UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, DC 20549

 

SCHEDULE 14A

 

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

 

Filed by the Registrant

Filed by a Party other than the Registrant

 

Check the appropriate box:
	Preliminary Proxy Statement
	Confidential, for Use of the Commission Only (as permitted by Rule 14A-6(E)(2))
	Definitive Proxy Statement
	Definitive Additional Materials
	Soliciting Material under §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 all boxes that apply):
	No fee required.
	Fee paid previously with preliminary materials.
	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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Our Company

ArcBest is a multibillion-dollar integrated logistics company that leverages our full suite of shipping and logistics solutions to meet our customers’ supply chain needs.

With the ability to optimize, connect and deliver across various modes of transportation, we serve as a single logistics resource and help keep the global supply chain moving. This integrated approach, combined with our technology and expertise, helps ensure our customers have the right solutions to get the job done — no matter the shipment size, type of product or speed of delivery.

 

We started 100 years ago as a local Arkansas freight hauler. Today, through organic growth, smart strategic acquisitions, visionary leadership and a mindset focused on the future, we’re a publicly traded $5 billion logistics powerhouse with over 15,000 employees across more than 250 campuses and service centers.

 

ArcBest is a trusted advisor, with our customers at the center of it all. We listen, get to know their business and look at things from their perspective, so the strategies and solutions we recommend align with their goals.

 

Our long history of innovation enriches these deep customer relationships. We invest heavily in strategic initiatives aimed at transformation — helping shippers and capacity providers successfully navigate the complex logistics landscape. With a strong emphasis on disruptive technology and advanced analytics, we’re enabling more sustainable supply chains and delivering intelligent solutions that make it easier for our customers to achieve their objectives.

 

In pursuit of our mission to connect and positively impact the world through solving logistics challenges and aligned to our values-driven culture, we’re also focused on advancing Environmental, Social and Governance (ESG) initiatives. We’re committed to identifying, analyzing and reporting on ESG-related data and conducting business in a way that helps create a safer, more sustainable and inclusive company and world. This includes our commitment to having a workplace that respects all cultures, perspectives and experiences so that we provide the best atmosphere for our employees and the best service to our customers.

 

Welcome to ArcBest.

 

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TABLE OF CONTENTS

/ 2023 PROXY STATEMENT	arcb.com/investor-relations

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Letter to our Stockholders from ArcBest Chairman, President & Chief Executive Officer

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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 2022 PERFORMANCE, PLEASE REVIEW OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2022.

Annual Meeting Information

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:

 

 

 

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Director Nominees

 

 

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Our nine nominees represent a diverse range of skills:

2022 Performance

Supply chains continued to be disrupted, and in 2022, many shippers depended on ArcBest’s expertise as an integrated logistics provider to help them navigate the challenges of effectively and efficiently delivering their products. With over 15,000 employees utilizing their industry knowledge while offering a breadth of solutions, ArcBest truly lived out its mission to connect and positively impact the world through solving logistics challenges. In 2022, we achieved record revenue, operating income, net income and earnings per share. We have accomplished a lot, and we are positioned to make much more progress in the future.

 

Compensation Highlights

Our executive compensation program strikes a balance between fixed and variable elements. As shown below, 80% of compensation for our CEO, and 68% of compensation (on average) for our other Named Executive Officers, was at risk in 2022.

 

 

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Key Compensation Governance Policies

The Compensation 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 three-year ratable 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.
	Half (50%) of the long-term incentive value granted to Named Executive Officers is contingent on the Company’s performance over a 3-year period.			NO hedging or pledging of Company stock.
	We have caps on both the annual incentive and long-term incentive payouts.			NO employment agreements with our Named Executive Officers.
	We have a robust clawback policy.			NO re-pricing of stock options without stockholder approval.
	We conduct annual risk assessments of our compensation plans.			NO guaranteed bonuses.
	We have an independent Compensation Committee.
	The Compensation Committee has an independent compensation consultant.
	We benchmark our compensation practices to peers with which we compete for talent.

 

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PROPOSAL I.
ELECTION OF DIRECTORS

The Board recommends a vote “FOR” each of the nominees.

