,941 |
Timothy
D. Thorne |
05/06/2016(3) |
933 |
$ |
39,811 |
|
05/12/2017(4) |
3,733 |
|
159,287 |
|
08/01/2018(5) |
3,008 |
|
128,351 |
|
05/09/2019(6) |
7,875 |
|
336,026 |
|
05/12/2020(7) |
19,700 |
|
840,599 |
David
R. Cobb |
05/06/2016(3) |
9,800 |
$ |
418,166 |
|
05/12/2017(4) |
12,900 |
|
550,443 |
|
08/01/2018(5) |
6,100 |
|
260,287 |
|
05/09/2019(6) |
10,900 |
|
465,103 |
|
05/12/2020(7) |
16,000 |
|
682,720 |
Michael
E. Newcity |
05/06/2016(3) |
11,500 |
$ |
490,705 |
|
05/12/2017(4) |
11,500 |
|
490,705 |
|
08/01/2018(5) |
5,400 |
|
230,418 |
|
05/09/2019(6) |
8,900 |
|
379,763 |
|
05/12/2020(7) |
13,300 |
|
567,511 |
James
A. Ingram |
05/06/2016(3) |
12,400 |
$ |
529,108 |
|
05/12/2017(4) |
12,400 |
|
529,108 |
|
08/01/2018(5) |
5,500 |
|
234,685 |
|
05/09/2019(6) |
9,100 |
|
388,297 |
|
05/12/2020(7) |
13,300 |
|
567,511 |
(1) |
Vesting
and settlement of RSUs generally occurs on the earlier of (i)(a) the fifth anniversary of the award date for RSUs awarded
prior to 2018, (b) the fourth anniversary of the award date for RSUs awarded in 2018 or later, or (ii) the date the participant
experiences a qualifying termination from employment with the Company. Upon a participant’s eligibility for normal retirement
(age 65) or termination due to death or disability, RSUs will vest in full. If termination of the participant occurs for good
reason or without cause within 24 months of a change in control of the Company (as defined in the 2012 Change in Control Plan),
the participant’s outstanding RSUs become fully vested and will be distributed as soon as administratively possible,
except where payment must be delayed for six months for certain key employees as required by Section 409A of the IRC. Upon
early retirement eligibility (age 55 with 10 years of service), if a minimum of 12 months have elapsed since the award date,
the participant becomes vested in a pro rata number of RSUs based on the number of whole months since the award date. From
that 12-month anniversary forward, employees, including Named Executive Officers, who have attained the early retirement age
and service requirements but have not terminated employment, continue to vest in 1/60 of their RSU awards each month for awards
prior to 2018, and 1/48 of their RSU awards each month for awards in 2018 or later. Ms. McReynolds and Mr. Thorne have attained
early retirement eligibility in accordance with the terms of the RSU awards. |
(2) |
Reflects
the value of unvested RSUs as of December 31, 2020, awarded under the ArcBest Corporation Ownership Incentive Plan, as amended
and restated, based on the closing market price of the Common Stock of $42.67 on December 31, 2020. |
(3) |
These
RSU awards fully vest on May 6, 2021, the fifth anniversary of their grant date. |
(4) |
These
RSU awards fully vest on May 12, 2022, the fifth anniversary of their grant date. |
(5) |
These
RSU awards fully vest on August 1, 2022, the fourth anniversary of their grant date. |
(6) |
These
RSU awards fully vest on May 9, 2023, the fourth anniversary of their grant date. |
(7) |
These
RSU awards fully vest on May 12, 2024, the fourth anniversary of their grant date. |
ArcBest
/ 2021
PROXY STATEMENT |
41 |
2020 Option Exercises and Stock Vested
The following table provides
information related to RSUs that vested during 2020 for the Named Executive Officers. None of our Named Executive Officers held
stock option awards during 2020.
|
Stock
Awards |
Name |
Number
of Shares
Acquired on Vesting
(#)(1,2) |
|
|
|
Value
Realized
on Vesting ($)(3) |
|
Judy
R. McReynolds |
28,267 |
|
|
|
|
$ 765,216 |
|
Timothy
D. Thorne |
13,605 |
|
|
|
|
367,795 |
|
David
R. Cobb |
5,100 |
|
|
|
|
107,151 |
|
Michael
E. Newcity |
5,900 |
|
|
|
|
123,959 |
|
James
A. Ingram |
6,400 |
|
|
|
|
134,464 |
|
(1) |
The
2015 RSU awards fully vested and settled on May 11, 2020. All of the shares issued for the 2015 RSU award at final vesting
are free of vesting and ownership restrictions. All shares owned by executive officers are subject to company-imposed restrictions
that limit trading during periods when officers have material nonpublic information as well as the Company’s policy
related to minimum stock ownership for executive officers, as discussed in the Compensation Discussion & Analysis. |
(2) |
The
RSUs held by Ms. McReynolds and Mr. Thorne were subject to pro rata vesting in 2020 because each of these executive officers
had attained early retirement eligibility under the terms of the RSU awards. Awards that vest on a pro rata basis due to attainment
of early retirement eligibility are not settled until the earlier of the original vesting date (five years from the grant
date for awards prior to 2018, and four years from the grant date for awards in 2018 or later) or the date of a qualifying
termination of employment. As such, while the value of all pro rata vesting in 2020 is reflected in the Option Exercises and
Stock Vested table above, Ms. McReynolds and Mr. Thorne have not yet received the shares that vested in 2020 based on qualification
for early retirement under awards that did not fully vest in 2020. |
|
The
pro rata vesting of Ms. McReynolds’ and Mr. Thorne’s RSUs is outlined in the table below. Of Ms. McReynolds’
28,267 vested shares in 2020, 1,020 shares were subject to final vesting and settlement of the 2015 RSU award. Of Mr. Thorne’s
13,605 vested shares in 2020, 480 shares were subject to final vesting and settlement of the 2015 RSU award. The values of
the vested and settled RSUs and the vested but unsettled RSUs, respectively, are reported in the 2020 “Nonqualified
Deferred Compensation Table.” |
|
|
|
McReynolds
Vested in 2020 |
Thorne
Vested in 2020 |
2015 RSU Award (settled) |
1,020 |
480 |
2016 RSU Award |
5,940 |
2,800 |
2017 RSU Award |
5,940 |
2,800 |
2018 RSU Award |
4,075 |
1,900 |
2019 RSU Award |
11,292 |
5,625 |
2020 RSU Award |
- |
- |
Total vesting in 2020 |
28,267 |
13,605 |
|
|
(3) |
Value
realized on RSU vesting is equal to the closing market price of the Common Stock on the date of vesting multiplied by the
number of shares that vest on that date. |
ArcBest
/ 2021
PROXY STATEMENT |
42 |
2020 Pension Benefits
The following table illustrates
the present value of the accumulated benefit as of December 31, 2020, under the SBP and DSA for the Named Executive Officers.
Name |
Plan Name |
Number of Years
Credited
Service
(#) |
Present
Value of
Accumulated
Benefit
($)(3) |
Payments
During Last Fiscal Year
($) |
Judy R. McReynolds(1) |
Supplemental
Benefit Plan |
10.7 |
|
$ 415,211 |
$
- |
|
Deferred
Salary Agreement |
10.7 |
|
140,387 |
- |
Timothy D. Thorne(2) |
|
- |
|
- |
- |
David R. Cobb(2) |
|
- |
|
- |
- |
Michael E. Newcity(2) |
|
- |
|
- |
- |
James
A. Ingram(2) |
|
- |
|
- |
- |
(1) |
Ms.
McReynolds elected to cease participation in the SBP and DSA, and the benefits were frozen effective January 31, 2008. Number
of Years of Credited Service for the SBP and DSA was frozen based on her service as of the January 31, 2008 freeze date. |
(2) |
Messrs.
Thorne, Newcity and Ingram were promoted to eligible roles after the SBP and DSA were closed to new entrants. Mr. Cobb was
hired after the SBP and DSA were closed to new entrants. As such, Messrs. Thorne, Cobb, Newcity and Ingram are not eligible
to participate in the SBP or DSA. |
(3) |
The
actuarial present value of the accumulated benefits disclosed above is determined using the same assumptions as used by the
Company for financial reporting purposes except the payment date is assumed to be age 60 for the SBP rather than age 65. Such
assumptions are discussed in Note I to the Company’s consolidated financial statements in the 2020 Annual Report. The
earliest date a benefit can be paid with no benefit reduction under the SBP is age 60. The payment date is assumed to be age
65 for the DSA, which is the earliest date a benefit can be paid with no benefit reduction. |
Supplemental Benefit Plan (frozen)
The SBP supplements benefits
under the Company’s non-contractual defined benefit pension plan (“Pension Plan”), which was terminated effective December
31, 2017 and fully liquidated as of December 31, 2019. The SBP was designed to replace benefit reductions (i) from various IRC
limits and (ii) from reductions in the rate of benefit accruals from the Company’s 1985 pension formula. The SBP takes into
account all eligible earnings under the Pension Plan without regard to IRC limitations. Participation in the SBP was generally
limited to officers of the Company or ABF Freight, including certain Named Executive Officers. No new participants were permitted
in the SBP after December 2005, and caps have been placed on the maximum benefits payable. Benefit accruals in the SBP were frozen
for all remaining participants effective December 31, 2009.
Benefits under the SBP were
calculated as an annuity and then converted to a lump sum. The Pension Plan benefit was then subtracted from the resulting lump
sum to determine the SBP benefit.
The annuity formula for
the ArcBest Supplemental Benefit Plan is:
1.0% x $400 x years of service + 2.0% x (FAP–$400) x years of service
Early retirement
eligible participants (age 55 with 10 years of service) are subject to a benefit reduction of 6% per year for each year he or she
retires prior to age 60.
Upon termination of employment,
benefits are paid in a lump sum as soon as administratively feasible. Certain benefits must be delayed for six months for key employees
as required by Section 409A of the IRC. Benefits are paid from the general assets of the Company.
Deferred Salary Agreements (frozen)
The Company and ABF Freight
have unfunded, noncontributory DSAs with certain of their officers, including certain Named Executive Officers. No DSA has been
entered into since December 2005, and neither the Company nor ABF Freight intends to enter into these agreements in the future.
For the existing DSAs, upon normal retirement (age 65), death or disability as defined in “Potential Payments upon Termination
or Change in Control,” the DSA benefit is equal to 35% of the participant’s final monthly base salary paid monthly
for 120 months. Upon termination of employment prior to age 65, the monthly benefit is equal to the participant’s years of
service (with a maximum of 25 years) times 3% times 35% of the participant’s final monthly base salary. Benefit payments
commence in the month following termination, except to the extent a portion of the benefit must be delayed for six months for key
employees as required by Section 409A of the IRC. DSA benefits are paid from the general assets of the Company.
The DSAs provide that in
the event of a change in control of the Company, as defined in “Potential Payments upon Termination or Change in Control,”
followed by the officer’s termination within 36 months for pre-2005 deferred salary accruals or within 24 months for post-2004
deferred salary accruals, all benefits become 100% vested. The DSA benefit will be paid as a lump sum within fifteen days, with
the 120 monthly installments discounted at 6.22% as provided in the DSA, except where payment must be delayed for six months for
key employees as required by Section 409A of the IRC. DSA benefits will be reduced to the extent required to avoid being classified
as excess parachute payments under Section 280G of the IRC. Other than during a 36-month period following a change in control of
the Company for benefits accrued and vested prior to 2005 or during a 24-month period following a change in control of the Company
for benefits accrued and vested after 2004, any
ArcBest
/ 2021
PROXY STATEMENT |
43 |
unpaid DSA benefit is subject
to forfeiture if the participant is discharged for wrongful conduct injurious to the Company, or if, following the date of termination,
the participant discloses confidential information relating to the Company to unauthorized persons or becomes employed or renders
services to a competitor of the Company.
2020 Non-Qualified Deferred Compensation
The following table shows
the Named Executive Officers’ deferred compensation activity during 2020 with respect to outstanding vested RSUs. The vesting
and settlement terms applicable to RSUs are described previously in the “Narrative Disclosure to Summary Compensation Table
and Grants of Plan-Based Awards Table – Stock Awards under the Plan” section and in footnote (1) to the “Outstanding
Equity Awards at 2020 Fiscal Year-End” table.
Name |
|
Executive
Contributions
in Last
Fiscal Year
($)(1) |
|
Registrant
Contributions
in Last
Fiscal Year
($) |
|
Aggregate
Earnings in
Last Fiscal
Year
($)(2) |
|
Aggregate
Withdrawals/
Distributions
($)(3) |
|
Aggregate
Balance at Last
Fiscal Year End
($)(4,5) |
Judy R.
McReynolds |
|
|
$ 765,216 |
|
|
$ - |
|
|
$ 1,064,545 |
|
|
$ 321,453 |
|
|
$ 3,014,209 |
Timothy D. Thorne |
|
|
367,795 |
|
|
- |
|
|
505,599 |
|
|
151,272 |
|
|
1,431,579 |
David R. Cobb |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
Michael E. Newcity |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
James
A. Ingram |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
(1) |
The
executive contribution amount represents the value realized on vesting of all RSUs that vested during 2020 due to early retirement
eligibility, as previously reported in the “2020 Option Exercises and Stock Vested” table. |
(2) |
The
earnings amount represents an estimate of annual earnings with respect to vested but unpaid RSUs and is based on the difference
in closing market price of the Common Stock of $27.60 as of December 31, 2019 and $42.67 as of December 31, 2020, multiplied
by the number of vested RSUs as of December 31, 2020, described in footnote (4) below. |
(3) |
The
value in the Aggregate Withdrawals/Distributions column represents the value of the 2015 RSU awards that fully vested and
were settled on May 11, 2020. The value is based on the closing market price of Common Stock of $21.01 on the settlement date,
and includes 15,300 RSUs for Ms. McReynolds and 7,200 RSUs for Mr. Thorne. |
(4) |
Includes
the value associated with 70,640 vested but unsettled RSUs for Ms. McReynolds and 33,550 vested but unsettled RSUs for Mr.
