DEF 14A 1 s002733x1_def14a.htm DEF 14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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C.H. Robinson Worldwide, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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14701 Charlson Road
Eden Prairie, Minnesota 55347

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 9, 2019

TO OUR SHAREHOLDERS:

C.H. Robinson Worldwide, Inc.’s 2019 Annual Shareholders’ Meeting will be held on Thursday, May 9, 2019, at 1:00 p.m., Central Time. You may attend the meeting and vote your shares electronically as part of our virtual only meeting of shareholders by visiting www.virtualshareholdermeeting.com/CHRW2019. You will need the 12-digit control number that is printed in the box marked by the arrow on your Notice of Internet Availability of Proxy Materials or Proxy Card to enter the Annual Meeting. We recommend that you log in at least fifteen minutes before the meeting to ensure that you are logged in when the meeting starts. The purposes of the meeting are:

1.To elect ten directors to serve for a term of one year;
2.To approve, on an advisory basis, the compensation of our named executive officers;
3.To ratify the selection of Deloitte & Touche LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2019;
4.To approve adding shares of our Common Stock to the company’s equity incentive plan, which increases by 4,000,000 shares the authorized number of shares of our Common Stock issuable thereunder;
5.To consider a shareholder proposal on the adoption of greenhouse gas emissions reduction targets; and
6.To conduct any other business that properly comes before the meeting and any adjournment or postponement of the meeting.

Our Board of Directors has selected Wednesday, March 13, 2019, as our record date. Shareholders who own shares of our Common Stock on the record date are entitled to be notified of, and to vote at, our Annual Meeting.

We use the internet to distribute proxy materials to our shareholders. We believe it is an efficient and cost-effective way to provide the material, and it reduces the environmental impact of our Annual Meeting. The Notice of Internet Availability of Proxy Materials for the Shareholder Meeting, the Proxy Statement, and the Annual Report are available at www.proxyvote.com.

By Thursday, March 28, 2019, we will have completed the mailing of the Notice of Internet Availability of Proxy Materials to our shareholders. The notice has instructions on how to access our 2019 Proxy Statement and Annual Report, attend our virtual meeting, and vote online. Shareholders who have requested hard copies will receive the Proxy Statement and Annual Report by mail.

Your vote is important. Please vote as soon as possible by voting via the internet or by telephone. If you receive a paper copy of the proxy card by mail, please sign and return the enclosed proxy card.

By Order of the Board of Directors


Ben G. Campbell
Chief Legal Officer and Secretary

March 28, 2019

C.H. ROBINSON WORLDWIDE, INC.
14701 Charlson Road
Eden Prairie, Minnesota 55347

PROXY STATEMENT FOR THE
2019 ANNUAL MEETING OF SHAREHOLDERS
May 9, 2019

This Proxy Statement is soliciting your proxy for use at the C.H. Robinson Worldwide, Inc.’s 2019 Annual Shareholders’ Meeting. A proxy enables your shares of Common Stock to be represented and voted at the Annual Meeting. Our Annual Meeting will be completely virtual and held at 1:00 p.m. Central Time on Thursday, May 9, 2019. You may attend the virtual meeting and vote your shares electronically by visiting www.virtualshareholdermeeting.com/CHRW2019. The proxy can also be used at any adjournment or postponement of the Annual Meeting.

This proxy is requested by the Board of Directors of C.H. Robinson Worldwide, Inc. (“the company,” “we,” “us,” “C.H. Robinson”) for the following purposes:

1.To elect ten directors to serve for a term of one year;
2.To approve, on an advisory basis, the compensation of our named executive officers;
3.To ratify the selection of Deloitte & Touche LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2019;
4.To approve adding shares of our Common Stock to the company’s equity incentive plan, which increases by 4,000,000 shares the authorized number of shares of our Common Stock issuable thereunder;
5.To consider a shareholder proposal on the adoption of greenhouse gas emissions reduction targets; and
6.To conduct any other business that properly comes before the meeting and any adjournment or postponement of the meeting.

We provide our shareholders with the opportunity to access the 2019 Annual Meeting proxy materials via the internet. A Notice of Internet Availability of Proxy Materials is being mailed to all our shareholders, except those who have previously provided instructions to receive paper copies of our proxy materials. The notice contains instructions on how to access and review our proxy materials on the internet and how to vote your shares. The notice will also tell you how to request our proxy materials in printed form or by email, at no charge, if that is your preference. The notice contains your 12-digit control number that you will need to vote your shares and attend our virtual only meeting. Please keep the notice for your reference until after our Annual Meeting.

We will have completed mailing the Notice of Internet Availability of Proxy Materials to our shareholders by March 28, 2019.

General Information

 

Q:Who is entitled to vote?
A:Holders of record of C.H. Robinson Worldwide, Inc. Common Stock, par value $0.10 per share, at the close of business on March 13, 2019, are entitled to vote at our Annual Meeting. March 13, 2019, is referred to as the record date. As of the record date, 137,358,627 shares of Common Stock were outstanding. Each share is entitled to one vote. There is no cumulative voting.

Shares are counted as present at the Annual Meeting if either the shareholder is present and votes during the Annual Meeting, or has properly submitted a proxy by mail, by telephone, or by internet. To achieve a quorum and conduct business at the Annual Meeting, a majority of our issued and

2019 Proxy Statement      
   
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outstanding Common Stock as of March 13, 2019, must be present and entitled to vote. If a quorum is not represented at the Annual Meeting, the shareholders and proxies entitled to vote will have the power to adjourn the Annual Meeting until a quorum is represented.

Q:How can I vote?
A:If you submit your vote before the Annual Meeting using any of the following methods, your shares of Common Stock will be voted as you have instructed:
By Internet: You can vote your shares at www.proxyvote.com. You may access this website 24 hours a day, and voting is available through 11:59 p.m. Eastern Time on Wednesday, May 8, 2019. You will need your 12-digit control number that was included in the notice that was mailed to you. The voting website has easy to follow instructions and allows you to confirm that the system has properly recorded your votes. If you hold shares in street name, please follow the internet voting instruction in the notice you received from your bank, broker, trustee, or other record holder.
By Telephone: You can vote your shares by telephone. To vote your shares by telephone, please go to www.proxyvote.com and log in using the control number provided on your notice. At that site, you will be provided with a telephone number for voting. Alternatively, if you request paper copies of the proxy materials, your proxy card or voting instruction form will have a toll-free telephone number that you may use to vote your shares. Telephone voting is available through 11:59 p.m. Eastern Time on Wednesday, May 8, 2019. When you vote by telephone, you will be required to enter your 12-digit control number, so please have it available when you call. As with internet voting, you will be able to confirm that the system has properly recorded your votes.
By Mail: If you choose to receive paper copies of the proxy materials by mail and you are a holder of record, you can vote by marking, dating, and signing your proxy card and returning it by mail in the postage-paid envelope provided to you. If you choose to receive paper copies of the proxy materials by mail, and you hold your shares in street name, you can vote by completing and mailing the voting instruction form provided by your bank, broker, trustee, or holder of record.

Your vote is important, and we encourage you to vote promptly. Internet and telephone voting are available through 11:59 p.m. Eastern Time on Wednesday, May 8, 2019, for all shares entitled to vote. The company will be hosting the Annual Meeting virtually this year, which we believe allows C.H. Robinson to be more inclusive and reach a greater number of our shareholders. To attend the virtual meeting please visit www.virtualshareholdermeeting.com/CHRW2019 and be sure to have the control number provided to you on your Notice of Internet Availability of Proxy Materials or Proxy Card. If you are a beneficial shareholder (you hold your shares through a nominee, such as a broker), your nominee can advise you whether you will be able to submit voting instructions by telephone or via the internet. Submitting your proxy will not affect your right to vote in person, if you decide to login with your control number and attend the Annual Meeting. Shareholders logging into the Annual Meeting with their control number will receive the same rights and opportunities to participate in the Annual Meeting as they would if the meeting was an in-person meeting, including having the ability to ask questions throughout the meeting and having those questions answered during the meeting, to the extent they are related to the business being conducted at the meeting. Shareholders logging in with their control number will be able to ask questions at any time during the Annual Meeting. Relevant questions related to business being conducted at the Annual Meeting will be answered following the adjournment of the Annual Meeting, and the company will prioritize questions that relate to the proposals considered at the Annual Meeting. If a shareholder asks general questions about C.H. Robinson, the company will respond to the shareholder after adjournment of the Annual Meeting. Shareholders can learn more information about how to access the Annual Meeting by visiting www.virtualshareholdermeeting.com/CHRW2019.

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2019 Proxy Statement

Q:What happens if I return my proxy without voting instructions?
A:If you do not return voting instructions with your proxy, your proxy will be voted:
FOR the election of the director nominees named in this Proxy Statement;
FOR approval of the compensation of our named executive officers;
FOR the ratification of Deloitte & Touche LLP, the member firm of Deloitte Touche Tohmatsu Limited, and their respective affiliates (collectively, “Deloitte & Touche”) as our independent registered public accounting firm for the fiscal year ending December 31, 2019;
FOR the addition of Common Stock to the company’s equity incentive plan; and
AGAINST the shareholder proposal on the adoption of greenhouse gas emissions reduction targets.

Generally, a shareholder who does not vote in person or by proxy on a nominee or a proposal is not considered present for determining whether the nominee is elected, or the proposal has been approved. Brokers cannot vote shares on their customers’ behalf on “non-routine” proposals without receiving voting instructions from a customer but may vote shares on “routine” proposals without such instructions. The only routine proposal among the five listed above is the proposal to ratify the selection of Deloitte & Touche. If a broker does not receive voting instructions from its customer with respect to the other non-routine proposals and is precluded from voting on those proposals, then a “broker non-vote” occurs. If a broker returns a proxy indicating a lack of authority to vote on non-routine proposals, the shares represented by the proxy will be deemed present at the meeting for purposes of determining a quorum, but not present for purposes of calculating the vote on the non-routine proposals.