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 2024 or until the individual’s earlier death, resignation or removal from office. Based on a recommendation from the Nominating/Corporate Governance Committee, the Board appointed Salvatore A. Abbate to the Board on January 30, 2023. Prior to his appointment, Mr. Abbate was recommended to the Nominating/Corporate Governance Committee as a potential Board candidate by Korn Ferry, which was engaged by the Nominating/Corporate Governance Committee to assist in identifying potential Board candidates.

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 votes against a director, 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.

 

Director Nominees

A biography of each Director nominee, current as of February 1, 2023, appears below. There are no family relationships among any of the nominees and executive officers of the Company or its subsidiaries.

SALVATORE A. ABBATE
Age 54   Director since: 2023   INDEPENDENT   Committees: ■ Compensation ■ Nominating/ Corporate Governance		Key experience ■ Sales and marketing ■ Manufacturing and process improvement ■ Logistics ■ Public company executive management ■ Strategic planning   Other directorships ■ Veritiv Corporation (Board member)   Mr. Abbate is Chief Executive Officer and a member of the Board of Directors of Veritiv Corporation. Based in Atlanta, GA, Veritiv is a Fortune 500 company and a leading North American business-to-business distribution solutions company. Before becoming its CEO, Mr. Abbate served as Chief Operating Officer for Veritiv from January 2020 until September 2020 and as Chief Commercial Officer from April 2018 until December 2019. Prior to joining Veritiv, his leadership roles included Senior Vice President, Chief Sales & Marketing Officer for Andersen Windows & Doors, Inc. and Vice-President, Global Sales and Marketing for the performance films division of Solutia, Inc., a performance materials and specialty chemical provider which is now part of the Eastman Chemical Company. Mr. Abbate began his career at Armstrong World Industries, where he spent 15 years in all three of its business units in various roles including sales, marketing, manufacturing, and process improvement.

 

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EDUARDO F. CONRADO
Age 56   Director since: 2016   INDEPENDENT   Committees: ■ Compensation ■ Nominating/ Corporate Governance (Chair)		Key experience ■ Brand marketing ■ Corporate strategy and strategic development ■ Digital transformation ■ New business development ■ Digital and data strategy ■ Product innovation ■ Operations ■ Cybersecurity   Other directorships ■ Previously served as a director on the not-for-profit boards of Ascension, Chicago Red Cross, and The Chicago Field Museum   Mr. Conrado is President for Ascension, the nation’s largest non-profit health system. Before becoming President, Mr. Conrado was Executive Vice President and Chief Strategy and Innovations Officer from July 2019 through January 2023. 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.

 

FREDRIK J. ELIASSON
Age 52   Director since: 2019   INDEPENDENT   Committees: ■ Audit		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 ■ Cybersecurity   Other directorships ■ Gates Industrial Corporation plc (Audit Committee Chair) ■ 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   Mr. Eliasson currently serves as a member of the Board of Directors of Gates Industrial Corporation plc. He previously served as Executive Vice President and Chief Financial Officer for Change Healthcare Inc., one of the largest independent healthcare IT companies in the United States, from 2018 to 2022. He joined Change Healthcare in 2018 after a 22-year career at CSX Corporation, where he served in various executive leadership capacities, including 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.

 

MICHAEL P. HOGAN
Age 63   Director since: 2016   INDEPENDENT   Committees: ■ Audit		Key experience ■ Strategic planning ■ IT and Cybersecurity ■ Marketing and sales ■ Ecommerce ■ Multi-channel and digital business ■ Corporate governance ■ Digital products and mobile and consumer electronics products   Other directorships ■ Feed the Children, a non-profit organization (Chairman of the Board)   Mr. Hogan is the Chief Growth and Strategy Officer for Forme Financial, the first financial advisory firm created specifically to serve physicians. He previously 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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KATHLEEN D. MCELLIGOTT
Age 67   Director since: 2015   INDEPENDENT   Committees: ■ Compensation (Chair) ■ Nominating/ Corporate Governance		Key experience ■ Manufacturing ■ Supply chain and distribution ■ Acquisitions and divestitures ■ Big data, cloud computing, and technology strategy ■ Cybersecurity ■ Technology ■ Transportation and enterprise logistics ■ Strategic planning   Other directorships ■ Previously served on the board of Forescout Technologies, Inc. (May 2019 to Aug. 2020) ■ Previously served as board president of Connections to Success, a St. Louis-based non-profit organization   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.