Thorne. The value is based on the closing market price of the Common Stock of $42.67 on December 31, 2020. RSUs that vested
during 2020 are reported in the “2020 Option Exercises and Stock Vested” table. |
(5) |
The
aggregate grant date fair value with respect to RSUs in prior years (2016-2019), including those previously reported in the
“Summary Compensation Table,” are set forth in the table below. To the extent those previously-awarded RSUs have
become vested but remain unsettled, the value associated with those RSUs as of December 31, 2020 (calculated as described
in footnote (4) above) is reported in the “Aggregate Balance at Last Fiscal Year End” column above. The grant
date fair value of RSUs awarded in 2020 is reported in the “Stock Awards” column of the “Summary Compensation
Table.” |
|
|
|
McReynolds |
Thorne |
2016 RSU Grant Date Fair Value |
$ |
461,241 |
$ |
217,420 |
2017 RSU Grant Date Fair Value |
|
480,546 |
|
226,520 |
2018 RSU Grant Date Fair Value |
|
726,002 |
|
338,504 |
2019 RSU Grant Date Fair Value |
|
748,773 |
|
373,005 |
Total |
$ |
2,416,562 |
$ |
1,155,449 |
ArcBest
/ 2021
PROXY STATEMENT |
44 |
Potential Payments upon Termination or Change in Control
The Company does not have any employment
contracts or severance arrangements with any Named Executive Officer that provide for payments in connection with a termination
of employment or a change in control, other than the applicable termination provisions contained within the various arrangements
discussed elsewhere in this Proxy Statement.
The termination and change in control provisions
existing as of December 31, 2020, are described and quantified below. All payments are assumed to be made in accordance with the
six-month delay for key employees as required by Section 409A of the IRC, where applicable.
Potential Payments upon Termination
Regardless of the manner in which a Named
Executive Officer’s employment with the Company terminates, the officer is entitled to receive compensation and other benefits
earned during the term of his or her employment, including the following:
■ |
Accrued vacation (see the table on page
48 for values); |
■ |
Amounts earned but not yet paid under the annual
incentive plan (“AIP”) and cash long-term incentive compensation plan (“C-LTIP”) (see the “Summary
Compensation Table” section for amounts earned in 2020); |
■ |
DSA benefit earned as of the DSA freeze date, paid
monthly over 120 months (see the “2020 Pension Benefits” table for present value as of December 31, 2020, and
more information regarding DSAs); and |
■ |
SBP benefit earned as of the SBP freeze date, distributed
as a lump sum (see “2020 Pension Benefits” for values). |
Potential Payments upon Early Retirement
In the event a Named Executive Officer
terminates and is eligible for early retirement, the officer will be entitled to the following, in addition to the items identified
in “Potential Payments upon Termination.” Early retirement is generally defined as termination of employment after
reaching at least age 55 with 10 years of service, but before age 65.
■ |
Vesting and settlement of a pro rata
number of RSUs based on the number of whole months elapsed since the award date if there has elapsed a minimum of 12 months
since the award date (see “2020 Non-Qualified Deferred Compensation” table for values related to our early retirement-eligible
Named Executive Officers); remaining unvested RSUs are forfeited; |
■ |
Executive medical coverage, with the retired officer
responsible for paying a monthly premium amount equal to the then-current COBRA rate until age 60. All retirees are responsible
for paying a premium equivalent to $250 per individual covered, up to a maximum of $500, from age 60 to 65, and a reduced
monthly premium after age 65 (see the table on page 48 for coverage values); and |
■ |
A pro rata benefit under the C-LTIP and under the
AIP based on the base salary received while a participant in the applicable measurement period (or grant value for C-LTIP
awards starting in 2020) and actual performance results for the full performance period, if he or she has completed a minimum
of (a) 12 months of the measurement period under the C-LTIP, and (b) 90 days of the measurement period under the AIP, respectively.
Any pro rata payment earned will not be paid until the end of the measurement period for the plan. (See “Narrative Disclosure
to Summary Compensation Table and Grants of Plan-Based Awards Table” for additional information on AIP awards and C-LTIP
awards). |
Potential Payments upon Normal Retirement,
Death or Disability
In the event of a Named Executive Officer’s
termination due to his or her normal retirement, death or disability, the officer will be entitled to the following, in addition
to the items identified in “Potential Payments upon Termination.” Under the Company’s plans, normal retirement
is generally defined as termination of employment on or after attaining age 65, and disability is generally determined to have
occurred if the participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to last for a continuous period of not less than 12 months.
■ |
Full vesting and settlement of all RSUs
(see the table on page 48 for values of RSUs related to accelerated vesting); |
■ |
Executive medical coverage, with the retired officer
(or his or her eligible dependents) responsible for paying a reduced monthly premium after age 65 (see table on page 48 for
values); and |
■ |
A pro rata benefit under the C-LTIP and under the
AIP based on the base salary received while a participant in the applicable measurement period (or grant value for C-LTIP
awards starting in 2020) and actual performance results for the full performance period, if he or she has completed a minimum
of (a) 12 months of the measurement period under the C-LTIP, and (b) 90 days of the measurement period under the AIP, respectively.
Any pro rata payment earned will not be paid until the end of the measurement period for the plan. (See “Narrative Disclosure
to Summary Compensation Table and Grants of Plan-Based Awards Table” for additional information on AIP awards and C-LTIP
awards). |
ArcBest
/ 2021
PROXY STATEMENT |
45 |
Potential Payments upon Termination After
a Change in Control
Subject to the terms of the 2012 Change
in Control Plan, in the event of a change in control of the Company, if termination of a Named Executive Officer occurs within
24 months of the change in control for “Good Reason” or without “Cause” (as such terms are defined in
the 2012 Change in Control Plan), the Named Executive Officer will be entitled to the following, in addition to the items identified
in “Potential Payments upon Termination”:
■ |
RSUs become fully vested as of the termination
date and will be distributed as soon as administratively possible (see the table on page 48 for RSU values related to accelerated
vesting); |
■ |
For annual awards that have not yet reached the end
of the measurement period, a prorated benefit under the AIP based on the number of whole months completed during the applicable
measurement period through the termination date; |
■ |
Under the DSA, if termination of the Named Executive
Officer occurs within 36 months of the change in control for benefits accrued and vested prior to 2005 and within 24 months
of the change in control for benefits accrued and vested after 2004, the officer becomes 100% vested in the DSA benefit and
the benefit is distributed as a lump sum (see table on page 48 for the value); |
■ |
For C-LTIP awards that have not yet reached the end
of the measurement period, a prorated benefit under the plan based on the number of whole months completed during the applicable
measurement period through the termination date; amounts payable pursuant to such awards are computed and paid in the normal
course of business and pursuant to the terms of the applicable plan after the end of the measurement period; |
■ |
A lump sum cash payment equal to 24 months of the
then-current COBRA rate to elect continuation of coverage under the medical and dental plans of the Company for the coverage
in effect for the officer immediately prior to the date of termination (“Medical Premiums”); and |
■ |
A lump sum cash payment equal to either (A) with
respect to Ms. McReynolds, two times her base salary in effect on the date of termination plus two times her average annual
cash incentive earned during the three years prior to the year in which the date of termination occurs, or (B) for the other
Named Executive Officers, one times the executive’s base salary in effect on the date of termination plus one times
his average annual cash incentive earned during the three years prior to the year in which the date of termination occurs
(“Cash Severance”). |
“Change in Control” under the
Company’s plans is generally defined as the earliest date on which any of the following events shall occur:
(i) |
The acquisition by any individual, entity
or group (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 35% or more of either (i) the then outstanding shares of the Company’s common stock or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following
acquisitions will not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by
the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction that constitutes
a Merger of Equals as defined in subsection (iii) below. |
(ii) |
In any 12-month period, the individuals who, as of
the beginning of the 12-month period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the effective date
of the applicable agreement whose election, or nomination for election by the Company’s shareholders, was approved by
a vote of at least a majority of the directors then comprising the Incumbent Board will be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors. |
(iii) |
Consummation of a reorganization, merger, statutory
share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries (each, a
“Business Combination”), in each case, unless such Business Combination constitutes a Merger of Equals. A Business
Combination will constitute a “Merger of Equals” if, following such Business Combination, (A) all or substantially
all of the individuals and entities that were the beneficial owners, respectively, of the outstanding shares of the Company’s
common stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of
the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) (the “Resulting Corporation”) in substantially the same proportions as their ownership, immediately
prior to such Business Combination, of the outstanding shares of the Company’s common stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding the Resulting Corporation and its affiliates or any employee
benefit plan (or related trust) of the Resulting Corporation and its affiliates) beneficially owns, directly or indirectly,
35% or more of, respectively, the then-outstanding shares of |
ArcBest
/ 2021
PROXY STATEMENT |
46 |
|
common stock of the Resulting Corporation
or the combined voting power of the then-outstanding voting securities of the Resulting Corporation except to the extent that
such ownership existed with respect to the Company prior to the Business Combination, and (C) at least a majority of the members
of the board of directors of the Resulting Corporation (the “Resulting Board”) were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business
Combination. |
(iv) |
The sale or other disposition of all or substantially
all of the assets of the Company to any Person, other than a transfer to (A) any corporation or other Person of which a majority
of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company or
(B) any corporation pursuant to a transaction that constitutes a Merger of Equals as defined in subsection (iii) above. |
(v) |
A complete liquidation or dissolution of the Company. |
“Good Reason” under the Company’s
arrangements is generally defined as (i) any material and adverse reduction in the Named Executive Officer’s title, duties
or responsibilities; (ii) a material reduction in the Named Executive Officer’s base salary or employee benefits (including
reducing the Named Executive Officer’s level of participation or award opportunity in the Company’s incentive compensation
plans); or (iii) a relocation of the Named Executive Officer’s principal place of employment by more than 50 miles without
the prior consent of the Named Executive Officer.
“Cause” under the Company’s
arrangements is generally defined as the Named Executive Officer’s (i) gross misconduct or fraud in the performance of a
Named Executive Officer’s duties to the Company or any subsidiary; (ii) conviction or guilty plea or plea of no contest
with respect to any felony or act of moral turpitude; (iii) engaging in any material act of theft or material misappropriation
of Company or any third party’s property; or (iv) material breach of the Company’s Code of Conduct as such code may
be revised from time to time.
The 2012 Change in Control Plan provides
that, unless outstanding equity awards are assumed by the successor and/or replaced by the successor with substitute awards of
approximately equal value, in the event any equity awards are outstanding immediately prior to a change in control, such awards
will become fully vested, settled and paid upon the occurrence of a change in control (with any outstanding performance-based
awards being vested, settled and paid at the maximum level). If the equity awards are replaced by the successor company and the
Named Executive Officer is terminated within 24 months of the change in control, he or she shall become vested as of the termination
date in any unvested equity awards.
If amounts payable to a Named Executive
Officer under the 2012 Change in Control Plan (or pursuant to any other arrangement or agreement with the Company) exceed the
amount allowed under section 280G of the IRC and would be subject to the excise tax imposed by section 4999 of the IRC, then,
prior to the making of any payments to a Named Executive Officer, the 2012 Change in Control Plan provides that a best-net calculation
will be made comparing (i) the before income tax net benefit to the Named Executive Officer of the payments after payment of the
excise tax to (ii) the before income tax net benefit to the Named Executive Officer if the payments are reduced to the extent
necessary to avoid being subject to the excise tax (the “Best Net Calculation”). If the amount calculated under (i)
is less than the amount calculated under (ii) in the preceding sentence, then the payments will be reduced to the extent necessary
to avoid being subject to the excise tax.
Restrictive Covenants; Clawback
Under the DSA, no unpaid benefit will be
paid if the Named Executive Officer is discharged for wrongful conduct injurious to the Company, if the Named Executive Officer
discloses confidential information relating to the Company or if the Named Executive Officer becomes employed by or renders service
to any competitor of the Company. Under the C-LTIP and RSU award agreements, if the Compensation Committee determines that the
recipient has committed an “Act of Misconduct,” as defined in the ArcBest Corporation Ownership Incentive Plan, the
Committee may suspend the recipient’s rights to vest in any RSU or C-LTIP awards outstanding and may provide that the recipient
will forfeit any vested but unpaid awards. The Executive Medical Policy provides that coverage will be forfeited if the Named
Executive Officer becomes an employee, consultant or director of, or has an ownership interest in, any competitor of the Company.
Under the 2012 Change in Control Plan, the Named Executive Officer is prohibited from solicitation of customers, clients and employees
of the Company for a 12-month period following the termination and will not, without prior written consent from the Company, communicate
or divulge any confidential information, knowledge or data to anyone at any time or the Committee may reduce or offset the benefits
under the plan.
The Company also has a policy for the “clawback”
of any bonus or incentive compensation awarded to any officer, including a Named Executive Officer, in the event of: (i) a material
restatement of the Company’s financial statements due to non-compliance with any financial reporting requirement under applicable
securities laws, regardless of the existence of misconduct or fault; (ii) an overpayment as the result of an error, including
errors in determination of performance metric results or in the calculation of an officer’s covered compensation; or (iii)
an Act of Misconduct (as such term is defined in the clawback policy) was committed by the officer. Under the terms of the policy,
the Board may require reimbursement of any bonus or incentive compensation awarded and cancel unvested RSU awards previously granted
to the Named Executive Officer under certain scenarios, which are described in “Compensation Discussion & Analysis”
in this Proxy Statement.
An “Act of Misconduct” has
been committed under the Company’s arrangements if the Committee, the Chief Executive Officer, or any other person designated
by the Committee determines a Named Executive Officer has committed an act of embezzlement, fraud, dishonesty, nonpayment of any
obligation owed to the Company or any subsidiary, breach of fiduciary duty, violation of Company ethics policy or Code of Conduct,
deliberate disregard of Company or subsidiary policies, or if a participant makes an unauthorized disclosure of any Company or
subsidiary trade secret or confidential information, solicits any employee or
ArcBest
/ 2021
PROXY STATEMENT |
47 |
service provider to leave the employ or
cease providing services to the Company or any subsidiary, breaches any intellectual property or assignment of inventions covenant,
engages in any conduct constituting unfair competition, breaches any non-competition agreement, induces any Company or subsidiary
customer to breach a contract with the Company or any subsidiary or to cease doing business with the Company or any subsidiary
or induces any principal for whom the Company or any subsidiary acts as agent to terminate such agency relationship.