Q:What is the effect of an abstention or broker non-vote on each proposal?
A:Regarding the proposals involving the election of directors, the ratification of Deloitte & Touche, the addition of our Common Stock to the company’s equity incentive plan, and the shareholder proposal:
If you abstain from voting on a nominee or a proposal, your shares will be considered present at the Annual Meeting for purposes of determining a quorum and calculating the shares present and entitled to vote on the nominee or the proposal and, accordingly, will have the same effect as a vote against the nominee or proposal.
If you do not vote (or a broker non-vote occurs) on a nominee or a proposal, your shares will not be deemed present for the purposes of calculating the vote on that nominee or proposal and will generally have no impact on determining whether the nominee is elected, or the proposal is approved.

Regarding the advisory proposal on the compensation of our named executive officers:

If you abstain or do not vote (or a broker non-vote occurs) on this proposal, the abstention or failure to vote will not have any impact on the outcome of this proposal.
Q:What is the required vote on each matter?
A:Pursuant to our Bylaws, each of the proposals in this Proxy Statement (other than the advisory vote on the compensation of our named executive officers) requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock present in person or by proxy at the Annual Meeting and entitled to vote, provided that a quorum is present at the Annual Meeting. Regarding the advisory vote on the compensation of our named executive officers, we will consider shareholders to have approved this proposal if the votes cast FOR the proposal exceed the votes cast AGAINST the proposal.
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Q:How do I revoke my proxy?
A:You may revoke your proxy and change your vote at any time before the voting closes at the Annual Meeting. You may do this by submitting a properly executed proxy with a later date, or by delivering a written revocation to the corporate secretary’s attention at the company’s address listed above, or during the Annual Meeting.

Shareholder Proposals and Other Matters

 

In November 2018, we received written notice of a shareholder proposal, and that shareholder proposal is described in detail within this Proxy Statement. As of the date of this Proxy Statement, except for the shareholder proposal and the other matters described in this Proxy Statement, neither the company nor the Board of Directors knows of any other business that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons named in the proxy card will have discretionary authority to vote on such matters and will vote according to their best judgment.

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2019 Proxy Statement

PROPOSAL ONE: ELECTION OF DIRECTORS

There are ten nominees for election to the C.H. Robinson Board of Directors for a one-year term, nine of whom are current directors. The Board of Directors has set the number of directors constituting the Board of Directors as of the Annual Meeting at ten.

Scott P. Anderson, Wayne M. Fortun, Timothy C. Gokey, Mary J. Steele Guilfoile, Jodee A. Kozlak, Brian P. Short, James B. Stake, Paula C. Tolliver, and John P. Wiehoff are directors whose terms expire at the 2019 Annual Meeting. Robert C. Biesterfeld Jr. is a nominee for director at the 2019 Annual Meeting. On the recommendation of our Governance Committee, the Board of Directors has nominated Ms. Guilfoile, Ms. Kozlak, and Ms. Tolliver and Messrs. Anderson, Biesterfeld, Fortun, Gokey, Short, Stake, and Wiehoff for election to the Board of Directors at the Annual Meeting for terms of one year each. Each has indicated a willingness to serve. Mr. Biesterfeld and Ms. Tolliver are standing for election by the shareholders for the first time at the Annual Meeting. Ms. Tolliver was identified as a potential candidate for the Board of Directors by a third-party search firm and appointed by the Board of Directors on October 1, 2018. Mr. Biesterfeld, who will be assuming the role of chief executive officer of the company on May 9, 2019, was nominated as a director by the Board of Directors in February 2019.

John P. Wiehoff and Ben G. Campbell will vote the proxies received by them for the election of Ms. Guilfoile, Ms. Kozlak, and Ms. Tolliver and Messrs. Anderson, Biesterfeld, Fortun, Gokey, Short, Stake, and Wiehoff unless otherwise directed. If any nominee becomes unavailable for election at the Annual Meeting, John P. Wiehoff and Ben G. Campbell may vote for a substitute nominee at their discretion as recommended by the Board of Directors.

The Board of Directors has determined that all the nominees, except for Robert C. Biesterfeld Jr. and John P. Wiehoff, are independent under the current standards for “independence” established by the Nasdaq Stock Market, on which C.H. Robinson’s stock is listed under the symbol “CHRW”. In connection with its evaluation of director independence, the Board of Directors considered the following transactions, all of which were entered into in the ordinary course of business:

For Mr. Anderson, goods and services provided in the ordinary course of business by the company to Patterson Companies, Inc., where Mr. Anderson was employed during 2018, and which were immaterial to either companies’ revenues or operations in the last three fiscal years.
For Mr. Gokey, services provided in the ordinary course of business on behalf of the company by Broadridge Financial Solutions where Mr. Gokey is employed, and which were immaterial to either companies’ revenues or operations in the last three fiscal years.
For Mr. Short, services provided in the ordinary course of business by Admiral Merchants Motor Freight, Inc. (“AMMF”), an entity in which, together with a number of his family members, Mr. Short holds a controlling interest. In 2018, AMMF provided services to C.H. Robinson as a contracted motor carrier. In addition, we receive health plan administration services and health claim stop loss insurance products from UnitedHealth Group Incorporated, of which Marianne D. Short, a sister of Mr. Short, was the chief legal officer during 2018. The amounts paid to UnitedHealth Group for such services and products were immaterial to either companies’ revenue or operations in the last three fiscal years.
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PROPOSAL ONE: ELECTION OF DIRECTORS

The Board considered these relationships and their significance in determining that these directors are independent. Information concerning the nominees is below.

Director and Nominee Biographies and Qualifications

Scott P. Anderson
(Director Nominee)
Scott P. Anderson, 52 years old, has been a director of the company since 2012. He is a special advisor to Patterson Companies, Inc. (Nasdaq: PDCO). He served as president and chief executive officer of Patterson Companies, Inc., from 2010 to 2017. In April 2013, he was elected to the additional responsibility of chairman of the board. Mr. Anderson has worked with Patterson Companies since 1993. Prior to June 2006, when he became president of Patterson Dental Supply, Inc., Mr. Anderson held senior management positions in the dental unit, including vice president, sales, and vice president, marketing. Mr. Anderson became one of the company’s directors in June 2010. Mr. Anderson is a past chairman of the Dental Trade Alliance. Mr. Anderson is a trustee of Gustavus Adolphus College. He serves on the board of directors of the Ordway Theater. Mr. Anderson earned his MBA from Northwestern University, Kellogg School of Management and a Bachelor of Arts degree from Gustavus Adolphus College.
 
Mr. Anderson has significant public company senior management and executive experience through his service in several senior leadership positions at Patterson Companies. He also has public company board experience, having served as a member of Patterson’s board of directors since 2010. Mr. Anderson also brings substantial sales and marketing expertise to the company, having served as Patterson’s vice president, sales, and vice president, marketing. Mr. Anderson meets the definition of an “Audit Committee Financial Expert” as established by the Securities and Exchange Commission.
   
Robert C. Biesterfeld Jr.
(Nominee)
Robert C. Biesterfeld, Jr., 43 years old, was named chief operating officer of C.H. Robinson in February 2018 and will be assuming the role of chief executive officer of C.H. Robinson on May 9, 2019. Prior to serving as chief operating officer, Mr. Biesterfeld served as president of North American Surface Transportation from January 2016 to December 2018, vice president of North American Truckload from January 2014 to December 2015, and vice president of Temperature Controlled Transportation and Sourcing Services from January 2013 to December 2014. Before his executive roles, Mr. Biesterfeld was general manager of the West Sourcing region from 2003 to 2011. He began his career with C.H. Robinson in 1999 in the Corporate Procurement and Distribution Services office. Mr. Biesterfeld serves on several industry and non-profit boards and committees. He holds a Bachelor of Arts degree from Winona State University.
 
Mr. Biesterfeld has approximately 20 years of experience with C.H. Robinson, including investor relations and executive experience as chief operating officer and various other executive positions within the company. He has an extensive and thorough understanding of C.H. Robinson’s operations and the transportation industry in general.
   

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PROPOSAL ONE: ELECTION OF DIRECTORS

Wayne M. Fortun
(Director Nominee)
Wayne M. Fortun, 70 years old, has been a director of C.H. Robinson since 2001. Mr. Fortun joined Hutchinson Technology Inc., a global technology manufacturer, in 1975 and until 1983, he held various positions in engineering, marketing, and operations. In 1983, he was elected director, president, and chief operating officer of Hutchinson Technology Inc., and in May 1996, he was appointed its chief executive officer. In October 2012, he was appointed chairman of the board and retired as chief executive officer. In October 2016, he retired as chairman of the board.
 
Through Mr. Fortun’s long tenure with Hutchinson, including as chief executive officer and member of the board, he possesses significant leadership and strategic planning skills. Because of Hutchinson’s worldwide footprint, Mr. Fortun has broad international business experience relevant to the company’s operations. He also has public company board experience through his membership on the boards of Hutchinson and G&K Services, Inc.
   