 

JUDY R. MCREYNOLDS
Age 60   Director since: 2010   Chairman of the Board since: 2016   Committees: ■ None		Key experience ■ Significant industry-specific experience ■ Expertise with respect to both ArcBest and its transportation and logistics subsidiaries resulting from a 26-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 ■ ESG oversight   Other directorships ■ OGE Energy (since 2011) (Compensation Committee; Lead Director since Dec. 2020) (Compensation Committee chair, Nominating and Governance Committee, 2011 to Dec. 2020) ■ Previously served as Chair on the American Transportation Research Institute board ■ Previously served as a member of the Board and the Executive Committee for the American Trucking Associations ■ Previously served on the Transportation Industry Council of the Federal Reserve Bank of St. Louis   Ms. McReynolds has served as ArcBest President and Chief Executive Officer since January 2010 and Chairman of the Board since April 2016. 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.

 

DR. CRAIG E. PHILIP
Age 69   Director since: 2011   INDEPENDENT   Committees: ■ Compensation ■ Nominating/ Corporate Governance		Key experience ■ 40-year career in the marine, rail and intermodal industries ■ Leadership experience in various modes of freight transportation ■ Industrial marketing ■ Strategic planning ■ Legal/Regulatory   Other directorships ■ Marine Board of the Transportation Research Board, a unit of the National Academies of Sciences, Engineering and Medicine (Chairman) ■ Transportation Research Board (Resilience Section Committee)   Dr. Philip joined the faculty of Vanderbilt University, a private research university, in 2015, as Research Professor in Civil and Environmental Engineering. He is the former 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
Age 63   Director since: 2011   Lead Independent Director since: 2022   Committees: ■ Audit		Key experience ■ Public company executive management ■ Logistics ■ Network business ■ Wholesale food distribution business ■ Operations ■ ESG oversight   Other directorships ■ MidOcean Partners (Private Equity Executive Board) ■ Vidafuel (Board member) ■ Boxcar Partners (Partner) ■ Previously served on the Board of Directors of United Natural Foods, Inc. (Chairman of the Board)   Mr. Spinner currently serves as an Operating Partner for MidOcean Partners, a private company offering capital solutions across private equity and credit markets. In August 2021, he became a Partner at Boxcar Partners, a multi-family office venture investment firm. Prior to that, he served as President and Chief Executive Officer and Chairman of the Board for United Natural Foods, Inc., an independent national distributor of natural, organic and specialty foods and related products, from September 2008 to August 2021 when he retired. 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.

 

JANICE E. STIPP
Age 63   Director since: 2012   INDEPENDENT   Committees: ■ Audit (Chair)		Key experience ■ Financial and accounting experience with a variety of industrial companies, both public and private ■ Auditing, financial controls, financial management and accounting and treasury ■ Corporate restructuring ■ Public company executive management ■ Risk Management ■ Acquisitions   Other directorships ■ Rotork, plc (since 2020) (Nomination and Remuneration Committees; Audit Committee chair) ■ Previously served on the Board of Directors of Commercial Vehicle Group, Inc. (Audit Committee; Nominating and Governance Committee chair) ■ Previously served on the Board of Sappi Limited (Audit Committee) ■ Previously served on the Board of Directors of Ply Gem Holdings, Inc.   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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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.

 

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Board Diversity Matrix

The table below provides certain highlights of the composition of our Board members and nominees as of January 30, 2023. Each of the categories listed in the tables below has the meaning as it is used in Nasdaq Rule 5605(f).

 

 

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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 an independent director 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:

The Lead Independent Director’s authority and responsibilities generally correspond to those performed by an independent Chairman.

Effective January 1, 2022, the Board elected Stephen E. Gorman to serve as Lead Independent Director, replacing Mr. Spinner who had served as the Lead Independent Director since 2016. On August 5, 2022, Mr. Gorman resigned from the Board. Accordingly, the Board replaced Mr. Gorman as Lead Independent Director with Mr. Spinner in October 2022. 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 more than 11 years on our Board, and previous experience serving as Lead Independent Director, 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, talent, 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.

 

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Director 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 four times in 2022. Mr. Gorman, as Lead Independent Director, presided over three of those meetings, and following Mr. Gorman’s departure, Mr. Spinner, as Lead Independent Director, presided over one of 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:

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. While the Nominating/Corporate Governance Committee does not have a formal policy on diversity with regard to consideration of director nominees, 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.