Quantification of Potential Payments upon Termination or Change
in Control
The following table reflects compensation
potentially payable to each Named Executive Officer under various employment termination and other scenarios based on the arrangements
existing as of December 31, 2020. The amounts shown in the following table assume that a change in control occurred and/or each
Named Executive Officer terminated employment with the Company effective December 31, 2020, and estimate the value that could
be realized by each Named Executive Officer as a result of each specified triggering event; however, the amounts shown below do
not take into account any Best Net Calculation and resulting reduction that may occur pursuant to the provisions of the 2012 Change
in Control Plan. None of the Named Executive Officers are eligible for normal retirement; therefore, no data is shown for that
scenario. Mr. Thorne and Ms. McReynolds are eligible for early retirement. None of the other Named Executive Officers are eligible
for early retirement.
See “2020 Pension Benefits”
for benefits payable under the SBP and DSA. Benefits payable with respect to previously vested RSUs are quantified in the “2020
Non-Qualified Deferred Compensation” table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
Cause or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation
for |
|
|
|
|
General |
|
Early |
|
|
|
|
|
|
|
Good
Reason After |
|
|
|
|
Termination |
|
Retirement |
|
Death |
|
Disability |
|
Change
in Control |
Name |
|
Benefit |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Judy
R. McReynolds |
|
RSUs(1) |
|
N/A |
|
|
- |
|
|
3,177,208 |
|
|
3,177,208 |
|
|
3,177,208 |
|
|
Executive Medical(2) |
|
N/A |
|
|
879,363 |
|
|
492,947 |
|
|
879,363 |
|
|
- |
|
|
Accrued Vacation(3) |
|
N/A |
|
|
76,923 |
|
|
76,923 |
|
|
76,923 |
|
|
76,923 |
|
|
DSA |
|
N/A |
|
|
- |
|
|
- |
|
|
- |
|
|
442,576 |
|
|
C-LTIP(5) |
|
N/A |
|
|
1,765,311 |
|
|
1,765,311 |
|
|
1,765,311 |
|
|
1,322,735 |
|
|
Annual Incentive Plan(6) |
|
N/A |
|
|
1,582,400 |
|
|
1,582,400 |
|
|
1,582,400 |
|
|
1,582,400 |
|
|
Cash Severance(7) |
|
N/A |
|
|
- |
|
|
- |
|
|
- |
|
|
4,069,653 |
|
|
Medical
Premiums(8) |
|
N/A |
|
|
- |
|
|
- |
|
|
- |
|
|
33,144 |
|
|
Total(9) |
|
N/A |
|
$ |
4,303,997 |
|
$ |
7,094,789 |
|
$ |
7,481,205 |
|
$ |
10,704,639 |
Timothy
D. Thorne |
|
RSUs(1) |
|
N/A |
|
|
- |
|
|
1,504,075 |
|
|
1,504,075 |
|
|
1,504,075 |
|
|
Executive Medical(2) |
|
N/A |
|
|
879,363 |
|
|
492,947 |
|
|
879,363 |
|
|
- |
|
|
Accrued Vacation(3) |
|
N/A |
|
|
45,041 |
|
|
45,041 |
|
|
45,041 |
|
|
45,041 |
|
|
C-LTIP(5) |
|
N/A |
|
|
826,866 |
|
|
826,866 |
|
|
826,866 |
|
|
826,866 |
|
|
Annual Incentive Plan(6) |
|
N/A |
|
|
648,581 |
|
|
648,581 |
|
|
648,581 |
|
|
648,581 |
|
|
Cash Severance(7) |
|
N/A |
|
|
- |
|
|
- |
|
|
- |
|
|
988,406 |
|
|
Medical
Premiums(8) |
|
N/A |
|
|
- |
|
|
- |
|
|
- |
|
|
33,144 |
|
|
Total(9) |
|
N/A |
|
$ |
2,399,851 |
|
$ |
3,517,510 |
|
$ |
3,903,926 |
|
$ |
4,046,113 |
David
R. Cobb |
|
RSUs(1) |
|
- |
|
|
N/A |
|
|
2,376,719 |
|
|
2,376,719 |
|
|
2,376,719 |
|
|
Executive Medical(2) |
|
- |
|
|
N/A |
|
|
520,775 |
|
|
925,885 |
|
|
- |
|
|
Accrued Vacation(3) |
|
33,115 |
|
|
N/A |
|
|
33,115 |
|
|
33,115 |
|
|
33,115 |
|
|
C-LTIP(5) |
|
364,407 |
|
|
N/A |
|
|
685,372 |
|
|
685,372 |
|
|
685,372 |
|
|
Annual Incentive Plan(6) |
|
596,070 |
|
|
N/A |
|
|
596,070 |
|
|
596,070 |
|
|
596,070 |
|
|
Cash Severance(7) |
|
- |
|
|
N/A |
|
|
- |
|
|
- |
|
|
893,968 |
|
|
Medical
Premiums(8) |
|
- |
|
|
N/A |
|
|
- |
|
|
- |
|
|
44,448 |
|
|
Total(9) |
|
$993,592 |
|
|
N/A |
|
$ |
4,212,051 |
|
$ |
4,617,161 |
|
$ |
4,629,692 |
ArcBest
/ 2021
PROXY STATEMENT |
48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
Cause or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation
for |
|
|
|
|
General |
|
Early |
|
|
|
|
|
|
|
Good
Reason After |
|
|
|
|
Termination |
|
Retirement |
|
Death |
|
Disability |
|
Change
in Control |
Name |
|
Benefit |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Michael
E. Newcity |
|
RSUs(1) |
|
|
- |
|
N/A |
|
|
2,159,102 |
|
|
2,159,102 |
|
|
2,159,102 |
|
|
Executive Medical(2) |
|
|
- |
|
N/A |
|
|
520,775 |
|
|
965,083 |
|
|
- |
|
|
Accrued Vacation(3) |
|
|
37,649 |
|
N/A |
|
|
37,649 |
|
|
37,649 |
|
|
37,649 |
|
|
C-LTIP(5) |
|
|
305,256 |
|
N/A |
|
|
567,619 |
|
|
567,619 |
|
|
567,619 |
|
|
Annual Incentive Plan(6) |
|
|
503,416 |
|
N/A |
|
|
503,416 |
|
|
503,416 |
|
|
503,416 |
|
|
Cash Severance(7) |
|
|
- |
|
N/A |
|
|
- |
|
|
- |
|
|
797,118 |
|
|
Medical
Premiums(8) |
|
|
- |
|
N/A |
|
|
- |
|
|
- |
|
|
44,448 |
|
|
Total(9) |
|
$ |
846,321 |
|
N/A |
|
$ |
3,788,561 |
|
$ |
4,232,869 |
|
$ |
4,109,352 |
James
A. Ingram |
|
RSUs(1) |
|
|
- |
|
N/A |
|
|
2,248,709 |
|
|
2,248,709 |
|
|
2,248,709 |
|
|
Executive Medical(2) |
|
|
- |
|
N/A |
|
|
526,884 |
|
|
953,831 |
|
|
- |
|
|
Accrued Vacation(3) |
|
|
36,861 |
|
N/A |
|
|
36,861 |
|
|
36,861 |
|
|
36,861 |
|
|
C-LTIP(5) |
|
|
310,209 |
|
N/A |
|
|
577,023 |
|
|
577,023 |
|
|
577,023 |
|
|
Annual Incentive Plan(6) |
|
|
492,873 |
|
N/A |
|
|
492,873 |
|
|
492,873 |
|
|
492,873 |
|
|
Cash Severance(7) |
|
|
- |
|
N/A |
|
|
- |
|
|
- |
|
|
780,741 |
|
|
Medical
Premiums(8) |
|
|
- |
|
N/A |
|
|
- |
|
|
- |
|
|
44,448 |
|
|
Total(9) |
|
$ |
839,943 |
|
N/A |
|
$ |
3,882,350 |
|
$ |
4,309,297 |
|
$ |
4,180,655 |
(1) |
The RSU value is calculated using
a per share price of $42.67, which is the closing market price of the Common Stock on December 31, 2020, multiplied by the
number of the Named Executive Officer’s RSUs vesting as a result of the applicable triggering event. Benefits payable
with respect to previously vested outstanding RSUs are quantified in the “2020 Non-Qualified Deferred Compensation”
table. |
(2) |
The executive medical value is based on the accumulated
benefit obligation for the Named Executive Officer as of December 31, 2020, using the same assumptions as used by the Company
for financial reporting purposes except that the values above are based on the Named Executive Officer’s actual age
at December 31, 2020, for the applicable triggering events. The values shown for executive medical coverage in the event of
the Named Executive Officer’s death reflect the value of health coverage for the Named Executive Officer’s surviving
spouse. |
(3) |
The accrued vacation value is based on the Named
Executive Officer’s actual earned weeks of vacation and base salary rate as of December 31, 2020. |
(4) |
The DSA value is equal to the accelerated benefit
value as a result of the applicable triggering event. This value is based on the difference in the present value of the 120
monthly payments assuming the applicable triggering event occurred on December 31, 2020, less the present value of the actual
DSA benefit accrued as of December 31, 2020. An interest rate of 6.22% was used to value the lump-sum payment upon a change
in control as provided under the terms of the DSA. See “2020 Pension Benefits” for the present value of currently
vested DSA benefits. |
(5) |
The C-LTIP value is the pro rata benefit accrued
under the 2018-2020, 2019-2021, and 2020-2022 cash long-term incentive compensation plans, calculated based on performance
as of December 31, 2020. Amounts shown in the “General Termination” column represents amounts fully earned but
unpaid as of December 31, 2020. For C-LTIP participants with a frozen DSA, the C-LTIP change in control value is equal to
the C-LTIP change in control value in excess of the DSA change in control value, if any. |
(6) |
The AIP is equal to the annual incentive amount
paid to each Named Executive Officer for 2020 since all such amounts were earned as of December 31, 2020 (reported in the
“Summary Compensation Table”). |
(7) |
The cash severance payment value is a lump sum
cash payment equal to (A) with respect to Ms. McReynolds, two times her base salary in effect on the date of termination plus
two times her average annual cash incentive earned during the three years prior to the year in which the date of termination
occurs, or (B) for the remaining Named Executive Officers, one times the executive’s base salary in effect on the date
of termination plus one times his average annual cash incentive earned during the three years prior to the year in which the
date of termination occurs, as provided under the terms of the 2012 Change in Control Plan. See “Potential Payments
upon Termination after a Change in Control” for additional information. |
(8) |
The medical premium is a lump sum payment equal
to 24 months of the COBRA premium in effect as of December 31, 2020, to elect continuation of coverage under the medical and
dental plans of the Company for the coverage in effect for the officer and his or her eligible dependents immediately prior
to the date of termination. See “Potential Payments upon Termination after a Change in Control” for additional
information. |
(9) |
Totals represent aggregate amounts reflected in
the table payable upon each termination or change in control event as indicated above. These totals do not include benefits
that are currently vested and payable under the DSA or SBP (each reported in “2020 Pension Benefits”) or with
respect to previously vested outstanding RSU awards (reported in the “2020 Non-Qualified Deferred Compensation”
table), except to the extent a change in control or other triggering event creates an additional benefit above what was reported
in either table. |
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CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information
about the relationship of the annual total compensation of our employees and the annual total compensation of Ms. McReynolds,
our CEO.
For 2020, our last completed fiscal year:
■ |
The total annual compensation of our
median employee was $90,310.40; and |
■ |
The total annual compensation of Ms. McReynolds,
as reported in the Summary Compensation Table in this Proxy Statement, was $4,174,608. |
■ |
Based on this information, for 2020 the ratio of
the total annual compensation of Ms. McReynolds to the median employee total annual compensation was reasonably estimated
to be 46.23 to 1. |
Methodology used to identify our median employee for fiscal
year 2020:
■ |
October 1, 2020 was the date used to
determine our employee population, which includes full-time and part-time employees. We do not have any seasonal or temporary
employees. As of that date, our employee population was 12,686 and consisted of individuals working at our parent company
and our subsidiaries in the United States, including Puerto Rico, but excluding the Company’s Canadian population. SEC
rules allow foreign employees to be excluded if those employees account for 5% or less of the total employees. Therefore,
the Company’s entire Canadian population (64 employees) was excluded from the employee population. |
■ |
To find the median employee of our employee
population (other than Ms. McReynolds), we used a consistently applied compensation measure comparing the amount of salary
or wages, bonus, vacation pay, sick pay, jury duty pay, bereavement pay, short-term disability, holiday pay and overtime prior
to any deductions (total annual compensation) paid in 2020 as reflected in our payroll records as of October 1, 2020. Since
equity awards are not widely distributed to our employees, we did not include equity awards in the compensation measure. |
Certain Transactions and Relationships
Item 404 of Regulation S-K of the Securities
Act of 1933, as amended, requires that the Company disclose certain “related party transactions” with the Company’s
Directors and executive officers, among others. For information regarding the Company’s policies and procedures for review,
approval and ratification of such related party transactions, see the Audit Committee section under “Governance of the Company.”
Steven L. Spinner, who joined the Board
in July 2011, is President and Chief Executive Officer and Chairman of the Board of United Natural Foods, Inc. (“UNFI”).
In 2020 and 2021 (through the March 1 record date), UNFI made ordinary course of business payments to one or more ArcBest subsidiaries
for transportation and other services in the aggregate amount of $2,759,870.
Kathleen D. McElligott, who has been on
the Board since July 2015, served as Executive Vice President, Chief Information Officer and Chief Technology Officer of McKesson
during 2020, until her retirement on February 4, 2020. In January 2020 through February 3, 2020, McKesson made ordinary course
of business payments to one or more ArcBest subsidiaries for freight services in the aggregate amount of $270,621.
The Company has entered into indemnification
agreements with the members of its Board. Under these agreements, the Company is obligated to indemnify its Directors to the fullest
extent permitted under the Delaware General Corporation Law for expenses, including attorneys’ fees, judgments and settlement
amounts incurred by them in any action or proceeding arising out of their services as a Director. The Company believes that these
agreements are helpful in attracting and retaining qualified Directors. The Company’s Restated Certificate of Incorporation,
as amended, and the bylaws also provide for indemnification of the Company’s officers and Directors to the fullest extent
permitted by the Delaware General Corporation Law.