Timothy C. Gokey
(Director Nominee)
Timothy C. Gokey, 57 years old, joined C.H. Robinson as a director in 2017. On September 12, 2018, Mr. Gokey was named Broadridge Financial Solutions’ (NYSE: BR) chief executive offer, effective January 2, 2019. At that time he was also appointed to the Broadridge board of directors. Prior to the appointment he served as president and chief operating officer. Mr. Gokey joined Broadridge Financial Solutions in 2010 as chief corporate development officer. Mr. Gokey was promoted to corporate senior vice president and chief operating officer in 2012. He was appointed to president of Broadridge in September 2017. Prior to Broadridge, Mr. Gokey served as president, Retail Tax for H&R Block (NYSE: HRB) and as a partner at McKinsey & Company. Mr. Gokey earned a Doctorate in Finance and an undergraduate degree in Philosophy, Politics, and Economics from the University of Oxford, where he studied as a Rhodes Scholar. He is a graduate of Princeton University, where he earned a Bachelor of Arts in Public Affairs and Management Engineering.
 
Through his service as president and chief operating officer of Broadridge Financial Solutions, Mr. Gokey has developed exceptional leadership and execution skills and has broad public company knowledge and expertise. He is also deeply involved in Broadridge’s international operations and technology organization. In his prior roles with Broadridge, as well as H&R Block and McKinsey & Company, Mr. Gokey has demonstrated expertise in the areas of mergers and acquisitions, sales and marketing, and other growth-related activities. Mr. Gokey meets the definition of an “Audit Committee Financial Expert” as established by the Securities and Exchange Commission.
   

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PROPOSAL ONE: ELECTION OF DIRECTORS

Mary J. Steele Guilfoile
(Director Nominee)
Mary J. Steele Guilfoile, 65 years old, joined C.H. Robinson as a director in 2012. Ms. Guilfoile is chairman of MG Advisors, Inc., a privately owned financial services merger and acquisition advisory and consulting services firm. Prior to joining MG Advisors in 2002, Ms. Guilfoile spent twelve years with JP Morgan Chase (NYSE: JPM) and its predecessor companies, Chase Manhattan Corporation and Chemical Banking Corporation, as executive vice president, corporate treasurer, and chief administrative officer for its investment bank, and various merger integration, executive management and strategic planning positions. Ms. Guilfoile currently serves on the boards of The Interpublic Group of Companies (NYSE: IPG), where she is chairman of the audit committee; Hudson, Ltd (NYSE: HUD), where she serves as chairman of the audit committee; and Pitney Bowes Inc. (NYSE: PBI). Ms. Guilfoile earned her Master of Business Administration from Columbia University Graduate School of Business, and a Bachelor of Science degree from Boston College.
 
Ms. Guilfoile has significant experience and expertise in the areas of corporate mergers and acquisitions, business integration, and financing through her association with the investment banks of several large financial institutions. She also has public board experience through her membership on the boards of Interpublic, Hudson, and Pitney Bowes.
   
Jodee A. Kozlak
(Director Nominee)
Jodee A. Kozlak, 56 years old, joined C.H. Robinson as a director in 2013. Ms. Kozlak is the founder and chief executive officer of Kozlak Capital Partners, LLC, a private consulting firm. Prior to this role, Ms. Kozlak served as the global senior vice president of human resources of Alibaba Group (NYSE: BABA) from February 2016 to November 2017. Prior to joining Alibaba Group, Ms. Kozlak was the executive vice president and chief human resources officer of Target Corporation (NYSE: TGT) from March 2007 until February 2016. Prior to joining Target in 2001, Kozlak was a partner in the litigation practice of Greene Espel, PLLP, a Minnesota law firm. She also previously served as a senior associate at Oppenheimer Wolff & Donnelly and a senior auditor at Arthur Andersen & Co., both in Minneapolis. Ms. Kozlak serves as a board member of Aspen Dental, and MGIC Investment Corp. (NYSE: MTG). She joined the University of St. Thomas Board of Trustees in 2018, is past president of the board of directors of The Guthrie Theater, a fellow of the Distinguished Careers Institute (DCI) at Stanford University and a member of the Stanford Advisory Board on Longevity. She received a Bachelor of Arts degree in Accounting from the College of St. Thomas and earned her Juris Doctor degree from the University of Minnesota.
 
Through her human resources executive leadership at Target and Alibaba Group, Ms. Kozlak has developed significant knowledge and expertise in human capital strategy, global operations, and digital transformation. Her experience has also given her a deep understanding of executive compensation within a public company.
   

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PROPOSAL ONE: ELECTION OF DIRECTORS

Brian P. Short
(Director Nominee)
Brian P. Short, 69 years old, has been a director of the company since 2002. He is chief executive officer of Leamington Co., a holding company with interests in transportation, community banking, agricultural production, and real estate. Leamington operates AMMF, St. Paul Flight Center, Inc., First Farmers & Merchants Banks, and Benson Parking Services, Inc. Mr. Short also serves as a legal mediator and previously served as a United States Magistrate. His community service has included service on the board of directors of Catholic Charities, St. Joseph’s Home for Children, Saint Thomas Academy, Allina Hospitals and Clinics, and William Mitchell College of Law. He also serves on the board of directors of the St. Francis Mission Foundation, the Advisory Council to the Law School of the University of Notre Dame and the board of governors of the Law School of the University of St. Thomas. Mr. Short has an undergraduate degree in economics from the University of Notre Dame and is also a graduate of its law school.
 
Mr. Short has significant executive experience and, in particular, has experience in the trucking industry through his leadership position at Admiral Merchants Motor Freight, a trucking and transportation services company. In addition, with Mr. Short’s legal background and experience, he provides valuable insight into the company’s enterprise risk management areas. Mr. Short meets the definition of an “Audit Committee Financial Expert” as established by the Securities and Exchange Commission.
   
James B. Stake
(Director Nominee)
James B. Stake, 66 years old, joined C.H. Robinson as a director in 2009. Mr. Stake retired from 3M Company (NYSE: MMM) in 2008, serving most recently as executive vice president of 3M’s Enterprise Services. He served in a variety of leadership positions at 3M Company, leading global health care, industrial, and commercial businesses ranging in size from $100 million to over $3 billion. During his career he served over 12 years of foreign assignments in Europe and South America. In addition to his career at 3M Company, Mr. Stake serves as a board member and chairs the compensation committee for Otter Tail Corporation (Nasdaq: OTTR), is chairman of the board for Ativa Medical Corp., and has taught as an adjunct professor at the University of Minnesota’s Carlson School of Management. Mr. Stake holds a Bachelor of Science in Chemical Engineering from Purdue University and a Master of Business Administration from the Wharton School at the University of Pennsylvania.
 
Throughout his career at 3M Company, Mr. Stake gained extensive public company senior management experience at a large company that operates worldwide. In particular, Mr. Stake’s foreign leadership positions and his position with Enterprise Services, a shared services organization, provide valuable perspective for 3M Company’s international operations and its information technology systems. Mr. Stake also has prior public company board experience with Otter Tail. Mr. Stake meets the definition of an “Audit Committee Financial Expert” as established by the Securities and Exchange Commission.
   

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PROPOSAL ONE: ELECTION OF DIRECTORS

Paula C. Tolliver
(Director Nominee)
Paula C. Tolliver, 54 years old, joined C.H. Robinson as a director in 2018. Ms. Tolliver currently serves as corporate vice president and chief information officer at Intel Corporation (Nasdaq: INTC). Prior to joining Intel in 2016, Ms. Tolliver served as corporate vice president of Business Services and chief information officer at the Dow Chemical Company (NYSE: DWDP) from 2012 to 2016. Ms. Tolliver also led a services business for Dow Chemical, in addition to holding a variety of other roles in her 20 plus years with the company. She earned a Bachelor’s degree in Business Information Systems and Computer Science from Ohio University.
 
Ms. Tolliver has significant experience and expertise in the areas of information technology and innovation. She also has demonstrated the ability to successfully lead a service business. Ms. Tolliver meets the definition of an “Audit Committee Financial Expert” as established by the Securities and Exchange Commission.
   
John P. Wiehoff
(Director Nominee)
John P. Wiehoff, 57 years old, has been chief executive officer of C.H. Robinson since May 2002, president of the company since December 1999, a director since 2001, and became the chairman in January 2007. As of May 9, 2019, Mr. Wiehoff will assume the role of executive chairman and no longer serve as chief executive officer. Previous positions with the company include senior vice president from October 1998, chief financial officer from July 1998 to December 1999, treasurer from August 1997 to June 1998, and corporate controller from 1992 to June 1998. Prior to that, Mr. Wiehoff was employed by Arthur Andersen LLP. Mr. Wiehoff also serves on the board of directors of Polaris Industries Inc. (NYSE: PII) and Donaldson Company, Inc. (NYSE: DCI). He holds a Bachelor of Science degree from St. John’s University.
 
Mr. Wiehoff has more than 27 years of experience with the company, including as its chief financial officer and as chief executive officer since 2002. He has deep and direct knowledge of the company’s business and operations. He also has significant public company board experience with Polaris and Donaldson.
   

BOARD VOTING RECOMMENDATION

 

The Board of Directors recommends a vote FOR the election of Scott P. Anderson, Robert C.
Biesterfeld Jr., Wayne M. Fortun, Timothy C. Gokey, Mary J. Steele Guilfoile, Jodee A. Kozlak,
Brian P. Short, James B. Stake, Paula C. Tolliver, and John P. Wiehoff as directors of
C.H. Robinson Worldwide, Inc.

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PROPOSAL ONE: ELECTION OF DIRECTORS

BOARD OF DIRECTORS GOVERNANCE MATTERS

 

The Board of Directors (or the “Board”) has a policy that all directors and nominees nominated for election at the Annual Meeting are expected to attend the Annual Meeting. In 2018, all of the director nominees attended the Annual Meeting.