The Nominating/Corporate Governance Committee may consider director candidates recommended by stockholders. Recommendations should be sent to the Nominating/Corporate Governance Committee at the address provided in the section of this Proxy Statement titled “Stockholder Communication with the Board”. The Nominating/Corporate Governance Committee does not have a specific policy regarding the consideration of stockholder recommendations for director candidates because the Nominating/Corporate Governance Committee would evaluate stockholder recommendations in the same manner as it evaluates director candidates recommended by other sources, using the process and criteria described above.

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, talent, 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, significant risk

 

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exposures, including cybersecurity and ESG-related risks, and the Company’s policies for risk assessment and risk management. 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.”

The Nominating/Corporate Governance Committee is responsible for overseeing risks associated with corporate governance, social and environmental issues, and the Company’s CEO succession process. In connection with this responsibility, the Nominating/Corporate Governance Committee annually reviews the Company’s Corporate Governance Guidelines and their implementation and oversees our ESG strategy, practices and policies.

CEO and Executive Leadership Succession Process

The Board ensures that ArcBest has a strong bench of well-prepared internal candidates, who align with the defined leadership competencies but have diverse strengths, to fill both planned and unplanned vacancies with limited disruption. Another critical part of the succession planning strategy is the executive team’s regular, data-driven review of the organizational structure, retention, culture, compensation, and talent development practices that support the execution of ArcBest’s strategic business goals. The Board, Talent Review Committee and Management share responsibility for management development and succession planning.

Board

A key responsibility of the Board is succession planning for the Chief Executive Officer, including identification and evaluation of potential successors. The Board also annually reviews succession planning for executive officers, including successor strengths and development opportunities and strategic talent metrics.

Talent Review Committee

This committee, led by the CEO and primarily composed of the CEO’s direct reports, conducts annual reviews of succession plans for critical roles, as well as strategic talent data, with a focus on maintaining a values-driven culture in which career development for current and future leaders is critical to driving employee and organizational growth.

Management

The Chief Human Resources Officer and senior Human Resources leaders work with functional leaders across ArcBest in developing and implementing programs to attract, assess, develop, engage, and retain leaders at all levels of the organization.

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 “Invest—Corporate Governance” section.

 

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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 six times during 2022. Eight members of the Board participated in 100%, and one member participated in 87.5%, of all regularly scheduled Board and applicable committee meetings held during the year.

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 2022 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, no Director is permitted to serve on the boards of more than two other public companies while serving on the ArcBest Board, unless he or she has obtained approval from the ArcBest Board.

 

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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.

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. There were no commercial transactions between related parties and the Company that required disclosure in this Proxy Statement.

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. As set forth in the Audit Committee’s charter, in determining whether to approve or ratify a related party transaction, the Audit Committee considers all 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.

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.

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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 January 2022, 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 increased the member annual retainer from $80,000 to $85,000, the lead independent director annual retainer from $25,000 to $30,000, the Compensation Committee Chair annual retainer from $15,000 to $20,000 and the Nominating/Corporate Governance Committee Chair annual retainer from $10,000 to $15,000. The increases were made based on a review of the 50th percentile of our peer group and similarly sized general industry companies.

The Nominating/Corporate Governance Committee moved the timing of its next annual review of Director compensation from January to October. Meridian conducted an updated study in October 2022, and no further changes were made to the program for 2023.

Cash Compensation

The following table shows the standard cash compensation for non-employee Directors for 2022. Retainers are cumulative, meaning that each non-employee Director receives a “Member Retainer” plus the appropriate retainer fee for any other positions held.

 

Actual cash compensation paid to Directors in 2022 is reflected in the “2022 Director Compensation Table.”

Equity-Based Awards

The target equity grant value for non-employee Directors in 2022 was increased from $110,000 to $125,000 based on a review of the 50th percentile of our peer group and similarly sized general industry companies. Awards were made in the form of restricted stock units (“RSUs”) in an amount determined by dividing the target 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). 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. Ms. Stipp and Messrs. Conrado, Eliasson, Hogan and Spinner 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.

 

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Miscellaneous Compensation Items

We typically provide transportation for Directors to attend Board meetings, pay for their hotel stays, and provide meals. Upon request, we may reimburse some or all of the cost of an educational conference and related travel.