Delinquent Section 16 (a) Reports
The Company’s executive officers,
Directors and persons who own more than 10% of a registered class of the Company’s equity securities are required by Section
16(a) of the Exchange Act to file reports of ownership and changes of ownership with the SEC. The SEC’s rules require such
persons to furnish the Company with copies of all Section 16(a) reports that are filed on their behalf. Based on a review of the
reports submitted by the Company, the Company believes that the applicable Section 16(a) reporting requirements were complied
with for all transactions which occurred in 2020, except, due to inadvertent oversights, as follows: Mr. Eliasson, Director, and
Mr. Steven Leonard, chief sales and customer engagement officer, each filed a late Form 4 to report transactions that took place
on February 6, 2020, and February 11, 2020, respectively; and Mr. Cobb, chief financial officer, filed a late Form 5 to report
gift transactions that occurred in 2018 and 2019, which resulted in indirect ownership of certain shares previously reported as
directly held by Mr. Cobb.
The Company has not received any information
from 10% stockholders indicating that they have not complied with filing requirements.
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PROPOSAL II.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Board recommends a vote “FOR”
Proposal II.
In accordance with Section 14A of the Exchange
Act, the Company is providing its stockholders with the opportunity to cast a non-binding advisory vote on a resolution to approve
the compensation of the Company’s Named Executive Officers (the “Say on Pay Vote”). At the 2011 and 2017 Annual
Meetings, stockholders voted in favor of the Board’s recommendation to hold a Say on Pay Vote on an annual basis, and since
the 2011 Annual Meeting, the Company has held annual non-binding Say on Pay Votes.
The non-binding Say on Pay Vote is not
intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers and
the philosophy, policies and practices described in this Proxy Statement. To that end, the Board has submitted the following resolution
to be voted on by our stockholders at the 2021 Annual Meeting:
RESOLVED, that the stockholders approve,
on an advisory basis, the compensation of the Company’s Named Executive Officers as disclosed in the Proxy Statement for
ArcBest Corporation’s 2021 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities
and Exchange Commission, including the Compensation Discussion & Analysis, the Summary Compensation Table and the other related
tables and narrative disclosure.
The Board recognizes that executive compensation
is an important matter for our stockholders. As described in detail in the “Compensation Discussion & Analysis”
section of this Proxy Statement, the Compensation Committee is responsible for establishing, implementing and monitoring adherence
with our executive compensation policy.
As you consider this Proposal II, we
encourage you to carefully review the “Compensation Discussion & Analysis” section and executive compensation
tables of this Proxy Statement for a detailed discussion of our executive compensation program, including the more detailed information
about our compensation philosophy and objectives and the past compensation of the Named Executive Officers.
As an advisory vote, Proposal II is not
binding on the Board or the Compensation Committee, will not overrule any decisions made by the Board or the Compensation Committee,
and will not require the Board or the Compensation Committee to take any action. Although the vote is non-binding, the Board and
the Compensation Committee value the opinions of our stockholders and intend to consider the outcome of the vote when making future
compensation decisions for executive officers. In particular, to the extent there is any significant vote against the Named Executive
Officers’ compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation
Committee will evaluate whether any actions are appropriate in the future to address those concerns.
The Board recommends that stockholders
vote “FOR” the approval of the compensation of the Named Executive Officers, as disclosed in this Proxy Statement.
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PROPOSAL III.
APPROVAL OF THE SECOND AMENDMENT TO THE AMENDED AND RESTATED
OWNERSHIP INCENTIVE PLAN
The Board recommends a vote “FOR” Proposal
III.
Our Board of Directors believes that equity-based
awards play an important role in the Company’s success by motivating and engaging our executives, employees and non-employee directors
and allowing them to participate in shareholder value creation through their ownership interest in the Company. On February 22,
2021, the Board, upon the recommendation of the Compensation Committee, approved the Second Amendment to the Amended and Restated
ArcBest Corporation Ownership Incentive Plan (the “Amended and Restated Plan”), and is seeking shareholder approval
of the Second Amendment to the Amended and Restated Plan. The Second Amendment, if approved by shareholders, will become effective
immediately and will replace the First Amendment to the Amended and Restated ArcBest Corporation Ownership Incentive Plan.
Background and Purpose of the Proposal
The Company’s Board of Directors
originally adopted the ArcBest Corporation 2005 Ownership Incentive Plan (the “2005 Plan”) on February 24, 2005,
and the Company’s stockholders originally approved the 2005 Plan on April 20, 2005. At the 2010 Annual Meeting of
Stockholders, stockholders approved the First Amendment to the 2005 Plan, which was approved by our Board on February 18,
2010, to increase the number of shares of common stock that the Company may issue under the Plan by 700,000 shares, from
1,500,000 shares to 2,200,000 shares. At the 2014 Annual Meeting of Stockholders, stockholders approved the Second Amendment
to the 2005 Plan, which was approved by our Board on February 24, 2014, to increase the number of shares of common
stock that the Company may issue under the Plan by 900,000 shares, from 2,200,000 shares to 3,100,000 shares. At the 2018
Annual Meeting of Stockholders, stockholders approved the Fourth Amendment to the 2005 Plan, which was approved by our Board
on February 22, 2018, to increase the number of shares of common stock that the Company may issue under the Plan by 250,000
shares, from 3,100,000 shares to 3,350,000 shares. At the 2019 Annual Meeting of Stockholders, stockholders approved the
Amended and Restated Plan, effective February 29, 2019, increasing the number of shares under the plan by 625,000 to
3,975,000 total shares. At the 2020 Annual Meeting of Stockholders, stockholders approved the First Amendment to the Amended
and Restated Plan, which was approved by the Board on February 21, 2020, to increase the number of shares of common stock
that the Company may issue under the Amended and Restated Plan by 299,500 shares, from 3,975,000 to 4,274,500. At the 2021
Annual Meeting, stockholders will be asked to approve the Second Amendment to the Amended and Restated Plan. The Second
Amendment to the Amended and Restated Plan increases the number of shares available for issuance under the Amended and
Restated Plan by 600,000 shares (from 4,274,500 to 4,874,500). If this Proposal III is approved, we will also register the
additional shares on a Form S-8 Registration Statement.
Summary of and Rationale for the Second Amendment to the Amended
and Restated Plan
The Second Amendment to the Amended
and Restated Plan seeks an increase to the authorized number of shares that the Company may issue under the Amended and Restated
Plan. We are seeking shareholder approval to increase the number of shares of common stock that the Company may issue under
the Amended and Restated Plan by 600,000 shares, from 4,274,500 shares to 4,874,500 shares, which we believe will enable us to
support the long-term growth of our business. Of the 4,274,500 shares currently authorized for issuance under the Amended and
Restated Plan, a total of 2,118,024 shares have been issued as of February 22, 2021 upon the lapse of restrictions on grants of
restricted stock or upon the settlement of restricted stock
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units. As of February 22, 2021, under the
Amended and Restated Plan, a total of 1,829,049 shares remained subject to unsettled restricted stock units. No other equity awards
are outstanding under the Amended and Restated Plan as of such date. As of February 22, 2021, no shares remained subject to outstanding
stock options under the Amended and Restated Plan. The Amended and Restated Plan is the only equity compensation plan currently
maintained by the Company.
Equity-based compensation allows us
to attract, retain and motivate the talent necessary for the successful execution of our strategic plan. Our thoughtful and
responsible use of equity plays a significant role in our continued ability to attract and engage top-tier talent. Shareholder
approval of the Second Amendment to the Amended and Restated Plan will enable us to continue our practice of granting equity awards
to a relatively broad base of employees, who in turn are responsible for executing on our strategic plan. We believe that the
hard work, creativity, and character of our people have been significant contributing factors to our recent success and our strong
performance in 2020 amidst a challenging environment.
Our ability to award equity to a
broad base of employees has enabled us to build a world-class team in a highly competitive market for talent. The Amended
and Restated Plan is a broad-based plan under which the Company grants awards to its officers, non-employee directors, key
management employees of exceptional abilities and other current and prospective employees. The market for talent in the
logistics industry is highly competitive, and our ability to recruit high-caliber talent is dependent upon our ability to
offer attractive compensation, of which equity is a key component. Equity awards enable us to remain competitive in the
marketplace, which in turn allows us to assemble a team that can help deliver value for our shareholders. In 2020, we granted
equity awards to approximately 130 individuals within the Company in roles of department director and above.
We believe that equity is a valuable
tool for retaining employees and fostering a long-term perspective, so we use longer vesting periods than is typical for most
public companies for many of our awards. Between 2007 and 2018, RSU awards cliff-vested over an extended period of five years,
which is significantly longer than the three-year period that is more typically used by public companies. Cognizant that this
extended vesting period resulted in a large number of granted-but-unvested equity awards, which may affect certain dilution calculations,
we adjusted the RSUs to vest over a four-year period in 2018. We continue to believe that this longer vesting horizon helps us
to retain talent, and we strongly believe that the accumulated knowledge and experience of our senior leaders has been an important
factor in our recent success.
Equity-based compensation aligns the
interests of our employees with those of shareholders. Equity compensation represents a significant portion of the total compensation
for our key executives. As a result, our executives have a significant personal investment in ArcBest, and we believe that alignment
helps ensure that the Company delivers shareholder value over the long-term.
We have a robust share repurchase program
which we believe has delivered significant value to our shareholders, but may impact traditional burn rate and dilution calculations.
In January 2021, the Company announced the extension of its share repurchase program that authorized a total of $50.0 million
available for purchases of ArcBest’s Common Stock. This increased the balance from the $6.6 million remaining from the extension
that was authorized in 2015. We have consistently repurchased shares each year since then. Traditional dilution and burn rate
calculations do not take into account how equity grants are offset through repurchases because they fail to adjust the number
of shares granted — only the number of shares outstanding. The principal purposes of the share repurchase program are to
offset dilution from stock issuances under the Company’s equity incentive plans and enhance long-term shareholder value.
Without sufficient shares to grant to
our employees, we would be forced to rely on alternative forms of compensation. Equity is a central component of compensation
for many of our employees and plays a critical role of incentivizing performance over a longer term and encouraging retention.
Insufficient equity awards may require us to rebalance the compensation mix of some of our key executives to award more compensation
in the form of cash, which we believe may be more prudently allocated towards returning capital to shareholders through continued
dividend payments or reinvested in our business to support future growth.
The Amended and Restated Plan continues
to incorporate many responsible equity compensation plan features:
■ |
No “evergreen” provision which
automatically increases the share reserve on an annual basis; |
■ |
Repricing of stock options is prohibited under the
plan; |
■ |
Awards granted under our Amended and Restated Plan
are subject to our robust “clawback” policy, which allows the Company to recoup bonus or incentive compensation
awards in certain circumstances (as described in further detail on page 47); |
■ |
Reload options are prohibited under the plan; and |
■ |
No dividend payments are permitted on unvested equity
awards. |
Our Compensation Committee carefully
monitors our equity compensation plan. While the Committee recognizes the significant motivational and performance benefits
that are achieved from making such awards, it is also cognizant of the potential dilutive effects. The Committee monitors our
burn rate and total dilution and seeks to limit the number of equity awards granted to that which is necessary to attract, retain
and motivate our officers, employees and non-employee directors.
The following table provides information
regarding the Company’s unadjusted annual burn rate and dilution for the past three years. On February 22, 2021, the closing price
of the Company’s common stock was $56.46 per share.
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Burn Rate and Dilution
As of and for the year-ended
December 31 | 3-Year Average(1) | | |
2020 | | |
2019 | | |
2018 | |
Dilution(2) | |
| 8.7% | | |
| 9.5% | | |
| 9.3% | | |
| 7.3% | |
Burn Rate(3) | |
| 1.6% | | |
| 2.3% | | |
| 1.5% | | |
| 0.9% | |
Share Price at Grant Date | |
| $ 31.65 | | |
| $ 20.34 | | |
| $ 28.85 | | |
| $ 45.75 | |
(1) |
3-Year Average is a simple average
of the values for the years 2020, 2019 and 2018. |
(2) |
Dilution is calculated as: (shares available for
grant under our equity plans + shares subject to outstanding equity awards) / (average diluted shares outstanding). |
(3) |
Burn Rate is calculated as: (equity awards granted
/ average common shares outstanding). |
Consequences of Failing to Approve the Proposal
Failure of the Company’s stockholders
to approve this proposal will not affect the rights of existing award holders under the Amended and Restated Plan or under any
previously granted awards under the Amended and Restated Plan; however, the Company may be required to reevaluate its compensation
structure since adequate shares may not be available for grant in the future.
Summary of the Amended and Restated Plan
The following summary of the Amended and
Restated Plan does not purport to be a complete description of all provisions of the Amended and Restated Plan and should be read
in conjunction with, and is qualified in its entirety by reference to, the complete text of the Amended and Restated Plan, which
was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on May 6, 2019. The Amended and Restated Plan gives
the Compensation Committee the ability to award stock options, stock appreciation rights (“SARs”), restricted stock
(“Restricted Stock Awards”), restricted stock units (“Restricted Stock Units”) and performance award units,
with vesting and other award provisions that provide effective incentives to Company employees and non-employee directors and
alignment of stockholder, management and director interests. Unless earlier terminated by action of the Company’s Board
of Directors, the Amended and Restated Plan will terminate on February 22, 2029. Awards granted prior to the termination date
of the Amended and Restated Plan will continue to be effective in accordance with their terms and conditions.
Persons Who May Participate
Any member of the Board of Directors, who
is not a current employee of the Company or one of its subsidiaries, and any current or prospective officer or employee of the
Company and its subsidiaries, is eligible to receive an award under the Amended and Restated Plan. Only individuals who are employees
of the Company or one of its corporate subsidiaries are eligible to receive Incentive Options (defined below). The Compensation
Committee determines in its discretion which eligible persons will receive awards under the Amended and Restated Plan. As of February
22, 2021, approximately 130 employees and 8 non-employee directors were eligible to participate in the Amended and Restated Plan.