During 2018, the Board of Directors held seven meetings. Each director holding office during the year attended at least 75 percent of the aggregate of the meetings of the Board of Directors (held during the period for which he or she had been a director) and the meetings of the Committees of the Board on which he or she served (held during the period for which he or she served on a committee) except Mr. Gokey, who attended 72 percent of the meetings. Mr. Gokey’s attendance was temporarily impacted by his professional obligations associated with his recent appointment as chief executive officer of Broadridge Financial Solutions. The Chair of the Governance Committee discussed these matters with Mr. Gokey and received assurances that Mr. Gokey’s attendance will not be impacted going forward.

Our Board of Directors has three committees: the Audit Committee, the Compensation Committee, and the Governance Committee. Currently, members and chairs of these committees are:

Independent Directors
Audit
Compensation
Governance
Scott P. Anderson
x
 
Chair
Wayne M. Fortun
 
Chair
x
Timothy C. Gokey
x
x
 
Mary J. Steele Guilfoile
 
x
x
Jodee A. Kozlak
 
x
x
Brian P. Short
x
 
x
James B. Stake
Chair
x
 
Paula C. Tolliver
x
x
 

Board Leadership Structure

Our Board of Directors is led by John P. Wiehoff, who has been our president since 1999 and our chief executive officer since 2002. Mr. Wiehoff joined the Board of Directors in 2001 and was appointed chairman of the board in 2007. Mr. Wiehoff, who is resigning as chief executive officer of C.H. Robinson effective May 9, 2019, will continue to serve as executive chairman of the board. The Board has determined that Mr. Wiehoff’s continued service as executive chairman will allow him to utilize his Board leadership experience during the time of chief executive officer transition.

In 2019, the Board amended our Corporate Governance Guidelines to provide that the Board will appoint a lead independent director any time that the chairman of the board is not independent, and it describes the duties of the lead independent director. The Board appointed Scott P. Anderson to serve as lead independent director beginning in May 2019. Mr. Anderson currently serves as the Chair of the Governance Committee.

Our Corporate Governance Guidelines provide that the chairman, in consultation with other Board members, sets the agenda for regular meetings of the Board, and the chair of each committee is responsible for the agendas for the meetings of the applicable committee. Directors and committee members are encouraged to suggest agenda items and may raise other matters at meetings.

We believe that our leadership structure supports the Board’s risk oversight function. Strong independent directors with significant tenure on the Board chair the committees most directly involved in the risk oversight function, there is open communication between management and the Board, and all directors are involved in the risk oversight function.

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Risk Oversight

The Board is actively involved in the oversight of risks that could affect the company. This oversight is conducted primarily through the Audit Committee. The Audit Committee Charter establishes that one of the responsibilities of the Audit Committee is to review the risk management of the company on an annual basis. To assist it in this oversight function, the vice president of risk of the company presents a risk management update at each of the quarterly Audit Committee meetings. In addition, our management and internal audit department conduct an annual enterprise risk assessment of the company, which includes interviews of various key personnel within the company and members of the Audit Committee. The results of the annual risk assessment are presented to the Audit Committee. The Audit Committee provides periodic risk assessment updates to the Board and solicits input from the Board regarding the company’s risk management practices. In addition, the Compensation Committee periodically reviews the company’s compensation programs to ensure that they do not encourage excessive risk-taking. Additional review or reports on enterprise risks are conducted as needed by the Board or the committees.

The Audit Committee

All our Audit Committee members are “independent” under applicable Nasdaq listing standards and Securities and Exchange Commission rules and regulations. Our Board of Directors has determined that all five members of the Audit Committee, Messrs. Anderson, Gokey, Short, Stake, and Ms. Tolliver, meet the definition of an “Audit Committee Financial Expert” as established by the Securities and Exchange Commission. The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the quality and integrity of the financial reports of the company. The Audit Committee has the sole authority to appoint, review, and discharge our independent auditors, and has established procedures for the receipt, retention, and response to complaints regarding accounting, internal controls, or audit matters. In addition, among other responsibilities in the Audit Committee Charter, the Audit Committee is responsible for:

(1)Reviewing the scope, results, timing, and costs of the audit with the company’s independent auditors and reviewing the results of the annual audit examination;
(2)Assessing the independence of the outside auditors on an annual basis, including receipt and review of a written report from the independent auditors regarding their independence consistent with applicable rules of the Public Company Accounting Oversight Board;
(3)Reviewing and approving in advance the services provided by the independent auditors;
(4)Overseeing the internal audit function;
(5)Reviewing the company’s significant accounting policies, financial results, and earnings releases and the adequacy of our internal controls and procedures;
(6)Reviewing the risk management status of the company; and
(7)Reviewing and approving related-party transactions.

The Audit Committee held eight meetings during 2018. The Audit Committee has engaged Deloitte & Touche LLP as the independent auditor for fiscal year 2019 and is recommending that the company’s shareholders ratify this appointment at the Annual Meeting. The report of the Audit Committee is found on page 42 of this Proxy Statement.

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The Compensation Committee

All our Compensation Committee members are “independent” under applicable Nasdaq listing standards and Internal Revenue Service and Securities and Exchange Commission rules and regulations. The Compensation Committee has oversight responsibilities relating to executive compensation, employee compensation and benefits programs and plans, and leadership development. In addition, among other responsibilities in the Compensation Committee Charter, the Compensation Committee is responsible for:

(1)Reviewing the performance of the chief executive officer;
(2)Determining all elements of the compensation and benefits for the chief executive officer and other executive officers of the company;
(3)Reviewing and approving the company’s compensation program, including equity-based plans, for management employees generally;
(4)Overseeing the company’s process of conducting advisory shareholder votes on executive compensation; and
(5)Reviewing executive officers’ employment agreements; separation and severance agreements; change in control agreements; and other compensatory contracts, arrangements, and benefits.

The Compensation Committee held five meetings during 2018. See 2018 Compensation Discussion and Analysis beginning on page 17 including Section VI, Compensation Process, beginning on page 25, for a discussion of the role played by our chief executive officer in compensation decisions. The Compensation Committee report on executive compensation is found on page 37 of this Proxy Statement.

The Governance Committee

All members of our Governance Committee are “independent” under applicable Nasdaq listing standards. The Governance Committee serves in an advisory capacity to the Board of Directors on matters of organization and the conduct of Board activities. Among other responsibilities in the Governance Committee Charter, the Governance Committee is responsible for:

(1)Periodically reviewing and making recommendations to the Board as to the size and composition of the Board and criteria for director nominees;
(2)Identifying and recommending candidates for service on the Board;
(3)Reviewing and revising the company’s Corporate Governance Guidelines, including recommending any necessary changes to the Corporate Governance Guidelines to the Board;
(4)Leading the Board in an annual review of the performance of the Board and the Board committees;
(5)Making recommendations to the Board regarding Board committee assignments;
(6)Making recommendations to the Board on whether each director is independent under all applicable requirements;
(7)Making recommendations to the Board with respect to the compensation of non-employee directors;
(8)Periodically reviewing with the company’s chief legal officer developments that may have a material impact on the company’s corporate governance programs, including related compliance policies; and
(9)Periodically reviewing the company’s policies, practices, and disclosures with respect to significant issues of corporate responsibility including the alignment of such efforts with the company’s overall strategy.
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The Governance Committee considers Board of Director nominees recommended by shareholders. The process for receiving and evaluating these nominations from shareholders is described below under the caption “Nominations.”

The Governance Committee held three meetings during 2018.

The charters for each of the Committees of the Board of Directors, our Corporate Governance Guidelines, and our company’s Code of Ethics, which are all a part of our Corporate Compliance Program, are posted under the Governance section of the Investors page of our website at www.chrobinson.com.

Shareholder Communications with Board

 

C.H. Robinson shareholders and other interested parties may send written communications to the Board of Directors or to any individual director by mailing it to C.H. Robinson Worldwide, Inc., Board of Directors, c/o C.H. Robinson corporate secretary, 14701 Charlson Road, Suite 1200, Eden Prairie, MN 55347. These communications will be compiled by the corporate secretary and periodically submitted to the Board or individual director.

Nominations

 

The Governance Committee considers director nominee recommendations from a wide variety of sources, including members of the Board of Directors, business contacts, community leaders, and members of management. The Governance Committee will also consider shareholder recommendations for director nominees using the same selection criteria and qualifications as nominees identified by other sources, as described below. The Governance Committee may also engage search firms to assist in the director recruitment process.

The Governance Committee determines the selection criteria and qualifications of director nominees based upon the needs of the company. The Board of Directors believes that the directors should possess the highest personal and professional ethics and integrity and be committed to representing the long-term interests of the company’s shareholders. Preferred qualifications also include current or recent experience as a chief executive officer or expertise in a particular business discipline. Directors should be able to provide insights and practical wisdom based on their experience and expertise. While the company does not have a policy regarding the consideration of diversity in identifying director nominees, the company’s Corporate Governance Guidelines provide, and the Governance Committee believes, that creating a board with a diversity of talent, experience, accomplishments, and perspectives is in the best interests of the company and our shareholders. The company is committed to considering candidates for the Board, regardless of gender, ethnicity, and national origin. Any search firm retained to assist the Governance Committee in seeking director candidates will be instructed to consider these commitments.

Shareholders who would like to directly nominate a director candidate must give written notice to the company’s corporate secretary, either by personal delivery or by United States mail, at the following address: 14701 Charlson Road, Eden Prairie, MN 55347. The shareholder’s notice must be received by the corporate secretary no later than (a) 90 days before the anniversary date of the previous year’s Annual Meeting or (b) the close of business on the tenth day following the date on which notice of a special meeting of shareholders for election of directors is first given to shareholders. For each proposed nominee, the shareholder’s notice must comply with and include all information that is required to be disclosed under our Bylaws, any applicable Securities and Exchange Commission rules and regulations, and any applicable laws. The written notice must also include a written consent of the proposed nominee, agreeing to stand for election if nominated by the Governance Committee, and to serve as a director if appointed by the Board of Directors. The shareholder’s notice must also include:

(1)The name and address of the shareholder making the nomination;
(2)The number of C.H. Robinson shares entitled to vote at the meeting held by the shareholder;

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(3)A representation that the shareholder is a holder of record of C.H. Robinson Common Stock entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person named in the notice; and
(4)A description of all arrangements or understandings between the shareholder and each nominee.