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 a minimum value of stock in the Company. For 2022, Directors were required to own shares with a total value equal to five times their total annual retainers. 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 (including unvested RSUs and RSUs that have vested but are deferred or subject to transfer restrictions) and stock owned outright count toward the stock ownership requirements.

The Nominating/Corporate Governance Committee reviews ownership levels annually. As of the review completed in 2022, all of the Directors have met their ownership requirements.

 

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2022 Director Compensation Table

The table below summarizes the compensation paid by the Company to non-employee Directors for the year ended December 31, 2022.

 

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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.

 

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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 42.

 

 

The Named Executive Officers for 2022 were:

Due to the minimal differences in compensation between Messrs. Loe and Anderson, the Company determined to voluntarily include both officers as named executive officers.

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Executive Summary

Company Performance

The table below summarizes our key 2022 and 2021 financial results.

 

Supply chain challenges continued in 2022, but we remained dedicated to and focused on our customers. Throughout the pandemic, our team navigated enormous amounts of change and pressures in the market to deliver for our customers and drive our business forward. With a spirit of innovation, we continuously analyze emerging technologies and collaborate with partners to actively support our customers’ success. Our rich history of delivering innovative solutions that make it easier for customers to do business is central to our ongoing strategy. Providing best-in-class customer experience and leading-edge solutions would not be possible without our people, who are at the heart of our success. The talent, character and hard work of our employees enabled us to turn challenges into opportunities and have another record-breaking year in 2022. Our laser focus on our customers, our people and technology has allowed us to provide long-term, sustainable value for our shareholders.

In 2022, we achieve our highest ever consolidated revenue at $5.3 billion for the year, an increase of 34% over 2021. We also achieved record net income and diluted earnings per share. Revenues of our Asset-Based segment reached $3 billion and revenues of our Asset-Light operations exceeded $2 billion for the first time in Company history. Our operating ratio, which is expressed as a percentage of revenues, was 92.5% — an improvement of 0.4 percentage points over our previous record operating results in 2021. Our revenue growth in 2022 reflects the acquired operations of MoLo, combined with strong customer demand and a solid market pricing environment. Our improved results also reflect revenue optimization initiatives, improvements in network efficiency and delivering integrated solutions to meet our customers’ needs in a changing freight market.

Executive Compensation Relative to Company Performance

Our executive compensation program provides a strong relationship between pay and Company performance. For example, the annual cash incentive for 2022 was based on operating income (adjusted) (“Adjusted Operating Income”) and Return on Capital Employed (adjusted) (“Adjusted ROCE”). As outlined further in “Annual Cash Incentive Compensation” on the following pages, Adjusted Operating Income and Adjusted ROCE both exceeded the maximum performance amounts in 2022, resulting in a maximum payout of 250% of the target incentive opportunity and an increase in total cash compensation for our Named Executive Officers in 2022 compared to 2021.

Our performance over the long term also reflects the strong pay-for-performance structure of our incentive compensation program for our executives. The 2020-2022 cash long-term incentive compensation plan (“C-LTIP”) was based on Total Shareholder Return (“TSR”) compared to our peer group and pre-established Adjusted ROCE goals. Actual Company performance generated a maximum payout of 250% of the target incentive opportunity under the 2020-2022 plan, as outlined further below in “Long-Term Incentive Compensation.” The RSU awards granted in 2017 (the “2017 RSU awards”) and in 2018 (the “2018 RSU awards”) fully vested and settled on May 12, 2022, and August 1, 2022, respectively. The vesting parameters for these awards are described in our Proxy Statements for the 2018 and 2019 Annual Meetings of Stockholders filed with the SEC on March 22, 2018, and March 8, 2019, respectively.

For more information regarding our pay-for-performance philosophy, we encourage you to review the remainder of our CD&A, including the section titled “Compensation Philosophy and Objectives,” as well as our new “Pay Versus Performance” table on page 57, which we are providing as required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K.

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Overview of our Compensation Program

The primary elements of direct compensation awarded to the Named Executive Officers are shown below.

Key Compensation Governance Policies

The Compensation 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.

Compensation Philosophy and Objectives

The primary objectives of the Company’s executive compensation program are to:

 

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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 15 to 29 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.