Shares Subject to the Amended and Restated Plan
Subject to stockholder approval of the
Second Amendment to the Amended and Restated Plan and the adjustments described below, the total aggregate number of shares of
the Company’s common stock that may be subject to awards under the Amended and Restated Plan, since the inception of the
Plan, is 4,874,500. The shares issued pursuant to awards under the Amended and Restated Plan may be authorized and unissued shares
or shares that the Company reacquired, including shares purchased in the open market. The number of shares considered issued under
the Amended and Restated Plan equals the number of shares actually issued upon exercise or settlement of an award. Shares under
the Amended and Restated Plan that (i) were subject to awards that were canceled, forfeited or settled in cash (rather than shares),
or (ii) are delivered or deemed delivered to the Company in payment or satisfaction of the purchase price, exercise price or tax
withholding obligation resulting from an award will be deemed returned to the pool of shares reserved for issuance under the Amended
and Restated Plan and will be available for issuance pursuant to additional awards granted under the Amended and Restated Plan.
Pursuant to the Amended and Restated Plan, (a) shares delivered or deemed delivered to the Company in payment of any exercise
or purchase price of an Option or SAR or taxes relating to an Option or SAR, (b) shares that were subject to an Option or a SAR
but were not issued or delivered as a result of the net settlement or net exercise of such Option or SAR and (c) shares repurchased
on the open market with the proceeds of an Option’s exercise price, are not, in each case, available for issuance pursuant
to additional awards granted under the Amended and Restated Plan. In addition, the grant date fair value (as determined by the
Company) of any equity award granted to any non-employee
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director in any calendar year cannot exceed
$600,000 less the amount of cash compensation payable to the director for the calendar year such award is granted.
Administration
The Amended and Restated Plan will be administered
by the Compensation Committee of the Board of Directors or another committee of two or more directors established by the Board
of Directors from time to time. Under Nasdaq rules, members of the Compensation Committee are required to satisfy Nasdaq’s
standards for independence, subject to certain narrow exceptions. The Compensation Committee may delegate various functions to
subcommittees or certain officers of the Company. Subject to the provisions of the Amended and Restated Plan, the Compensation
Committee has the power to: (i) prescribe, amend and rescind rules and regulations relating to the Amended and Restated Plan and
to define terms not otherwise defined therein; (ii) determine which persons are eligible to participate and to receive awards
under the Amended and Restated Plan and the timing of any such awards; (iii) grant awards to participants and determine the terms
and conditions thereof, including the number of shares subject to awards and the exercise or purchase price of such shares and
the circumstances under which awards become exercisable or vested or are forfeited or expire, which terms may but need not be
conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain
events (including a change in control), or other factors; (iv) establish and verify the extent of satisfaction of any performance
goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any award; (v) prescribe
and amend the terms of the agreements or other documents evidencing awards made under the Amended and Restated Plan (which need
not be identical) and the terms of or form of any document or notice required to be delivered to the Company by participants under
the Amended and Restated Plan; (vi) determine whether, and the extent to which, adjustments are required as a result of any reorganization,
reclassification, combination of shares, stock split, reverse stock split, spin-off, or dividend (other than regular, quarterly
cash dividends); (vii) interpret and construe the Amended and Restated Plan, any rules and regulations under the Amended and Restated
Plan and the terms and conditions of any award granted thereunder, and to make exceptions to any such provisions in good faith
and for the benefit of the Company; and (viii) make all other determinations deemed necessary or advisable for the administration
of the Amended and Restated Plan.
Awards under the Amended and Restated Plan
Stock Options
Options granted under the Amended and
Restated Plan may be either incentive stock options qualifying under Section 422 of the IRC (“Incentive Option”)
or options which are not intended to qualify as incentive stock options (“Nonstatutory Option”). Under the terms
of the Amended and Restated Plan, the exercise price for stock options must be equal to or greater than the fair market value
of the Company’s common stock on the date of grant (and, in the case of an Incentive Option granted to a participant
who owns stock representing more than 10% of the combined voting power of all classes of stock of the Company, must be equal
to or greater than 110% of the fair market value of the Company’s common stock on the date of grant). Stock options
granted under the terms of the Amended and Restated Plan will not become exercisable earlier than one year from the date of
grant (except upon a change in control or termination of employment due to death, disability or retirement), and options may
be for a term of no more than 10 years (five years, in the case of an Incentive Option granted to a participant owning more
than 10% of the Company’s voting power). Otherwise, the Compensation Committee has discretion to determine the number
of shares subject to an option (subject to the Amended and Restated Plan’s stated limits), the vesting, expiration and
forfeiture provisions for options, the restrictions on transferability of an option, and any other terms and conditions
otherwise consistent with the Amended and Restated Plan. The exercise price of an option may be paid through various means
acceptable to the Compensation Committee, including in cash or, to the extent allowed by the Compensation Committee, by
delivering previously owned shares, by withholding shares deliverable upon the exercise of the option or by delivering to the
Company the proceeds of shares of the Company’s stock issuable under an option. Other than in connection with a change
in the Company’s capitalization, the Amended and Restated Plan prohibits repricing stock options without stockholder
approval.
Stock Appreciation Rights
A stock appreciation right, or SAR, provides
the right to the monetary equivalent of the increase in the value of a specified number of the Company’s shares over a specified
period of time after the right is granted. SARs may be paid in stock, cash or a combination thereof. SARs may be granted either
in tandem with or as a component of other awards granted under the Amended and Restated Plan or not in conjunction with other
awards and may, but need not, relate to a specific option. SARs are generally subject to the same terms and limitations as options
or, when granted in tandem with other awards, to the same terms as those other awards. Other than in connection with a change
in the Company’s capitalization, SARs cannot be repriced without stockholder approval.
Restricted Stock and Restricted Stock Units
A Restricted Stock Award is an award of
shares, and Restricted Stock Units are an award of units denominated in shares and payable in shares or cash, in each case, the
grant, issuance, retention and/or vesting of which is subject to such performance and other conditions as are specified by the
Compensation Committee. The Compensation Committee has discretion to determine the terms of any Restricted Stock
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Award or Restricted Stock Unit award, including
the number of shares subject to such award (subject to the Amended and Restated Plan’s stated limits), the price (if any)
paid for shares subject to a Restricted Stock Award or Restricted Stock Units, and the minimum period over which a Restricted
Stock Award or Restricted Stock Units may vest or be settled, which must cover at least a three-year period (except in the event
of a change in control or upon the participant’s death, disability or retirement) or, if the grant, issuance, vesting or
retention of the award is contingent upon satisfaction of a performance criteria, a performance period of at least one year or
made to a director. Unless otherwise determined by the Compensation Committee, participants holding shares subject to a Restricted
Stock Award may exercise full voting rights with respect to the shares during the restriction period and will be entitled to receive
all dividend and other distributions with respect to the shares, subject to any requirement imposed by the Compensation Committee
that such dividend or distribution amounts be reinvested in additional shares subject to a Restricted Stock Award or remain subject
to the same restrictions as the Restricted Stock Award. Holders of Restricted Stock Units will be entitled to receive dividend
equivalents only to the extent provided by the Compensation Committee. As described below in “Dividends and Distributions,”
any such dividends or distributions are subject to the same restrictions and risk of forfeiture as the applicable Restricted Stock
Award or Restricted Stock Units and are not paid unless and until the award has vested and been earned.
Performance Award Units
The Amended and Restated Plan authorizes
the grant of performance award units, pursuant to which participants are awarded bonus opportunities that are paid contingent
upon the achievement of performance criteria specified by the Compensation Committee. The Compensation Committee has discretion
to determine the terms of any performance award unit, including the maximum amount payable, the performance period (which is generally
at least one year), the performance criteria (which may be based on financial performance and/or personal performance evaluations)
and level of achievement versus these criteria, the timing of any payment, restrictions on a performance award unit prior to actual
payment, forfeiture provisions and any other terms and conditions consistent with the Amended and Restated Plan. Performance award
units are payable in cash or shares of common stock as determined by the Compensation Committee. Notwithstanding satisfaction
of any performance goals, the number of shares issued under or the amount paid under an award may, to the extent specified in
the award agreement, be increased or reduced by the Compensation Committee on the basis of such further considerations as the
Compensation Committee in its sole discretion shall determine.
Transferability
Unless otherwise provided for by the Compensation
Committee, awards under the Amended and Restated Plan are generally only transferable (i) by a recipient’s last will and
testament and by the applicable laws of descent and distribution, (ii) pursuant to a domestic relations order or (iii) to immediate
family members or trusts or partnerships solely for the benefit of the Participant’s immediate family members. Incentive
Options are transferable only as provided in (i) above. Shares issued upon exercise of an Option or SAR may not be sold or transferred
by the Participant until the earlier of (a) one year following the date of exercise and (b) the date of the termination of the
Participant’s employment.
Tax Withholding
A participant must satisfy any applicable
federal, state, local or foreign tax withholding obligations that arise due to an award made under the Amended and Restated Plan,
and the Compensation Committee will not be required to issue any shares or make any payment until the participant satisfies those
obligations in a manner satisfactory to the Company. The Compensation Committee may permit tax withholding obligations to be satisfied
by having the Company withhold a portion of the shares that would otherwise be issued to the participant under an award or by
allowing the participant to tender previously acquired shares.
Dividends and Distributions
All dividends or distributions payable
in respect of shares underlying awards granted under the Amended and Restated Plan to which a Participant is entitled are subject
to the same restrictions and risk of forfeiture as the applicable award and will not be paid unless and until the award has vested
and been earned. The Company does not pay dividends or dividend equivalents with respect to RSUs, except RSUs that are vested
but deferred under the terms of the plan.
Corporate Events
In the event that the number of shares
of common stock shall be increased or decreased through reorganization, reclassification, combination of shares, stock split,
reverse stock split, spin-off, dividend (other than regular, quarterly cash dividends) or otherwise, the Compensation Committee
may, in its discretion, adjust the number and kind of shares available for issuance under the Amended and Restated Plan, the number
and kind of shares subject to outstanding awards and the exercise price of awards and the number and kind of shares subject to
the various limitations under the Amended and Restated Plan to reflect such increase or decrease. The Compensation Committee has
the authority to determine, subject to the terms of the Amended and Restated Plan, the effect, if any, that a change in control
(as defined in the Amended and Restated Plan) or termination of employment following a change in control would have on outstanding
awards under the Amended and Restated Plan.
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Change in Control
Under the Amended and Restated Plan, the
Compensation Committee does not have discretion to provide for an alternative definition of “Change in Control” in
the case of an individual award. In addition, under the Amended and Restated Plan, the Compensation Committee has the discretion
to accelerate an award subject to time-based vesting conditions in connection with a Change in Control only if (i) the award is
not substituted, assumed, or continued by the successor company or its parent or subsidiary or (ii) the Participant’s employment
is terminated without cause following the Change in Control, as determined by the Compensation Committee. In the case of awards
subject to performance-based vesting conditions, upon a Change in Control, (a) the Compensation Committee will determine the extent
to which the performance goals with respect to each incomplete performance period have been met based upon such audited or unaudited
financial information then available as it deems relevant and (b) the applicable Participant will receive payment of partial or
full awards with respect to performance goals based upon the Committee’s determination of the degree of attainment of the
performance goals or, if not determinable, on a pro rata basis assuming that the applicable “target” levels of performance
have been attained, or on such other basis determined by the Committee to be consistent with the payment levels set forth in this
clause (b).
Amendments
The Board of Directors may terminate, amend
or discontinue the Amended and Restated Plan and the Compensation Committee may amend or alter any agreement or other document
evidencing an award made under the Amended and Restated Plan, provided that no action may be taken by the Board of Directors (except
those described earlier in the “Corporate Events” section above) without the approval of the stockholders to: (i)
increase the maximum number of shares that may be issued under the Amended and Restated Plan; (ii) permit granting of options
at less than fair market value; (iii) reduce the exercise price of outstanding options; (iv) extend the term of the Amended and
Restated Plan; (v) change the class of individuals eligible for the Amended and Restated Plan; or (vi) otherwise amend the Amended
and Restated Plan in any manner requiring stockholder approval by law or under the Nasdaq National Market listing requirements.
In addition, no amendment of the Amended and Restated Plan or any award granted thereunder may impair the rights of any award
holder without his or her consent (unless the Compensation Committee determines prior to any change in control that the amendment
or alteration is required or advisable in certain situations).
Federal Income Tax Consequences
The following discussion is for general
information only and is intended to briefly summarize the U.S. federal tax consequences to participants arising from participation
in the Amended and Restated Plan. This description is based on current law, which is subject to change (possibly retroactively).
The tax treatment of participants in the Amended and Restated Plan may vary depending on the particular situation and, therefore,
may be subject to special rules not discussed below. No attempt has been made to discuss any potential foreign, state or local
tax consequences.
Incentive Options; Nonstatutory Options; SARs
Participants will not realize taxable income
upon the grant of a Nonstatutory Option or an SAR. Upon the exercise of a Nonstatutory Option or SAR, a participant will recognize
ordinary compensation income (subject to withholding) in an amount equal to the excess of (i) the amount of cash and the fair
market value of the common stock received, over (ii) the exercise price (if any) paid therefore. A participant will generally
have a tax basis in any shares of common stock received pursuant to the exercise of an SAR, or pursuant to the cash exercise of
a Nonstatutory Option, that equals the fair market value of such shares on the date of exercise. Subject to the discussion under
“Tax Code Limitations on Deductibility” below, the Company or one of its subsidiaries (as applicable) will be entitled
to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized
by a participant under the foregoing rules.
Participants eligible to receive an Incentive
Option will not recognize taxable income on the grant of an Incentive Option. Upon the exercise of an Incentive Option, a participant
will not recognize taxable income, although the excess of the fair market value of the shares of common stock received upon exercise
of the Incentive Option (“ISO Stock”) over the exercise price will increase the alternative minimum taxable income
of the participant, which may cause such participant to incur alternative minimum tax. The payment of any alternative minimum
tax attributable to the exercise of an Incentive Option would be allowed as a credit against the participant’s regular tax
liability in a later year to the extent the participant’s regular tax liability is in excess of the alternative minimum
tax for that year.
Upon the disposition of ISO Stock that
has been held for the requisite holding period (generally, at least two years from the date of grant and more than one year from
the date of exercise of the Incentive Option), a participant will generally recognize capital gain (or loss) equal to the excess
(or shortfall) of the amount received in the disposition over the exercise price paid by the participant for the ISO Stock. However,
if a participant disposes of ISO Stock that has not been held for the requisite holding period (a “Disqualifying Disposition”),
the participant will
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recognize ordinary compensation income
in the year of the Disqualifying Disposition in an amount equal to the amount by which the fair market value of the ISO Stock
at the time of exercise of the Incentive Option (or, if less, the amount realized in the case of an arm’s-length disposition
to an unrelated party) exceeds the exercise price paid by the participant for such ISO Stock. A participant would also recognize
capital gain to the extent the amount realized in the Disqualifying Disposition exceeds the fair market value of the ISO Stock
on the exercise date. If the exercise price paid for the ISO Stock exceeds the amount realized (in the case of an arm’s-length
disposition to an unrelated party), such excess would ordinarily constitute a capital loss.