The Governance Committee initially evaluates a prospective nominee based on his or her resume and other background information that has been provided to the committee. A member of the committee will contact for further review those candidates whom the committee believes are qualified, who may fulfill a specific need of the Board of Directors, and who would otherwise best contribute to the Board of Directors. Based on the information the Governance Committee learns during this process, it determines which nominee(s) to recommend to the Board of Directors to submit for election. The Governance Committee uses the same process for evaluating all nominees, regardless of the source of the nomination.

No candidates for director nominations were submitted to the Governance Committee by any shareholder for the 2019 Annual Meeting. Any shareholder interested in presenting a nomination for consideration by the Governance Committee prior to the 2020 Annual Meeting should do so as early as possible, to provide adequate time to consider the nominee and comply with our Bylaws.

Compensation of Directors

 

In 2018, each independent director of C.H. Robinson was paid an annual retainer of $90,000 and no meeting fees. The Audit Committee chair received an additional annual retainer of $30,000, and the chairs of the Governance and Compensation Committees each received an additional annual retainer of $20,000. Other members of the Audit Committee received an additional annual retainer of $12,500, and other members of the Governance and Compensation Committees received additional annual retainers of $7,500. Retainers are paid in quarterly installments, at the end of each calendar quarter. Before the retainers are earned, the directors may elect to receive all or a portion of their retainers in cash, stock, or restricted stock units that are immediately vested and are payable to the directors after their service on the Board of Directors has ended.

Directors are required to own a minimum of five times their annual Board retainer in company stock no later than five years after joining the Board of Directors. We base the stock ownership requirements on all shares of company stock deemed owned by a director, which includes vested stock options, vested and unvested restricted stock units, and stock beneficially owned by the director, including owned in a trust, by a spouse, or by dependent children for our directors.

In 2018, the Board of Directors granted each director a fully vested restricted stock unit award valued at $135,000, deliverable after leaving the Board of Directors. C.H. Robinson also reimburses non-employee directors for reasonable expenses incurred in attending Board of Directors meetings and for expenses incurred in obtaining continuing education related to service on our Board of Directors. Directors who are also employees of C.H. Robinson are not separately compensated for being a member of the Board of Directors.

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2018 Director Compensation Table

Name
Fees Earned
or Paid in
Cash
Stock
Awards(1)
Total
Aggregate
Number of
Shares
Outstanding
as of
December 31, 2018(2)
Scott P. Anderson
$
122,500
 
$
135,000
 
$
257,500
 
 
#16,732
 
Wayne M. Fortun
 
117,500
 
 
135,000
 
 
252,500
 
 
38,149
 
Timothy C. Gokey
 
110,000
(3) 
 
135,000
 
 
245,000
 
 
3,380
 
Mary J. Steele Guilfoile
 
105,000
(4) 
 
135,000
 
 
240,000
 
 
11,546
 
Jodee A. Kozlak
 
105,000
(5) 
 
135,000
 
 
240,000
 
 
12,473
 
Brian P. Short
 
110,000
(3) 
 
135,000
 
 
245,000
 
 
57,163
 
James B. Stake
 
127,500
(6) 
 
135,000
 
 
262,500
 
 
18,908
 
Paula C. Tolliver(7)
 
22,500
(3) 
 
33,750
 
 
56,250
 
 
668
 
(1)The dollar value reflected in this column was awarded as fully vested restricted stock units of the company. Shares equal to the number of restricted stock units will be distributed to the director after his or her board membership terminates.
(2)Includes fully vested restricted stock units and directly owned shares.
(3)The director has elected to receive the dollar value of these fees in restricted stock units of the company. Shares equal to the number of restricted stock units will be distributed after termination of board membership.
(4)The director has elected to receive one half of her board retainer in fully taxable unrestricted shares of company stock and the balance of her board and committee retainers in cash for the first half of 2018.
(5)The director has elected to receive one half of the dollar value of these fees in restricted stock units of the company and the balance of her fees in cash for the first quarter of 2018. Shares equal to the number of restricted stock units will be distributed after termination of board membership.
(6)The director has elected to receive one half of the dollar value of these fees in restricted stock units of the company and the balance of his fees paid in cash for 2018. Shares equal to the number of restricted stock units will be distributed after termination of board membership.
(7)Ms. Tolliver was elected as a director of the company on October 1, 2018.

Compensation Committee Interlocks and Insider Participation

 

The members of the Compensation Committee are Wayne M. Fortun, Timothy C. Gokey, Mary J. Steele Guilfoile, Jodee A. Kozlak, James B. Stake, and Paula C. Tolliver. The Compensation Committee members have no interlocking relationships requiring disclosure and are deemed independent under the rules of the Securities and Exchange Commission.

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2018 EXECUTIVE COMPENSATION

2018 Compensation Discussion and Analysis The following Compensation Discussion & Analysis (“CD&A”) describes the background, objectives, and structure of our executive compensation programs. This CD&A is intended to be read in conjunction with the tables beginning on pages 27 and 32, which provide further historical compensation information for the following Named Executive Officers (“NEOs”):

John P. Wiehoff, Chief Executive Officer
Andrew C. Clarke, Chief Financial Officer
Robert C. Biesterfeld Jr., Chief Operating Officer and President of North America Surface Transportation (“NAST”)1
Christopher J. O’Brien, Chief Commercial Officer
Michael J. Short, President of Global Freight Forwarding

I. Executive Summary

 

Key Compensation Philosophy and Structure

We believe our compensation philosophy and design are well aligned with the interests of our shareholders, as well as our performance culture, growth strategy, and desire to attract and retain high-quality executives.

We:

Pay for performance;
Reward profitable long-term growth; and
Align the interests of management with our shareholders.

The company reviews general industry survey data prepared by an independent compensation consultant to assess market competitiveness of the components of NEO compensation, including the appropriate mix of cash and equity. The company also relies on broader survey data to assess market competitiveness of executive compensation components. Internal equity is an important and necessary consideration in valuing executive positions. Individual pay decisions are made based on a variety of factors, such as company, business unit, and individual performance; scope and complexity of responsibility; critical needs and skills; leadership potential; and succession planning.

Compensation component considerations are as follows:

Base salaries: Base salaries are market-based, generally reflecting the 25th-50th percentile of our defined market for talent.
Annual incentive compensation: Annual incentive compensation for 2018 was based on the following:
For our CEO, the annual incentive was 125 percent of base salary at target and was based on enterprise adjusted pre-tax income (“APTI”). APTI is defined as pre-tax income, adjusted to exclude executive bonuses and unusual or extraordinary items. The APTI calculation is approved by our Compensation Committee.
For operating executive officers, the annual incentive varied from 33 percent to 100 percent of base salary at target and is tied to the APTI of the business division and/or region of responsibility for the executive.
For administrative executive officers, the annual incentive at target varied between 60 percent and 70 percent of base salary and is based on enterprise APTI.
1Mr. Biesterfeld began 2018 as the company’s president of NAST and was appointed to chief operating officer as of March 1, 2018.
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The maximum annual incentive that may be paid is two times the executive’s planned annual incentive at target.
Threshold and maximum performance goals for NEOs were set at 70 percent and 120 percent of the relevant APTI targets, respectively.
Equity compensation: Our restricted stock awards are performance-based. Beginning with grants issued in 2015, incentive stock options vest ratably over five years. We believe options are an inherently performance-based instrument because stock price appreciation must occur for the value to be delivered. Time-based vesting allows flexibility and liquidity for our executives not present in our performance-based share awards. It is also more consistent with market-based practices and therefore, supports our philosophy of providing compensation that is necessary to attract, retain, and motivate high-quality executives.

Equity compensation is approximately 51 percent of the value of target total compensation (salary plus target annual incentive plus grant date fair value of equity awards) for our executives, and 64 percent of target total compensation for our CEO. Because equity compensation is a significant component, it is important that our equity compensation instruments are consistent with market practices and viewed as competitive for top executive talent.

Mix of fixed and variable compensation: The mix of pay between fixed and variable compensation, and the portion of variable compensation linked to performance vesting and the value of company common stock, are consistent with our philosophy of strong linkage between pay and performance. It also puts a substantial percentage of our executives’ compensation at risk. As reflected in the following charts, 84 percent of Mr. Wiehoff’s 2018 target total compensation was variable or “at-risk,” and 72 percent of the 2018 target compensation for our other NEOs was variable or “at-risk.”


Stock ownership guidelines: To ensure alignment with our shareholders, the Compensation Committee has established stock ownership guidelines for our executive officers. The Compensation Committee believes that linking a significant portion of the executive officer’s personal holdings to the company’s success aligns our executive interests with that of our shareholders. Therefore, executive officers are expected to acquire and hold a significant amount of C.H. Robinson stock. The Compensation Committee has established stock ownership guidelines for our executive officers based on all shares of company stock deemed owned by an executive officer, which includes vested stock options, stock held in the company 401(k) plan, vested and unvested performance shares and restricted stock units. It also includes stock beneficially owned by the officer, including owned in a trust, by a spouse, or by dependent children. Equity ownership guidelines for executive officers are as follows:
CEO: Six times base salary
Other NEOs: Three times base salary

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Other direct reports to the CEO and COO: Three times base salary

It is expected that new or recently promoted members of the executive team will achieve the appropriate level of ownership within five years of their appointment.