2022 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’ 2022 target compensation that was at risk and based on either reaching certain performance goals or the value of the Company’s Common Stock.

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 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, payout

 

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opportunities, equity award levels and terms, and the peer group used for market 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 consultant. Meridian provided ongoing consulting assistance to the Compensation Committee throughout the year on areas such as compensation design, proxy disclosure, market trends, technical considerations and other matters. In particular, Meridian 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 evaluates the consultant periodically. The Chair of the Compensation Committee 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 2021. This study helped inform compensation decisions for 2022.

Role of Management

The Company’s Chairman, President and Chief Executive Officer, Chief Legal Officer and Corporate Secretary, and Chief Human Resources Officer are routinely invited to attend Committee meetings 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 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.

 

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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 relative TSR in the C-LTIP.

The peer group includes 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 for 2022 is listed in the table below. Our peer group is identical to our prior peer group from 2021 other than the removal of Echo Global Logistics, Inc. (which underwent a go-private transaction) and the addition of TFI International Inc. following its acquisition of UPS Freight in April 2021.

Peer Group and Industry Comparisons

Target total compensation and each pay component are designed to approximate the 50th percentile of the peer group, with actual pay outcomes that vary based on company performance. Although the Committee considers these market benchmarks, compensation for a given executive may further 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.

In setting performance goals for the incentive plans, the Committee references the historical long-term 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 ongoing 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.

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:

 

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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, 2022. The following chart sets forth the base salaries for each Named Executive Officer for 2021 and 2022.

Annual Cash Incentive Compensation

PERFORMANCE METRICS

The annual cash incentive for 2022 was based on the Company’s ROCE (adjusted) and operating income (adjusted). As in prior years, the two performance metrics were equally weighted.

Operating income (adjusted) 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.

ROCE (adjusted) is generally calculated by dividing net income by average adjusted debt plus average equity for the applicable period (with net income, debt and equity adjusted for nonrecurring or unusual items and other items set forth in the ArcBest Corporation Executive Officer Incentive Compensation Plan). 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.

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 2022.

 

The annual incentive opportunities (as a percentage of base salary) for the named executive officers were unchanged from 2021. The maximum total payout potential is 250% of the target incentive, assuming Company performance is at or above the maximum goal levels for operating income and ROCE.

 

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PERFORMANCE GOALS

The following tables show the goals and associated payouts for the two performance metrics utilized for the 2022 annual incentive.

PERFORMANCE RESULTS

Actual operating income achieved for 2022 as measured under the annual plan was $514.4 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 39.9%, greater than the maximum performance amount, resulting in a payout of 300% for the ROCE portion of the annual incentive. Combining the two payouts, weighted 50% each, produced a maximum total payout of 250% of the target incentive opportunity. Actual payouts for 2022 performance are shown below:

 

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Long-Term Incentive Compensation

TARGET AWARDS

Our long-term compensation target incentive opportunity consists of two components: (i) a three-year cash incentive opportunity (“C-LTIP”), and (ii) a time-vested RSU award. The following table shows the targets for long-term incentive compensation opportunities awarded in 2022 for the 2022-2024 C-LTIP and the 2022 RSU award.

 

 

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. 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 payout being driven by relative TSR and three-year average ROCE (adjusted) incentivizes sustainable value creation relative to our peers along with profitability and capital efficiency. Using cash-based awards also mitigates the dilutive effect of solely offering long-term equity compensation. In February 2022, the Committee granted a three-year cash incentive award for the performance period from January 1, 2022, through December 31, 2024, using the same two metrics we have used in recent years: three-year average ROCE (adjusted) 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 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 2022-2024 cash long-term incentive plan, refer to page 33.

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 34. ROCE is generally calculated by dividing net income by average adjusted debt plus average equity for the applicable period (with net income, debt and equity adjusted for nonrecurring or unusual items and other items set forth in the ArcBest Corporation Executive Officer Incentive Compensation Plan).

 

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The tables below show the goals and associated payouts for the two performance metrics utilized for the 2022-2024 C-LTIP. Payments for the 2022-2024 C-LTIP, if any, will be made in early 2025. The maximum total payout potential is 250% of the target incentive, assuming Company performance is at or above the maximum goal levels for operating income and ROCE.