Generally, the Company will not be entitled
to any federal income tax deduction upon the grant or exercise of an Incentive Option, unless a participant makes a Disqualifying
Disposition of the ISO Stock. If a participant makes a Disqualifying Disposition, the Company will then, subject to the discussion
below under “Tax Code Limitations on Deductibility,” be entitled to a tax deduction that corresponds as to timing
and amount with the compensation income recognized by a participant under the rules described in the preceding paragraph.
Under current rulings, if a participant
transfers previously held shares of common stock (other than ISO Stock that has not been held for the requisite holding period)
in satisfaction of part or all of the exercise price of a Nonstatutory Option or Incentive Option, no additional gain will be
recognized on the transfer of such previously held shares in satisfaction of the Nonstatutory Option or Incentive Option exercise
price (although a participant would still recognize ordinary compensation income upon exercise of a Nonstatutory Option in the
manner described above). Moreover, that number of shares of common stock received upon exercise which equals the number of shares
of previously held common stock surrendered therefore in satisfaction of the Nonstatutory Option or Incentive Option exercise
price will have a tax basis that equals, and a capital gains holding period that includes, the tax basis and capital gains holding
period of the previously held shares of common stock surrendered in satisfaction of the Nonstatutory Option or Incentive Option
exercise price. Any additional shares of common stock received upon exercise will have a tax basis that equals the amount of cash
(if any) paid by the participant, plus the amount of compensation income recognized by the participant under the rules described
above.
The Amended and Restated Plan allows the
Compensation Committee to permit the transfer of awards in limited circumstances. See “Summary of the Amended and Restated
Plan — Transferability.” For income and gift tax purposes, certain transfers of Nonstatutory Options and SARs generally
should be treated as completed gifts, subject to gift taxation.
The IRS has not provided formal guidance
on the income tax consequences of a transfer of Nonstatutory Options (other than in the context of divorce) or SARs. However,
the IRS has informally indicated that after a transfer of stock options (other than in the context of divorce pursuant to a domestic
relations order), the transferor will recognize income, which will be subject to withholding, and FICA/FUTA taxes will be collectible
at the time the transferee exercises the stock options.
In addition, if a participant transfers
a vested Nonstatutory Option to another person and retains no interest in or power over it, the transfer is treated as a completed
gift. The amount of the transferor’s gift (or generation-skipping transfer, if the gift is to a grandchild or later generation)
equals the value of the Nonstatutory Option at the time of the gift. The value of the Nonstatutory Option may be affected by several
factors, including the difference between the exercise price and the fair market value of the stock, the potential for future
appreciation or depreciation of the stock, the time period of the Nonstatutory Option and the illiquidity of the Nonstatutory
Option. The transferor will be subject to a federal gift tax, which will be limited by (i) the annual exclusion of $15,000 (for
2021) per donee, (ii) the transferor’s lifetime exclusion or (iii) the marital or charitable deduction rules. The gifted
Nonstatutory Option will not be included in the participant’s gross estate for purposes of the federal estate tax or the
generation-skipping transfer tax.
This favorable tax treatment for vested
Nonstatutory Options has not been extended to unvested Nonstatutory Options. Whether such consequences apply to unvested Nonstatutory
Options is uncertain, and the gift tax implications of such a transfer are a risk the transferor will bear upon such a disposition.
The IRS has not specifically addressed the tax consequences of a transfer of SARs.
Restricted Stock Awards; Restricted Stock Units; Cash Awards
A participant will recognize ordinary compensation
income upon receipt of cash pursuant to a cash award or, if earlier, at the time the cash is otherwise made available for the
participant to draw upon. A participant will not have taxable income at the time of grant of a stock award in the form of Restricted
Stock Units denominated in common stock, but rather, will generally recognize ordinary compensation income at the time he/she
receives cash or common stock in settlement of the Restricted Stock Units in an amount equal to the cash or the fair market value
of the common stock received. In general, a participant will recognize ordinary compensation income as a result of the receipt
of common stock pursuant to a Restricted Stock Award in an amount equal to the fair market value of the common stock when such
stock is received; provided that, if the stock is not transferable and is subject to a substantial risk of forfeiture when received,
a participant will recognize ordinary compensation income in an amount equal to the fair market value of the common stock (i)
when the common stock first becomes transferable or is no longer subject to a substantial risk of forfeiture, in cases where a
participant does not make a valid election under section 83(b) of the IRC or (ii) when the common stock is received, in cases
where a participant makes a valid election under section 83(b) of the IRC.
A participant will be subject to withholding
for federal, and generally for state and local, income taxes at the time he/she recognizes income under the rules described above
with
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respect to common stock or cash received.
Dividends that are received by a participant prior to the time that the common stock is taxed to the participant under the rules
described in the preceding paragraph are taxed as additional compensation, not as dividend income. The tax basis in the common
stock received by a participant will equal the amount recognized by him/her as compensation income under the rules described in
the preceding paragraph, and the participant’s capital gains holding period in those shares will commence on the later of
the date the shares are received or the restrictions lapse.
Subject to the discussion immediately below,
the Company or one of its subsidiaries (as applicable) will be entitled to a deduction for federal income tax purposes that corresponds
as to timing and amount with the compensation income recognized by a participant under the foregoing rules.
Tax Code Limitations on Deductibility
In order for the amounts described above
to be deductible, such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary
and necessary business expenses. The Company’s ability (or the ability of one of its subsidiaries, as applicable) to obtain
a deduction for future payments under the Amended and Restated Plan could also be limited by the golden parachute payment rules
of Section 280G of the IRC, which prevent the deductibility of certain excess parachute payments made in connection with
a change in control of an employer-corporation.
Finally, the Company’s ability (or
the ability of one of its subsidiaries, as applicable) to obtain a deduction for amounts paid under the Amended and Restated Plan
could be limited by Section 162(m) of the IRC, which limits the deductibility, for federal income tax purposes, of compensation
paid to certain executive officers of a publicly traded corporation to $1,000,000 with respect to any such officer during any
taxable year of the corporation.
New Plan Benefits
A summary of the material features of the
Amended and Restated Plan, including the class of persons eligible to participate therein and the number of persons in such class,
is included above under the title “Summary of Amended and Restated Plan.”
The awards, if any, that will be made to
eligible persons under the Amended and Restated Plan are subject to the discretion of the Compensation Committee and, thus, the
Company cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to its
executive officers, employees and directors under the Amended and Restated Plan. Therefore, a New Plan Benefits Table is not provided.
The Company did make its annual equity
awards under the Amended and Restated Plan for 2020 on May 12, 2020, to the Named Executive Officers, nonemployee directors, and
to its other eligible employees. The grants to the Named Executive Officers are reflected in the “2020 Grants of Plan-Based
Awards” table that can be found on page 39 of this Proxy Statement. The 2020 grant to the nonemployee directors is
reflected in footnote 3 to the Director Compensation Table. On February 22, 2021, the closing price of the Company’s common
stock was $56.46 per share. As of February 22, 2021, no stock options have been granted under the Plan.
Vote Required and Board Recommendation
Assuming the presence of a quorum at the
2021 Annual Meeting, approval of the Second Amendment to the Amended and Restated Plan, which increases the number of shares of
common stock that the Company may issue under the Plan by 600,000 shares, from 4,274,500 shares to 4,874,500 shares, requires
the affirmative vote of the holders of a majority of the total number of shares of Common Stock present in person or by proxy
and entitled to vote on the matter. For these purposes, broker non-votes are not treated as entitled to vote. See “Required
Votes” on page 68. Unless marked to the contrary, proxies received will be voted FOR approval. The Board believes
strongly that the approval of the Second Amendment to the Amended and Restated Plan is essential to the Company’s continued
success. For the reasons stated above, the stockholders are being asked to approve this proposal.
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2020 Equity Compensation Plan Information
The following table sets forth information
as of December 31, 2020, with respect to the Company’s compensation plans under which equity securities of the Company are
authorized for issuance:
| |
| | |
| | |
Number of Securities |
| |
| | |
| | |
Remaining Available for |
| |
Number of Securities to | | |
Weighted-Average Exercise | | |
Future Issuance Under |
| |
be Issued Upon Exercise | | |
Price of Outstanding | | |
Equity Compensation Plans, |
| |
of Outstanding Options, | | |
Options, Warrants and | | |
Excluding Securities |
| |
Warrants and Rights | | |
Rights | | |
Reflected in Column (a) |
Plan Category | |
(a) | | |
(b) | | |
(c) |
Equity Compensation | |
| | | |
| | | |
| |
Plans Approved by Security Holders | |
| 1,841,150 | (1) | |
| $ - | | |
| 673,027 |
Equity Compensation | |
| | | |
| | | |
| |
Plans Not Approved By Security Holders | |
| - | | |
| - | | |
| - |
Total | |
| 1,841,150 | | |
| $ - | | |
| 673,027 |
(1) |
This amount reflects outstanding RSU
awards under the ArcBest Corporation Ownership Incentive Plan, as amended and restated effective February 22, 2019. On April
30, 2019, the Company’s stockholders approved the Plan, as amended and restated, which provides for the award of incentive
stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted stock, RSUs and performance
award units. The Plan does not permit reload options. Following stockholder approval of the First Amendment to the Amended
and Restated Plan on May 1, 2020, the aggregate number of shares that have been reserved for issuance pursuant to awards under
the Plan is 4,274,500. No options have been granted under the Plan. The Committee administers the Plan. |
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee is
comprised solely of Directors who meet the independence standards and financial literacy requirements defined by the SEC and
Nasdaq, and we operate under a written charter approved by the Board. The Audit Committee’s composition, member
attributes and responsibilities, as reflected in its charter, are intended to be in accordance with applicable requirements
for corporate audit committees. Mr. Hogan and Ms. Stipp are Board-designated Audit Committee Financial Experts
as defined under applicable SEC and Nasdaq rules.
As part of our responsibilities,
the Audit Committee oversaw the Company’s financial reporting process on behalf of the Board. Management has the primary
responsibility for the preparation, presentation and integrity of the Company’s financial statements and the reporting process,
including the systems of internal controls. In fulfilling our oversight responsibilities related to the audited consolidated financial
statements in the Company’s 2020 Annual Report, we reviewed and discussed with management, among other things:
■ |
the Company’s audited consolidated financial statements for 2020 and recommended to the Board they be included in the Company’s Annual Report; |
■ |
the representations of management that those consolidated financial statements were prepared in accordance with generally accepted accounting principles; |
■ |
the quality and acceptability of the accounting principles; |
■ |
the reasonableness of significant accounting judgments and critical accounting policies and estimates; |
■ |
the clarity of disclosures in the consolidated financial statements; |
■ |
the adequacy and effectiveness of the Company’s financial reporting procedures, including disclosure controls and procedures; and |
■ |
the adequacy and effectiveness of the Company’s internal controls over financial reporting, including the report of management’s assessment on the effectiveness of internal controls over financial reporting, which was performed by management using the 2013 framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission. |
The Audit Committee is also responsible
for the appointment, termination, compensation, evaluation and oversight of Ernst & Young LLP (“EY”), the Company’s
independent registered public accounting firm, including review of the firm’s qualifications, performance and independence.
EY is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with
generally accepted auditing standards and expressing an opinion on the effectiveness of the Company’s internal controls over
financial reporting. EY is also responsible for expressing an opinion on the conformity of the audited consolidated financial statements
with generally accepted accounting principles. We reviewed and discussed with EY its judgments as to the quality, not just the
acceptability, of the Company’s accounting principles, reasonableness of significant accounting judgments, and critical accounting
policies and estimates, and the matters required to be discussed by the applicable requirements of the Public Company Accounting
Oversight Board (“PCAOB”) and the SEC. In addition, we received the written disclosures and the letter from EY as required
by the PCAOB regarding EY’s communications with the Audit Committee concerning independence and discussed with EY its independence
from management and the Company. We considered the compatibility of non-audit services performed by EY and determined the non-audit
services to be compatible with EY’s independence.
We discussed with the Company’s
internal auditors and EY the overall scope and plans for their respective audits. The Audit Committee met with the internal auditors
and EY, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s
internal controls, and the overall quality of the Company’s financial reporting. Additionally, we reviewed the performance,
responsibilities, and staffing of the Company’s internal auditors. We also oversaw compliance with the Company’s receipt,
retention and treatment of complaints regarding accounting, internal accounting controls, auditing and other federal securities
law matters, including confidential and anonymous submissions of these complaints. Furthermore, we met with members of management
to discuss the results of the Company’s legal and ethical compliance programs.
The Audit Committee provided
oversight of the Company’s risk management policies and processes and we reviewed and discussed with members of senior management
significant risks identified by management in various areas of the Company, including financial statements, systems and reporting,
legal, compliance, ethics, information technology, data security, cybersecurity, and related party transactions.
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In reliance on the reviews and
discussions referred to above, and the receipt of unqualified opinions from EY dated February 26, 2021, with respect to the
consolidated financial statements of the Company as of and for the year ended December 31, 2020, and with respect to the effectiveness
of the Company’s internal controls over financial reporting, the Audit Committee recommended to the Board (and the Board
has approved) that the audited consolidated financial statements be included in the Company’s 2020 Annual Report for filing
with the SEC.
|
Audit Committee |
|
|
Janice E. Stipp, Chair
Fredrik J. Eliasson
Michael P. Hogan
Steven L. Spinner |
|
ArcBest / 2021 PROXY STATEMENT |
62 |
PROPOSAL IV.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors recommends
a vote “FOR” Proposal IV.
The firm of Ernst &
Young LLP (“EY”) served as the independent registered public accounting firm for the Company for the fiscal year
ended December 31, 2020. The Audit Committee has appointed EY to continue in that capacity for fiscal year 2021, subject to
the Audit Committee’s approval of an engagement agreement and related service fees. EY has served as the
Company’s independent auditor since 1972. The Audit Committee and the Board believe it is in the best interests of the
Company and its stockholders to retain EY as the Company’s independent auditor for fiscal year 2021, and recommend that
a resolution be presented to the stockholders at the 2021 Annual Meeting to ratify that appointment.