2018 Performance Highlights and Incentive Payouts

In 2018, we achieved record performance results through the strength of our people and our global platform. Our focus on providing exceptional service to our customers and service providers; leveraging our technology and data; and having highly talented, high-performing people in the industry enabled us to continue to win in the marketplace. Our strong business results translated into above-target incentive payouts under our annual cash incentive plan for four of our NEOs and increased vesting in our performance-based equity awards.

Our enterprise APTI, which is the measure we used to determine annual non-equity incentive payments for three of our NEOs in 2018, finished 14 percent above target in 2018.

NAST APTI finished at 17 percent above target in 2018 driven by strong net revenue growth from all service lines. Net revenue growth was primarily driven by increased pricing to our customers, mostly notably in truckload and less than truckload (“LTL”) services but was partially offset by a decrease in truckload volumes. NAST APTI is one of the performance measures for one of our 2018 NEOs.

Global Forwarding APTI finished at four percent below target in 2018 driven by strategic investments in our people and processes. These investments included an increase in personnel expense due to higher average headcount and increased expenditures related to technology, occupancy, and purchased services, including those from acquisitions. These increases were partially offset by an increase in net revenues. Net revenue growth was driven by increased volumes in all services and increased customer pricing in ocean and air services. Global Forwarding APTI was the annual incentive compensation performance measure for one of our 2018 NEOs.

Say On Pay

The Compensation Committee also considers the results of the shareholders’ advisory vote on the compensation of NEOs. At our 2018 and 2017 Annual Meetings, our say-on-pay proposals received “for” votes that represented approximately 88 percent and 90 percent, respectively, of the shares voted on the proposals. The Compensation Committee considered the results of these say-on-pay votes and other shareholder feedback when evaluating our compensation practices and policies in 2018, and when setting the compensation of our NEOs for 2018. The Compensation Committee believes that our say-on-pay proposal results demonstrate shareholders’ support of our compensation practices.

II. Compensation Philosophy

 

Performance-based compensation and alignment of individual, company, and shareholder goals are integral components of C.H. Robinson’s company culture and management approach. Within our office network, a significant portion of the cash compensation of our managers is based on the growth and profitability of their office. Performance based compensation makes up a significant portion of our employees’ total compensation package. In addition, approximately 2,500 employees, or over 16.4 percent of our total employees, hold equity they received through our current equity incentive plan.

C.H. Robinson, with guidance and oversight from our Compensation Committee, has adopted an executive officer compensation philosophy that is intended to be consistent with our overall compensation approach and to achieve the following basic goals:

(1)Provide a level of total compensation necessary to attract, retain, and motivate high quality executives;
(2)Pay incentive compensation aligned with company earnings growth at various levels;
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2018 EXECUTIVE COMPENSATION

(3)Emphasize both team and company performance;
(4)Balance incentive compensation to achieve both short-term and long-term profitability and growth; and
(5)Encourage executives to make long-term career commitments to C.H. Robinson and our shareholders.

Compensation decisions regarding individual executive officers are based on several factors, including individual performance, level of responsibility, unique skills of the executive, tenure, and demands of the position.

III. Key Compensation Practices

 

Our compensation framework and pay-for-performance practices provide appropriate incentives to our executive officers to achieve our financial goals and better align our executives with our shareholders’ interests.

What We Do
What We Don’t Do
Executive compensation and incentive payouts are subject to the approval of our independent Compensation Committee
No guaranteed bonuses
Pay opportunity is competitive with the 25th-50th percentile of general market data of similarly-sized companies. Performance determines a majority of actual earned pay and can be above or below the pay opportunity
No supplemental pension or executive retirement plan (SERP) benefits
A significant portion of pay is at risk and performance based
No repricing of underwater options or stock appreciation rights without shareholder approval
Annual incentive compensation performance metrics are directly tied to the driver of shareholder value (APTI)
No hedging or pledging of company shares
Appropriate caps on incentive plan payouts
No discounted option or SAR grants
Performance based restricted stock and stock option grants to create alignment with shareholders
No executive only severance plan
Executives are subject to robust stock ownership guidelines and a minimum of a two-year post-vest holding requirement on all performance shares
 
Equity compensation subject to forfeiture and claw-back if executive violates company employment agreements
 
Our Compensation Committee is comprised entirely of independent directors
 
Our Compensation Committee engages an independent consultant
 
Our Compensation Committee regularly meets in executive session without management present
 

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IV. Elements of Executive Compensation

 

Base Salary

Annual base salary is designed to compensate our executive officers as part of a total compensation package necessary to attract, retain, and motivate high quality executives. Our 2018 base salaries generally reflect the 25th to 50th percentile of our defined market for talent. Salary levels in 2018 remain unchanged from 2017, other than for Mr. Biesterfeld who was promoted to chief operating officer in 2018 and took on additional responsibilities in that position.

Base salaries are reviewed annually. The Salary column of the Summary Compensation Table on page 32 contains the annual base salary earned for 2018 for each of the NEOs.

Non-Equity Incentive Plan Compensation (“annual incentive compensation”)

The primary objectives of our annual non-equity incentive plan compensation (“annual incentive compensation”) are to motivate our people to grow our company profits and align pay with annual company performance.

The Compensation Committee approves an individualized incentive compensation plan for each NEO in the first quarter of the calendar year. NEO annual incentive compensation amounts are set as a percentage of their base salary, to reflect the executive’s responsibilities, performance, and contribution to overall company goals. The financial measure used to determine incentive compensation is APTI.

Each year, the Compensation Committee establishes target APTI growth for the enterprise and the divisions at levels that are consistent with the company’s expected results. Given the transactional nature of a significant portion of our business and our fluctuating net revenue margins due to market conditions, historically, the company has found it difficult to forecast short-term performance. As such, we believe it is important to align targets more closely with our long-term growth goals, with some consideration given to shorter-term market trends and divisional business plans. Our annual targets should not vary significantly year to year, except under unusual circumstances.

The threshold, target, and maximum levels of APTI growth are set each year with the following objectives:

The relative difficulty of achieving each level is consistent from year to year;
The target level is challenging but achievable and reflects planned company performance. The performance ranges within which threshold and maximum incentive payouts can be earned are generally consistent with the range of financial results within which performance is expected to occur; and
A threshold payment is made to reward partial achievement of the target, and a maximum payment rewards attainment of an aggressive, but potentially achievable, level of performance.

For performance between threshold and target or target and maximum, the achievement percentage is determined by linear interpolation. The performance range for the annual incentive compensation target for NEOs ranges from 70 percent of target at threshold and 120 percent of target at maximum. The NEO annual incentive compensation plan is capped at two times the target opportunity.

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2018 EXECUTIVE COMPENSATION

In 2018, the Compensation Committee established these APTI targets based on the expectation that our stated long-term diluted earnings per share growth rate for the company would be in the range of 7 to 12 percent. The Compensation Committee certified the following actual performance levels and percentage of target payout for each of the NEOs.

2018 NEO Annual Incentive Compensation Metrics
Target
Actual
Enterprise APTI growth(1)
 
7
%
 
21
%
North America Surface Transportation APTI growth(2)
 
7
%
 
24
%
Global Forwarding APTI growth(3)
 
10
%
 
6
%
(1)In 2018, Mr. Wiehoff, Mr. Clarke, and Mr. O’Brien were paid based on Enterprise APTI.
(2)In 2018, Mr. Biesterfeld was paid based on NAST APTI and Enterprise APTI.
(3)In 2018, Mr. Short was paid based on Global Forwarding APTI.

Incentive compensation plans are reviewed annually. The Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page 32 contains the annual incentive compensation earned for 2018 for each of the NEOs.

Equity Compensation

We use equity compensation as our primary tool for aligning our executives with long-term shareholder interests, rewarding them for the achievement of overall company performance, and retaining them at C.H. Robinson. Equity compensation for our executive officers is performance based and highly variable based on growth in company earnings and stock price appreciation. We believe equity compensation is an integral component of meeting our compensation goals as outlined in our compensation philosophy above. Our shareholder-approved equity incentive plan is designed to give us flexibility to achieve these objectives. It allows us to grant stock options, restricted stock, stock units, and other types of equity compensation. Executive officers, other employees, and directors may receive equity compensation.

NEO Awards

Equity awards made to our NEOs in 2018 were granted in the form of performance shares and time-based incentive stock options weighted equally by fair value. Both the performance shares and time-based incentive stock option awards vest over five calendar years. Given the large percentage of their total compensation that is equity, the performance vesting formula that is based solely on growth in company profitability, and the long-term nature of the vesting and delivery, we believe these awards are an effective tool for creating long-term ownership, aligning our executives’ interests with those of our shareholders, and linking executive officer compensation to our long term company growth strategy. While the five-year vesting for both performance shares and incentive options is a longer period than most companies use, this was done purposefully, to reinforce the long-term retentive intent of these awards.

Equity awards are reviewed and granted annually. The Stock Awards and Option Awards columns of the Summary Compensation Table on page 32 contain the grant date fair value of the equity awards granted during 2018 to each of the NEOs.

Performance Shares

For our performance share awards, vesting may occur each year for up to five calendar years, based on company performance. Any performance shares that are unvested at the end of the five years are forfeited back to the company. Performance vesting is constructed in a manner as to vest 0 to 100 percent of the award based on the change in earnings per share from the prior year’s achievement, over the five-year vesting period of the award. However, in no case may an award vest more than 100 percent. Additionally, an award may vest zero percent when there is negative year-over-year growth as was experienced by participants in 2013.