 

LONG-TERM EQUITY INCENTIVE COMPENSATION

The Company grants RSU awards to help align the executives’ interests with those of our stockholders. In 2022, Named Executive Officers were granted time-vested RSUs as shown in the table below.

 

The Committee believes the award of RSUs with time-based 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 granted in 2022 are subject to three-year ratable vesting, with one-third of the awards vesting on each of the first, second and third anniversaries of the grant date. Stock will be issued in settlement of the RSUs on the vesting dates, or earlier if the Named Executive Officer experiences a qualifying termination of employment. No dividends or dividend equivalents are paid to Named Executive Officers on RSUs. See “Outstanding Equity Awards at 2022 Fiscal Year-End” for additional information regarding these awards.

C-LTIP Awards for the 2020-2022 Performance Period

The performance period for the 2020-2022 C-LTIP ended on December 31, 2022. The Company’s actual TSR percentile rank was 100th and three-year average ROCE (adjusted) was 26.7%, both above the maximum performance levels, resulting in an aggregate payout of 250% 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 2020-2022 awards can be found in our proxy statement for our 2021 Annual Meeting of Stockholders.

 

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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:

The most recent risk management evaluation was provided to the Compensation Committee in December 2022. 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.

 

 

Participants are prohibited from selling any Company stock (except to pay the taxes generated by an 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 2022, 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.

Pursuant to the Ownership Incentive Plan, any shares issued in the future upon exercise of a stock option or stock appreciation right (should any be granted under the 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:

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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. Under the terms of the 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:

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 Policy 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 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 48. 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, 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

 

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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.

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 “2022 Pension Benefits” for more information.

Deferred Salary Agreements

The Company has 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 “2022 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 Amended and Restated 2012 Change in Control Plan (the “2012 Change in Control Plan”) for certain senior officers of the Company. The Board amended and restated the plan in October 2022 to, among other things, clarify the treatment of outstanding equity awards upon a change in control. 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 Internal Revenue Code (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” under applicable exceptions. The Committee believes that stockholder 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.

 

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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 2022 Annual Report and the Company’s 2023 Proxy Statement.

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. Ms. McElligott, Messrs. Gorman and Conrado, and Dr. Philip served on the Compensation Committee in 2022.

 

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Summary Compensation Table

The following table sets forth compensation paid for the years indicated for our 2022 Named Executive Officers.

 

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2022 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 2022:

 

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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 Amended and Restated 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 target value, and payment, if any, is made at the end of the measurement period based upon actual performance results. Additional detail regarding the 2022 awards granted under the C-LTIP can be found in “Compensation Discussion & Analysis — Components of Compensation — Long-Term Incentive Compensation.”

Stock Awards under the Ownership Incentive Plan

RSUs awarded in 2022 were granted under the Company’s Ownership Incentive Plan on May 6, 2022. The 2022 RSUs are subject to three-year ratable vesting, with one-third of the awards vesting on each of the first, second and third anniversaries of the grant date, subject to early vesting if the participant experiences a qualifying termination from employment with the Company. Upon a participant’s 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 Amended and Restated 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. No dividends are paid to Named Executive Officers on RSUs.

 

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Outstanding Equity Awards at 2022 Year-End

The following table provides information related to any equity-based awards outstanding for the Named Executive Officers, as of December 31, 2022:

 

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2022 Option Exercises and Stock Vested

The following table provides information related to RSUs that vested during 2022 for the Named Executive Officers. None of our Named Executive Officers held stock option awards during 2022.

2022 Equity Compensation Plan Information

The following table sets forth information as of December 31, 2022, with respect to the Company’s compensation plans under which equity securities of the Company are authorized for issuance:

 

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2022 Pension Benefits

The following table illustrates the present value of the accumulated benefit as of December 31, 2022, under the SBP and DSA for the Named Executive Officers.

Supplemental Benefit Plan (frozen)

The SBP supplements benefits under the Company’s legacy 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 has unfunded, noncontributory DSAs with certain of their officers, including certain Named Executive Officers. No DSA has been entered into since December 2005, and the Company does not intend 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.

 

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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 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.

2022 Non-Qualified Deferred Compensation

The following table shows the Named Executive Officers’ deferred compensation activity during 2022 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 Ownership Incentive Plan” section and in footnote (1) to the “Outstanding Equity Awards at 2022 Year-End” table.