The Audit Committee has ultimate
authority and responsibility for the appointment, termination, compensation, evaluation and oversight of the Company’s independent
auditor, including review of EY’s qualifications, performance and independence. The Audit Committee’s oversight includes
regular private sessions with EY, discussions with EY regarding the scope of its audit, an annual evaluation of whether to engage
EY, and direct involvement in the transition of the new lead engagement partner in connection with the regulatory five-year rotation
of that position. As part of the annual review, the Audit Committee considers, among other things:
■ |
the quality and efficiency of the current and historical services provided by EY; |
■ |
EY’s capability and expertise in handling the breadth and complexity of the Company’s operations; |
■ |
the quality and candor of EY’s communications with the Audit Committee; |
■ |
external data on EY’s audit quality and performance, including recent PCAOB reports; |
■ |
EY’s independence from the Company; |
■ |
the appropriateness of EY’s fees; |
■ |
EY’s tenure as the Company’s independent auditor, including the benefits of the extensive institutional knowledge EY has gained through the years and the controls and processes in place to help ensure EY’s continued independence; and |
■ |
the costs associated with onboarding a new independent auditor due to training and lost efficiencies. |
The submission of this proposal
for approval by stockholders is not legally required, but the Board and the Audit Committee believe the submission provides an
opportunity for stockholders, through their vote, to communicate with the Board and the Audit Committee about an important aspect
of corporate governance. In the event the stockholders fail to ratify the appointment of EY, the Audit Committee will consider
whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the
Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year
if it determines that such a change would be in the best interests of the Company and its stockholders. Representatives of EY will
attend the 2021 Annual Meeting. They will have the opportunity, following the meeting, to make a statement and respond to appropriate
questions from stockholders.
ArcBest / 2021 PROXY STATEMENT |
63 |
Independent Auditor’s
Fees and Services
In connection with the audit
of the 2020 consolidated financial statements, the Company entered into an engagement agreement with EY that sets forth the terms
by which EY will perform audit services for the Company. That agreement is subject to alternative dispute resolution (“ADR”)
procedures agreed upon by the parties. ADR procedures are used in lieu of litigation with the goal of resolving disputes in a more
expeditious and cost-effective manner. They do not limit the damage claims that could be asserted by either party.
The following is a summary of
the fees billed to the Company by EY for professional services rendered for the fiscal years ended December 31, 2020 and December
31, 2019:
Fee Category | 2020
Fees(1) | | |
2019 Fees |
Audit Fees | |
| $ 1,412,500 | | |
| $ 1,500,000 |
Audit-Related Fees | |
| - | | |
| 7,500 |
Tax Fees | |
| 37,463 | | |
| 27,512 |
All Other Fees | |
| 2,000 | | |
| 7,085 |
Total Fees | |
| $ 1,451,963 | | |
| $ 1,542,097 |
(1) |
Audit Fees include actual and expected billings for fees and expenses related to the 2020 financial statement audit. |
Audit Fees
Consists of fees billed for professional
services rendered for the integrated audit of the Company’s consolidated financial statements and internal controls over
financial reporting and quarterly reviews of the interim consolidated financial statements included in quarterly reports and services
that are normally provided by EY in connection with statutory and regulatory filings or engagements. These services also include
accounting consultations related to the impact of changes in rules or standards.
Audit-Related Fees
Consists of fees billed for assurance
and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated
financial statements and are not reported under “Audit Fees.”
Tax Fees
Consists of fees billed for professional
services for tax compliance and tax consulting. These services include assistance regarding federal, state and international tax
compliance.
All Other Fees
Consists of fees for online technical
accounting research materials.
Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee, under the
responsibilities and duties outlined in its charter, is to pre-approve all audit and non-audit services provided by EY. These services
may include audit services, audit-related services, tax services and other services as allowed by law or regulation. Pre-approval
is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services
and is generally subject to a specifically approved amount. EY and management are required to periodically report to the Audit
Committee regarding the extent of services provided by EY in accordance with this pre-approval and the fees incurred to date. The
Audit Committee may also pre-approve particular services on a case-by-case basis.
The Audit Committee, or the Audit
Committee Chair under authority of the Audit Committee, pre-approved 100% of the Company’s audit fees, audit-related fees,
tax fees and all other fees for each of the fiscal years ended December 31, 2020 and December 31, 2019.
ArcBest / 2021 PROXY STATEMENT |
64 |
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth
certain information concerning beneficial ownership of the Common Stock as of March 1, 2021 by (i) each person who is known
by the Company to own beneficially more than five percent (5%) of the outstanding shares of Common Stock; (ii) each officer who
is listed in the Summary Compensation Table (collectively the “Named Executive Officers”) and each director and director
nominee; and (iii) all directors and executive officers as a group.
Unless otherwise indicated,
to the Company’s knowledge, the persons included in the table below have sole voting and investment power with respect
to all the shares of Common Stock beneficially owned by them, subject to applicable community property laws. The number of
shares beneficially owned by a person includes RSUs that are (i) scheduled to vest within 60 days after March 1, 2021, (ii)
vested but deferred (and payable on a separation from service with the Company), or (iii) vested but unsettled due to
the Director’s or officer’s eligibility for either normal retirement or early retirement pursuant to the award
agreement under which the award was granted. These shares are also deemed outstanding for the purpose of computing the
percentage of outstanding shares owned by the person. These shares are not deemed outstanding for the purpose of computing
the percentage ownership of any other person. On March 1, 2021, there were 25,395,346 shares of Common Stock outstanding.
(i) Name / Address |
|
Shares Beneficially Owned |
|
Percentage of
Shares
Outstanding |
BlackRock, Inc.(1)
55 East 52nd Street, New York, NY 10055 |
|
3,971,349 |
|
15.64% |
The Vanguard Group, Inc.(2)
100 Vanguard Boulevard, Malvern, PA 19355 |
|
2,539,630 |
|
10.00% |
Dimensional Fund Advisors LP (3)
Building One, 6300 Bee Cave Road, Austin, TX 78746 |
|
2,049,234 |
|
8.07% |
JPMorgan Chase & Co.(4)
383 Madison Avenue, New York, NY 10179 |
|
1,142,997 |
|
4.50% |
(ii) Name |
|
Position |
|
|
|
|
Judy R. McReynolds(5,6) |
|
Chairman, President and CEO |
|
155,767 |
|
* |
Eduardo F. Conrado(5) |
|
Director |
|
19,750 |
|
* |
Fredrik J. Eliasson(5) |
|
Director |
|
4,700 |
|
* |
Stephen E. Gorman(5) |
|
Director |
|
24,600 |
|
* |
Michael P. Hogan(5) |
|
Director |
|
19,750 |
|
* |
Kathleen D. McElligott(5) |
|
Director |
|
24,600 |
|
* |
Craig E. Philip(5) |
|
Director |
|
40,500 |
|
* |
Steven L. Spinner(5) |
|
Director |
|
33,350 |
|
* |
Janice E. Stipp(5) |
|
Director |
|
31,350 |
|
* |
David R. Cobb(5,7) |
|
Chief Financial Officer |
|
38,700 |
|
* |
Michael E. Newcity(5) |
|
Senior Vice President–Chief Innovation Officer and ArcBest Technologies President |
|
- |
|
* |
James A. Ingram(5) |
|
Chief Operating Officer, Asset-Light Logistics |
|
- |
|
* |
Timothy D. Thorne(5,8) |
|
ABF Freight President |
|
55,957 |
|
* |
(iii) All Current Directors and Executive Officers as a Group (19 total) (9) |
|
506,023 |
|
1.98% |
ArcBest / 2021 PROXY STATEMENT |
65 |
* |
Less than 1% |
(1) |
Based on information contained in Schedule 13G filed
with the SEC by BlackRock, Inc. on January 25, 2021, BlackRock, Inc. has sole voting power with respect to 3,919,460 shares
of Common Stock and sole dispositive power with respect to 3,971,349 shares. |
(2) |
Based on information contained in Amendment No. 10 to
Schedule 13G filed with the SEC by The Vanguard Group, Inc. on February 10, 2021, The Vanguard Group, Inc. has sole voting
power with respect to 0 shares of Common Stock, shared voting power with respect to 26,904 shares, sole dispositive power
with respect to 2,489,829 shares and shared dispositive power with respect to 49,801 shares. |
(3) |
Based on information contained in Amendment No. 12 to
Schedule 13G filed with the SEC by Dimensional Fund Advisors LP on February 12, 2021, Dimensional Fund Advisors LP has sole
voting power with respect to 1,978,062 shares of Common Stock and sole dispositive power with respect to 2,049,234 shares. |
(4) |
Based on information contained in Amendment No. 4 to
Schedule 13G filed with the SEC by JPMorgan Chase & Co. on December 9, 2020, JPMorgan Chase & Co. has sole voting
power with respect to 989,450 shares of Common Stock and sole dispositive power with respect to 1,122,289 shares. |
(5) |
Includes RSUs that are (i) scheduled to vest within
60 days after March 1, 2021, (ii) vested but deferred (and payable on a separation from service with the Company), or (iii)
vested but unsettled due to the Director’s or Named Executive Officer’s eligibility for either normal retirement
or early retirement pursuant to the award agreement under which the award was granted, as follows: |
As of March 1, 2021 |
McReynolds |
|
77,721 |
Conrado |
|
16,150 |
Eliasson |
|
- |
Gorman |
|
5,400 |
Hogan |
|
16,150 |
McElligott |
|
11,600 |
Philip |
|
5,400 |
Spinner |
|
4,950 |
Stipp |
|
4,950 |
Cobb |
|
- |
Newcity |
|
- |
Ingram |
|
- |
Thorne |
|
36,942 |
(6) |
Includes 78,046 shares of Common Stock held
by the McReynolds 2005 Joint Trust, of which Ms. McReynolds is co-trustee. |
(7) |
Includes 14,900 shares held by the David R. Cobb Living
Trust, of which Mr. Cobb is trustee, and 23,800 shares held by the Carenda L. Cobb Living Trust, of which Carenda L. Cobb,
the spouse of Mr. Cobb, is trustee. |
(8) |
Includes 105 shares held by Mr. Thorne in the ArcBest
401(k) and DC Retirement Plan. |
(9) |
Includes 203,755 RSUs that will vest in 60 days; are
vested but deferred (and payable on a separation from service with the Company); or are vested but unsettled either due to
the Director’s or officer’s eligibility for normal retirement or early retirement pursuant to the terms of the
Company’s Plan. |
ArcBest / 2021 PROXY STATEMENT |
66 |
INFORMATION ABOUT THE MEETING
Taking into consideration the
continued public health impact of COVID-19, and to support the health and wellbeing of the employees, directors, partners and stockholders
of the Company, the Board has authorized a virtual-only meeting format for the Company’s 2021 Annual Meeting. The meeting will
only be accessible online; there will be no physical meeting. The meeting is scheduled for April 29, 2021, at 8:00 a.m. CDT. We
expect to resume in-person or hybrid annual meetings beginning with our 2022 annual meeting of stockholders.
The virtual Annual Meeting will
provide stockholders with rights and opportunities to participate in the meeting similar to what they would have at an in-person
meeting. Stockholders will have an opportunity to hear all portions of the official meeting, submit written questions during the
meeting, and vote online during the open poll portion of the meeting.
Questions must be submitted in
writing by following the instructions on the meeting website. The question period of the Annual Meeting will be open for up to
20 minutes for stockholder questions to be read and answered by Company personnel during the meeting. In submitting questions,
please note that we will only address questions that are germane to the matters being voted on at our Annual Meeting.
To attend the Annual Meeting,
you must pre-register at www.proxydocs.com/arcb using the control number found on the Notice of Internet Availability, proxy card
or voting instruction form. After registering, you will receive further instructions via email, including your unique links to
access the meeting, view the list of shareholders of record, submit questions and vote at the virtual Annual Meeting.
Help and technical support for
accessing and participating in the Annual Meeting will be available during the meeting. An email address for support will be provided
during the registration process and a toll-free support number will be provided in the email that you will receive approximately
one hour prior to the meeting.
Internet Availability of Proxy
Materials
We are pleased to furnish proxy
materials to our stockholders electronically, rather than mailing individual printed copies of those materials. Electronic delivery
makes our annual meeting more environmentally friendly and reduces printing and distribution costs. Accordingly, on or about March
16, 2021, we began mailing a Notice of Internet Availability to stockholders entitled to vote at the Annual Meeting containing
instructions on how you may access and review the proxy materials and how to cast your vote online. If you received a Notice of
Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request
one. There is no charge to you for requesting a copy. If you prefer printed copies of our proxy materials, see “General Matters”
for instructions on how to request those items and submit your request on or before 12 calendar days prior to the meeting date
to facilitate timely delivery.
Record Date
The Board has fixed the close
of business on March 1, 2021, as the record date for the 2021 Annual Meeting. Only stockholders of record on that date are entitled
to notice of and to vote at the meeting or any adjournment(s) or postponement(s) thereof in person or by proxy. Stockholders may
contact us at invrel@arcb.com, up to 10 days prior to the Annual Meeting to inspect the list of stockholders.
Voting
Stockholders of Record.
If you are a registered stockholder, you may vote your shares of the Company’s common stock by proxy or in person
during the meeting. Shares of common stock that are present virtually during the meeting constitute shares of common stock represented
“in person.” To vote during the meeting, use the link provided in the email you will receive one hour prior to the meeting
start time, and follow the instructions on the website to cast your vote. To vote in advance of the Annual Meeting, either: (i)
visit www.proxydocs.com/arcb to submit your proxy online; (ii) call 1-866-883-3382 to submit your proxy by telephone through an
automated system; (iii) call 1-833-670-0698 to submit your proxy by telephone through a live agent; or (iv) mail a signed and
dated proxy card in the envelope provided if you requested paper materials.
ArcBest / 2021 PROXY STATEMENT |
67 |
Beneficial Holders.
If you are a beneficial holder, meaning you hold your shares in “street name,” and you would like to vote during
the meeting, you must register at www.proxydocs.com/arcb using the control number provided by your broker, bank or other nominee
that holds your shares, and follow the instructions on the meeting website to submit your vote.