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The annual vesting percentage for performance share awards is equal to the year-over-year percentage increase (or decrease) in diluted net income per share, plus ten percentage points.

For all performance awards made to NEOs in 2013 through 2018, we have a post-vest holding period whereby the standard delivery of all vested shares occurs on the earlier of two years after termination of employment or two years following the end of the five-year vesting period. We believe the delivery two years after vesting or termination strengthens our employment agreements and aligns with shareholders’ interests.

For awards made prior to 2015, NEOs could elect a different time for the delivery of the vested shares before the vesting period began. However, that delivery cannot be less than two years after termination or the five-year vesting period.

Dividend equivalents are paid to participants in cash on all performance shares, vested or unvested. Dividend equivalents provide an important link between the executives’ stake in the company and its long-term health. It also better aligns them with our shareholders, who receive approximately 40 to 50 percent of company earnings in the form of dividends.

The fair value of each share-based award is established on the date of grant. For grants of performance shares and restricted stock units, the fair value is established based on the market price of our common stock on the date of the grant, discounted for post-vesting holding restrictions.

Performance share annual vesting percentage information is set forth in the following table:

Performance Vesting Year
2013
Award
2014
Award
2015
Award
2016
Award
2017
Award
2018
Award
2014
 
25
%
 
 
 
 
 
 
 
 
 
 
2015
 
25
%
 
25
%
 
 
 
 
 
 
 
 
2016
 
12
%
 
12
%
 
12
%
 
 
 
 
 
 
2017
 
9
%
 
9
%
 
9
%
 
9
%
 
 
 
 
2018
 
29
%
 
43
%
 
43
%
 
43
%
 
43
%
 
 
Total Cumulative Vesting
 
100
%
 
89
%
 
64
%
 
52
%
 
43
%
 
0
%
Vesting Years Remaining
 
0
 
 
1
 
 
2
 
 
3
 
 
4
 
 
5
 

Stock Options

C.H. Robinson awarded performance-based incentive stock options to executives, including the NEOs, through 2014. These awards contain performance-based vesting terms and conditions identical to the performance share grants made to our executives. As noted below, beginning in 2015, incentive stock options granted were time-based, vesting ratably over five years beginning in 2016, 2017, and 2018, respectively. For grants of incentive stock options, the fair value is established using the Black-Scholes option pricing model. Incentive stock option annual vesting percentage information is set forth in the following table:

Vesting Year
2013 Award
2014 Award
2015 Award
2016 Award
2017 Award
2018 Award
2014
 
25
%
 
 
 
 
 
 
 
 
 
 
2015
 
25
%
 
25
%
 
 
 
 
 
 
 
 
2016
 
12
%
 
12
%
 
20
%
 
 
 
 
 
 
2017
 
9
%
 
9
%
 
20
%
 
20
%
 
 
 
 
2018
 
29
%
 
43
%
 
20
%
 
20
%
 
20
%
 
 
Total Cumulative Vesting
 
100
%
 
89
%
 
60
%
 
40
%
 
20
%
 
0
%
Vesting Years Remaining
 
0
 
 
1
 
 
2
 
 
3
 
 
4
 
 
5
 
2019 Proxy Statement      
   
23

2018 EXECUTIVE COMPENSATION

V. Additional Compensation Policies and Practices

 

Equity Plan Acceleration and Post Employment Vesting

We do not have a separate severance pay plan for NEOs.

Our performance share award agreements with our NEOs include provisions that allow Board discretion to accelerate vesting, in full, if a change in control occurs2, or if employment ends due to death or disability. Incentive stock options granted to our NEOs will fully vest and become exercisable immediately in connection with the same events. This treatment for performance share awards and stock option awards has been adopted primarily because it is seen to effectively create incentives for our executive team to obtain the highest value possible should we be acquired in the future, because it is expected to provide a powerful retention device during the uncertain times preceding a change in control transaction, and because it provides employees the same opportunity as shareholders to participate in the change in control event.

Post-employment vesting (for reasons other than death, disability, and change in control) is tied to non-compete agreements and provides protections to the company and our relationships with our employees, customers, and service providers. For equity grants, the following post-employment vesting is available, based on age and tenure with the company following a minimum of five years of service:

Sum of Age and Tenure at Termination of Employment
Post-Employment
Additional Vesting
Less than 50
2 Years
At least 50 but less than 60
3 Years
At least 60 but less than 70
4 Years
70 and greater
5 Years

Employment Agreements

C.H. Robinson uses employment agreements to protect against former employees soliciting our employees, customers, and service providers. All employees sign agreements acknowledging their understanding of company policies and committing to confidentiality. Certain employees, including all executives, sign a management employment agreement that includes more restrictive non-competition and non-solicitation covenants. These agreements do not commit to post-termination compensation. The company does not have severance plan commitments to any NEOs, except for the continued vesting provision listed above in the Equity Plan Acceleration and Post Employment Vesting section.

Officer-Only Benefits

C.H. Robinson places a high value on all roles throughout our company and on consistency of culture and management approach. For that reason, we only provide our executives and managers with unique perquisites and compensation plans when it is essential to our goal to attract and retain high quality executives and managers. The only executive-specific benefit arrangement and perquisite in 2018 was the personal use of the corporate aircraft by the chief executive officer for up to 30 hours per year. During 2018, Mr. Wiehoff had 5.54 hours of personal use of the corporate aircraft.

The Supplemental All Other Compensation table found on page 32 contains information about the benefits and perquisites for each of the NEOs, including the aggregate incremental value of the perquisites.

2If a change in control of our company occurs, the Compensation Committee may take such actions with respect to outstanding equity awards as it deems appropriate under the circumstances, which may include (i) providing for the continuation, assumption, or replacement of outstanding awards by the surviving or successor entity; (ii) providing that outstanding awards will terminate upon or immediately prior to the consummation of such change in control; (iii) providing that outstanding awards will vest and become exercisable or payable, in whole or in part, prior to or upon consummation of such change in control, or upon termination of a NEO’s employment; or (iv) providing for the cancellation of any outstanding award in exchange for a payment equal to the intrinsic value of the award at the time of the change in control. The Compensation Committee may specify the action to be take in an award agreement or take the action prior to or coincident with the change in control and is not required to treat all awards or all NEOs similarly.

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2018 EXECUTIVE COMPENSATION

Other Broad-Based Employee Benefits

Our NEOs are eligible to participate in all the same benefit programs as other C.H. Robinson employees. These include:

Employee 401(k) Retirement Plan

We believe that saving for retirement is important for our employees. C.H. Robinson maintains a 401(k)-retirement plan that meets the requirements of an ERISA qualified plan and the Internal Revenue Code. Our U.S. employees are eligible to contribute up to 50 percent of their cash compensation to the 401(k) plan, subject to Internal Revenue Service limitations. To support our compensation objectives, through 2018, the company matched 100 percent of the first four percent of eligible compensation that employees contributed to the plan during the year.

Employee Stock Purchase Plan

Because we believe in aligning employee interests with our shareholders and our long-term company performance, C.H. Robinson maintains an employee stock purchase plan (ESPP) that meets the requirements of the Internal Revenue Code.

Employee Health and Welfare Benefits

To support our goal to provide competitive compensation and benefits, the company sponsors several health and welfare benefit plans for our employees: health, dental, vision, flexible medical and dependent care spending, short-term disability and long-term disability, life insurance, and holiday and other paid time off.

VI. Compensation Process

 

The Compensation Committee

The Compensation Committee is responsible for assisting the Board of Directors in:

(1)Reviewing the performance of the chief executive officer;
(2)Determining all elements of the compensation and benefits for the chief executive officer and other executive officers of the company;
(3)Reviewing and approving the company’s compensation program, including equity-based plans, for management employees generally;
(4)Overseeing the company’s process of conducting advisory shareholder votes on executive compensation; and
(5)Reviewing the executive officers’ employment agreements, separation and severance agreements, change in control agreements, and other compensatory contracts, arrangements, and benefits.

The Compensation Committee Report on executive compensation is found on page 37 of this Proxy Statement.

Cash Compensation

Prior to the beginning of each calendar year, our chief executive officer presents to the Compensation Committee his recommendations on base salary compensation for the company’s executive leaders, including each of the NEOs. Mr. Wiehoff does not make a recommendation on his own compensation. The Compensation Committee determines the chief executive officer’s compensation, as well as approves the compensation for the other NEOs.

2019 Proxy Statement      
   
25

2018 EXECUTIVE COMPENSATION

At the February 2018 Compensation Committee meeting, after the financial results of the previous year have been finalized, our chief executive officer presents to the Compensation Committee his recommendation on annual incentive compensation plans for the company’s executive leaders, including each of the NEOs. During this meeting, the Compensation Committee certifies the APTI results and corresponding incentive compensation for the executive officers for the prior year and approves recommended non-equity incentive targets for the current year.

The Compensation Committee considers many factors when setting compensation plans and awards, including company performance, NEOs’ responsibilities, officer performance, position tenure, experience, and survey information from independent experts. For the past five years, the Compensation Committee engaged Aon Hewitt to present executive compensation market data and practices information to the Compensation Committee in preparation for determining and approving executive compensation. Typically, the Compensation Committee reviews general industry benchmark data every one to two years as provided by Aon Hewitt. The Compensation Committee does periodically plan to seek independent consultative input and consideration of the company’s executive compensation as it continues to assess the company’s executive officer compensation practices.

Equity Compensation

In 2018, our NEOs were awarded performance shares and time-based stock options. Our chief executive officer presents equity recommendations to the Compensation Committee for our executive officers, excluding himself. The Compensation Committee determines the chief executive officer’s equity compensation award. The Compensation Committee approves the awards for each of the executive officers and approves the equity grants to all other recipients through the Non-Executive Stock Award Committee. The grant date of awards for all employees, including the NEOs, is the date of Compensation Committee approval.