If you do not provide voting
instructions, the entity that owns your shares will only be permitted to vote your shares on Proposal IV (Ratification of the Independent
Auditor). Your broker cannot vote on Proposal I (Election of Directors), Proposal II (Advisory Vote to Approve Executive Compensation)
or Proposal III (Second Amendment to Amended and Restated Ownership Incentive Plan) without your instructions. This is called a
“broker non-vote.”
If you vote by Internet or telephone
or submit a properly signed and dated proxy card, the individuals designated by the Board will vote your shares in accordance with
your instructions. If you do not vote or return your proxy card, your shares cannot be voted by proxy. If you return a signed proxy
card that does not provide complete voting instructions, your shares will be voted as recommended by the Board. Your proxy also
confers discretionary authority to the proxy holders to vote on any other matter not presently known to the Company that may properly
come before the meeting.
Guests. Guests
may virtually attend the Annual Meeting only by registering with the Company in advance of the meeting. To register as a guest,
contact us at invrel@arcb.com, by 5:00 p.m. (CDT), on or before April 19, 2021. Guests are not entitled to ask questions or
vote during the Annual Meeting.
Revoking a Proxy
If you are a registered stockholder,
you may revoke your proxy at any time before the open poll portion of the Annual Meeting closes by submitting a later-dated vote
online during the Annual Meeting, via the Internet, by telephone, by mail or by delivering instructions to our Corporate Secretary
before the Annual Meeting commences. Beneficial holders may revoke any prior voting instructions by contacting the broker, bank
or other nominee that holds their shares or by voting online during the meeting.
Merely attending the meeting
without voting will not revoke a previously submitted proxy.
Quorum
On the record date, there were
25,395,346 shares of ArcBest common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote.
Cumulative voting is not allowed. The holders in person or by proxy of a majority of the total number of shares of common stock
will constitute a quorum for purposes of the 2021 Annual Meeting. If there is not a quorum at the meeting (either in person, virtually,
or represented by proxy), the holders of a majority of the shares entitled to vote who are represented
in person, virtually, or by proxy may adjourn the meeting from time to time, until a quorum is present. At any such adjourned meeting
at which a quorum is present, any business may be transacted that might have been transacted at the original meeting. Votes are
tabulated by the inspector of elections, Equiniti Trust Company, also known as EQ.
Required Votes
Proposal |
|
Vote Required to Pass |
|
Effect of Abstentions and Broker Non-Votes |
Proposal I (Election of Directors) |
|
A nominee is elected by a plurality of the votes cast |
|
None |
Proposal II (Advisory Vote on Executive Compensation) |
|
The affirmative vote of the holders of a majority of the total number of shares of common stock present in person or by proxy and entitled to vote |
|
An abstention will have the same effect as a vote “against” this proposal. Broker non-votes will not affect the outcome of the vote. |
Proposal III (Second Amendment to Amended and Restated Ownership Incentive Plan) |
|
The affirmative vote of the holders of a majority of the total number of shares of common stock present in person or by proxy and entitled to vote |
|
An abstention will have the same effect as a vote “against” this proposal. Broker non-votes will not affect the outcome of the vote. |
Proposal IV (Ratification of Appointment of Independent Registered Public Accounting Firm) |
|
The affirmative vote by the holders of a majority of the total number of shares of common stock present in person or by proxy and entitled to vote |
|
An abstention will have the same effect as a vote “against” the proposal. There should not be any broker non-votes. |
Unless otherwise instructed or
unless authority to vote is withheld, shares represented by proxy will be voted for the election of each of the director nominees;
for the approval, on an advisory basis, of the compensation of the Company’s Named Executive Officers; for the approval of
the Second Amendment to the Amended and Restated Ownership Incentive Plan; and for the ratification of Ernst & Young LLP as
the Company’s independent registered public accounting firm for fiscal year 2021.
ArcBest / 2021 PROXY STATEMENT |
68 |
How to Submit a Candidate for
the Board
The Nominating/Corporate Governance
Committee considers director candidates submitted by stockholders that follow the procedure set forth in the following Stockholder
Director Nomination Procedure.
Any stockholder entitled to vote
at an annual meeting of stockholders who intends to recommend candidate(s) for nomination for director must submit a written notice
to the Company that includes the information set forth in the Company’s bylaws.
As to the stockholder giving
the notice and each Stockholder Associated Person (defined below), the notice must include, among other things:
■ |
name and address, including business address and telephone number, |
■ |
the class and number of shares of the Company which are owned beneficially and of record by such persons, |
■ |
any option, warrant or other derivative security owned by such persons, |
■ |
any agreement pursuant to which such persons have the right to vote any shares of the Company, and |
■ |
any other information relating to such persons required to be disclosed in a proxy statement in connection with the solicitation of proxies relating to the election of directors in a contested election. |
As to each proposed candidate
for election or re-election as a director:
■ |
all information relating to such person required to be disclosed in a proxy statement relating to the election of directors in a contested election, |
■ |
such person’s written consent to being named in the proxy statement and to serving as a director if elected, and |
■ |
a description of all direct and indirect compensation and other material monetary agreements during the past three years between the stockholder and Stockholder Associated Person and their affiliates and the proposed nominee and his or her affiliates. |
For this purpose, a “Stockholder
Associated Person” of any stockholder means, subject to certain limitations set forth in the Company’s bylaws, (i) any beneficial
owner of shares of stock of ArcBest on whose behalf any proposal or nomination is made by such stockholder; (ii) any affiliates
or associates of such stockholder or any beneficial owner described in the foregoing clause (i); and (iii) each other person with
whom any of the persons described in the foregoing clauses (i) and (ii) either is acting in concert or has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting or disposing of any ArcBest capital stock or to cooperate in obtaining,
changing or influencing the control of ArcBest.
Any candidate to be a nominee
for election as director must deliver to the Corporate Secretary a written response to a questionnaire with respect to the candidate’s
background and qualifications and a written representation and agreement.
In accordance with the Company’s
advance notice procedure discussed below, to properly submit a candidate for consideration at the Company’s 2022 Annual Meeting
of Stockholders, the materials described above must be received by the Corporate Secretary at 8401 McClure Drive, Fort Smith, Arkansas
72916 between December 30, 2021 and January 29, 2022. Please see “Procedure for Submitting Stockholder Proposals for 2022
Annual Meeting.” For additional information regarding the required information in the stockholder notice and the candidate’s
questionnaire and representation and agreement, please see the Company’s bylaws or contact the Corporate Secretary’s
office at info@arcb.com or at 479-785-6000.
ArcBest / 2021 PROXY STATEMENT |
69 |
OTHER MATTERS
Neither the Company nor the Board
knows of any matters that will be presented for action at the 2021 Annual Meeting other than those described above and matters
incident to the conduct of the meeting. If, however, any other matters not presently known to the Company or the Board should come
before the 2021 Annual Meeting, it is intended that the shares represented by the accompanying proxy will be voted on such matters
in accordance with the discretion of the holders of such proxy.
Cost of Solicitation
Proxies may be solicited by Directors,
officers or employees of the Company or its subsidiaries in person, by telephone, electronic communication or other means. However,
no payment will be made to any of them for their solicitation activities. The costs of solicitation, including the standard charges
and expenses of banks, brokerage houses, other institutions, nominees and fiduciaries for preparing, assembling and forwarding
proxy materials to and obtaining proxies from beneficial owners of shares held of record by such persons, will be borne by the
Company. If you would like to speak with the Company’s solicitor, Alliance Advisors, please call their toll-free number, 1-833-670-0698.
Stockholder Communication with
the Board
ArcBest Corporation stockholders
may communicate with the Board, or any individual member of the Board, by sending the communication as follows:
|
Board of Directors (or Individual Member’s Name)
c/o Corporate Secretary
ArcBest Corporation
P.O. Box 10048
Fort Smith, AR 72917-0048 |
Communications addressed to the Board will be sent
to the Chairman of the Board.
All communications to the Board,
or an individual member, will be opened and reviewed by the Corporate Secretary prior to forwarding to the Board or individual
member of the Board. This review will facilitate a timely review of any matters contained in the communication if, for any reason,
the Board member is unavailable to timely review the communication.
Procedure for Submitting Stockholder Proposals for
2022 Annual Meeting
To permit the Company and its
stockholders to deal with stockholder proposals in an informed and orderly manner, the Company’s bylaws establish an advance
notice procedure. Pursuant to the Company’s bylaws, for a proposal that is not intended to be included in the Company’s
proxy statement to be properly and timely submitted as business to come before the 2022 Annual Meeting, the stockholder must submit
a written notice (“stockholder notice”) that must be received by the Corporate Secretary of the Company at the address
previously shown not less than 90 days nor more than 120 days prior to the first anniversary of the 2021 Annual Meeting. Director
nominations that a stockholder intends to present at the 2022 Annual Meeting, but does not intend to have included in the Company’s
proxy materials, must be received no earlier than the close of business on December 30, 2021, and no later than the close of business
on January 29, 2022. In the event that the date of the 2022 Annual Meeting is more than 30 days before or more than 60 days after
the anniversary date of the 2021 Annual Meeting, to be timely received, the proposal must be received by the Corporate Secretary
of the Company not less than 100 days nor more than 120 days prior to the date of the 2022 Annual Meeting, and in the event that
the first public announcement of the date of the 2022 Annual Meeting is less than 100 days prior to the date of such meeting, the
proposal must be received by the Corporate Secretary of the Company by the 10th day following the date of the public
announcement. Such stockholder notices must set forth the information specified in the bylaws. For information regarding the required
information in the stockholder notice, contact the Corporate Secretary’s office at info@arcb.com or 479-785-6000.
ArcBest / 2021 PROXY STATEMENT |
70 |
Notwithstanding the above provisions,
pursuant to Rule 14a-8 under the Exchange Act, any stockholder who wishes to submit a proposal for inclusion in the Company’s
proxy statement and proxy relating to the 2022 Annual Meeting must deliver such proposal to the Company no later than the close
of business on November 16, 2021. Proposals should be addressed to Corporate Secretary, ArcBest Corporation, P.O. Box 10048, Fort
Smith, AR 72917-0048. In order to prevent controversy about the date of receipt of a proposal, which must be no later than the
close of business on November 16, 2021, the Company strongly recommends that any stockholder wishing to present a proposal submit
the proposal by certified mail, return receipt requested.
General Matters
The Proxy Statement, proxy card
and 2020 Annual Report are first being made available at www.proxydocs.com/arcb beginning on or about March 16, 2021.
Upon request, the Company will
provide stockholders with a printed copy of this Proxy Statement, proxy card and the 2020 Annual Report filed with the SEC (including
financial statements and schedules thereto), without charge. If you wish to request paper copies of the proxy materials, please
contact us via:
■ |
Internet/Mobile
- Access the Internet and go to www.proxydocs.com/arcb. Follow the instructions to log in and order copies. |
■ |
Telephone - Call
us free of charge at 866-870-3684 in the U.S. or Canada, using a touch-tone phone, and follow the instructions to log in and
order copies. |
■ |
Email - Send us an e-mail at paper@investorelections.com
with “ARCB Materials Request” in the subject line. The email must include: |
|
■ |
the 11-digit control number located on your Notice of Internet Availability; |
|
■ |
your preference to receive printed materials via mail or to receive an email with links to the electronic materials; |
|
■ |
if you choose email delivery, you must include the email address; and |
|
■ |
if you would like this election to apply to delivery of material for all future meetings, write the word “Permanent” and include the last 4 digits of your Tax ID number in the email. |
Stockholders who are beneficial
owners may also contact their bank, broker or other nominee record holder, or contact Broadridge online at www.proxyvote.com, by
telephone at 1-800-579-1639 or by email at sendmaterial@proxyvote.com. If requesting materials by email, please send a blank email
with the control number, printed on your Notice of Internet Availability, in the subject line. Requests for printed materials must
be made on or before April 15, 2021 to facilitate timely delivery.
Your vote is important. Whether or not you plan to attend the meeting, we hope you will vote promptly: by Internet, by telephone or by signing, dating and returning a proxy card. |
Fort Smith, Arkansas |
MICHAEL R. JOHNS |
Date: March 16, 2021 |
Secretary |
ArcBest / 2021 PROXY STATEMENT |
71 |
APPENDIX A
SECOND AMENDMENT TO THE AMENDED AND RESTATED ARCBEST
CORPORATION OWNERSHIP INCENTIVE PLAN
(Amended and Restated Effective
February 22, 2019)
THIS SECOND AMENDMENT (the “Second
Amendment”) to the ArcBest Corporation Ownership Incentive Plan, as amended from time to time (the “Plan”), was
adopted by ArcBest Corporation’s (the “Company’s”) board of directors (the “Board”) on February
22, 2021 to be effective April 29, 2021 (the “Effective Date”).
WITNESSETH:
WHEREAS, the Company previously
adopted the Plan, under which the Company is authorized to grant equity-based incentive awards to certain employees and service
providers of the Company;
WHEREAS, the Company’s
Board has determined that it is desirable to amend the Plan, effective as of the Effective Date and subject to approval by the
stockholders of the Company, to increase the maximum number of shares for which Awards may be granted under the Plan; and
WHEREAS, Section 18
of the Plan provides that the Board may amend the Plan from time to time under certain circumstances, including to increase the
maximum number of shares for which Awards may be granted under the Plan, subject to approval by the stockholders of the Company.
NOW, THEREFORE, the Plan
shall be amended as of the Effective Date, subject to approval by the Company’s stockholders, as set forth below:
1. The first sentence of Section 6(a) of the Plan shall be deleted and replaced with the following:
The maximum aggregate number
of Shares issuable pursuant to all Awards, since inception of the Plan, is 4,874,500.
NOW, THEREFORE, be it
further provided that, except as set forth above, the Plan shall continue to read in its current state.
IN WITNESS WHEREOF, the
Company has caused the execution of this Second Amendment by its duly authorized officer, effective as of the Effective Date and
subject to approval of the Company’s stockholders.
|
ARCBEST CORPORATION |
|
By: |
|
Name: |
|
Title: |
|
Date: |
ArcBest / 2021 PROXY STATEMENT |
72 |
This regulatory filing also includes additional resources:
larc2021_def14a.pdf
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