VII. Named Executive Officer Compensation

 

Realized Annual Compensation

C.H. Robinson views total realized annual compensation as total cash (base salary and annual incentive compensation) plus equity vested during that calendar year. As described in the equity compensation section above, the equity compensation of our executive officers is performance based and has significant variability based on company earnings growth. Because performance equity may not vest, we think it is most appropriate to measure total compensation in this way. In the Total 2018 Realized Annual Compensation table for each NEO below, the values in the “Equity Earned” column reflect the actual percentage vested during the calendar year multiplied by the grant date fair value for the performance shares and the stock options vesting during each year.

Named Executive Officers Performance Evaluation and Compensation

The NEOs are all paid the same compensation elements. The determination of the other NEOs’ 2018 base salary, annual incentive compensation award, and equity compensation followed the practices explained above for executive compensation. Each member of this group is evaluated, and his compensation is based on several different factors, including, but not limited to, the following:

(1)title, role, scope of responsibility, and relative experience;
(2)tenure in their position;
(3)subjective evaluation of individual performance;
(4)financial performance of the company as a whole;
(5)financial performance of the portion of the business the NEO leads, where applicable; and
(6)comparison to market survey information.

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2019 Proxy Statement

2018 EXECUTIVE COMPENSATION

Chairman and Chief Executive Officer Performance Evaluation and Compensation

John P. Wiehoff, Chairman, President, and Chief Executive Officer

The Compensation Committee annually conducts an evaluation of the chairman and chief executive officer’s performance. Based on this evaluation, the Compensation Committee determines base salary, annual incentive compensation, and equity compensation of the chairman and chief executive officer.

The Compensation Committee set John P. Wiehoff’s base salary at $1,167,000 in 2018. In 2018, Mr. Wiehoff earned annual incentive compensation of $2,427,366, which was paid in cash on February 28, 2019. The amount was calculated based on his annual incentive compensation agreement, as described in Section IV above. Mr. Wiehoff’s annual incentive compensation plan awarded compensation for the company’s achievement of APTI in certain ranges. Mr. Wiehoff’s 2018 incentive compensation and equity compensation increased compared to 2017. This was primarily due to Enterprise performance exceeding our 2018 target performance goal, which resulted in an above-target incentive payout and a higher performance vesting percentage in 2018 compared to prior years. Mr. Wiehoff was granted 33,760 performance shares and 118,350 time-based incentive stock options. These shares and options are available to begin vesting in 2019.

John P. Wiehoff 2018 Incentive Compensation Plan

Base Salary
Target
Incentive as %
of Base Salary
Maximum
Incentive as
% of Base
Salary
Enterprise
Target APTI
Growth %
Enterprise
Actual APTI
Growth %
$1,167,000
 
125
%
 
250
%
 
7
%
 
21
%

Total 2018 Realized Annual Compensation: The table below illustrates Mr. Wiehoff’s total realized compensation in 2018 of $10,085,489, an increase of 166.1 percent from 2017. Our strong performance in 2018 resulted in enterprise APTI growth of 21 percent, significantly exceeding target growth of 7 percent and therefore Mr. Wiehoff earned a large increase in non-equity incentive compensation. In addition, our earnings per share growth of 33 percent resulted in performance equity vesting of 43 percent.

 
Salary
Non-Equity Incentive
Total Cash
% of
Target
Incentive
Achieved
Equity Earned(1)
Total Realized
Compensation
2018
$
1,167,000
 
$
2,427,366
 
$
3,594,366
 
 
166
%
$
6,491,123
 
$
10,085,489
 
2017
 
1,167,000
 
 
871,475
 
 
2,038,475
 
 
60
%
 
1,752,027
 
 
3,790,502
 
2016
 
1,167,000
 
 
937,270
 
 
2,104,270
 
 
80
%
 
1,645,457
 
 
3,749,727
 
(1)See the disclosures made under the headings Performance Shares, page 22, and Stock Options, page 23, pertaining to the actual vesting percentages earned.

Andrew C. Clarke, Chief Financial Officer

The base salary for Andrew C. Clarke was $550,000 in 2018. He earned annual incentive compensation of $640,642 for 2018 paid in cash on February 28, 2019. Mr. Clarke’s 2018 incentive compensation and equity compensation increased compared to 2017. This was primarily due to enterprise performance exceeding our 2018 target performance goal, which resulted in an above-target incentive payout and a higher performance vesting percentage in 2018 compared to prior years. Mr. Clarke was awarded 6,010 performance shares and 21,410 time-based incentive stock options in 2018. These shares and options are available to begin vesting in 2019.

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27

2018 EXECUTIVE COMPENSATION

Andrew C. Clarke 2018 Incentive Compensation Plan

Base Salary
Target
Incentive as %
of Base Salary
Maximum
Incentive as
% of Base
Salary
Enterprise
Target APTI
Growth %
Enterprise
Actual APTI
Growth %
$550,000
 
70
%
 
140
%
 
7
%
 
21
%

Total 2018 Realized Annual Compensation: The table below illustrates Mr. Clarke’s total realized compensation in 2018 of $2,314,432, an increase of 115.9 percent over 2017. Our strong performance in 2018 resulted in enterprise APTI growth of 21 percent, significantly exceeding target growth of 7 percent and therefore Mr. Clarke earned a large increase in non-equity incentive compensation. In addition, our earnings per share growth of 33 percent resulted in performance equity vesting of 43 percent.

 
Salary
Non-Equity Incentive
Total Cash
% of
Target
Incentive
Achieved
Equity Earned(1)
Total Realized
Compensation
2018
$
550,000
 
$
640,642
 
$
1,190,642
 
 
166
%
$
1,123,790
 
$
2,314,432
 
2017
 
550,000
 
 
230,004
 
 
780,004
 
 
60
%
 
292,080
 
 
1,072,084
 
2016
 
525,000
 
 
210,826
 
 
735,826
 
 
80
%
 
213,071
 
 
948,897
 
(1)See the disclosures made under the headings Performance Shares, page 22, and Stock Options, page 23, pertaining to the actual vesting percentages earned.

Robert C. Biesterfeld Jr., Chief Operating Officer and President of North America Surface Transportation

Mr. Biesterfeld began 2018 as the company's president of NAST, earning a salary of $475,000. On March 1, 2018, Mr. Biesterfeld was promoted to chief operating officer of the company, earning a salary of $625,000. He earned annual incentive compensation for 2018 of $849,620 paid in cash on February 28, 2019. Mr. Biesterfeld’s 2018 incentive compensation and equity compensation increased compared to 2017. This was primarily due to both enterprise and NAST performance exceeding our 2018 target performance goal, which resulted in an above-target incentive payout and a higher performance vesting percentage in 2018 compared to prior years. In March 2018 and in conjunction with Mr. Biesterfeld’s promotion to Chief Operating Officer, Mr. Biesterfeld received 3,970 performance shares and 20,640 time-based incentive stock options. These shares and options were available to begin vesting in 2018. In December 2018, as part of our regular equity grant cycle, Mr. Biesterfeld received 10,840 performance shares and 37,970 time-based incentive stock options. These shares and options are available to begin vesting in 2019.

Robert C. Biesterfeld Jr. 2018 Incentive Compensation Plan (split 50/50 between below metrics)

Base Salary
Target
Incentive as %
of Base Salary
Maximum
Incentive as
% of Base
Salary
North America
Surface
Transportation
Target APTI
Growth %
North America
Surface
Transportation
Actual APTI
Growth %
$625,000
 
100
%
 
150
%
 
7
%
 
24
%
 
Enterprise
Target APTI
Growth %
Enterprise
Target APTI
Growth %
 
 
7
%
 
21
%

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2019 Proxy Statement

2018 EXECUTIVE COMPENSATION

Following Mr. Biesterfeld’s promotion to chief operating officer on March 1, 2018, Mr. Biesterfeld’s target growth also began to be measured on the company’s enterprise wide target growth of 7 percent and actual growth of 21 percent.

Total 2018 Realized Annual Compensation: The table below illustrates Mr. Biesterfeld’s total realized compensation in 2018 of $2,666,932, an increase of 166.0 percent from 2017. Our strong performance in 2018 resulted in enterprise APTI growth of 21 percent and NAST APTI growth of 24 percent, each significantly exceeding their respective target growth amounts of 7 percent and therefore Mr. Biesterfeld, who was measured on both our enterprise and NAST APTI growth metrics, earned a large increase in non-equity incentive compensation. In addition, our earnings per share growth of 33 percent resulted in performance equity vesting of 43 percent.

 
Salary
Non-Equity Incentive
Total Cash
% of
Target
Incentive
Achieved
Equity Earned(1)
Total Realized
Compensation
2018
$
600,000
 
$
849,620
 
$
1,449,620
 
 
136
%
$
1,217,312
 
$
2,666,932
 
2017
 
475,000
 
 
245,848
 
 
720,848
 
 
65
%
 
281,602
 
 
1,002,450
 
2016
 
450,000
 
 
250,378
 
 
700,378
 
 
74
%
 
212,795
 
 
913,173
 
(1)See the disclosures made under the headings Performance Shares, page 22, and Stock Options, page 23, pertaining to the actual vesting percentages earned.

Christopher J. O’Brien, Chief Commercial Officer

Christopher J. O’Brien’s base salary was $500,000 in 2018. He earned annual incentive compensation of $499,201 for 2018, which was paid in cash on February 28, 2019. Mr. O’Brien’s annual incentive compensation plan awarded compensation for the company’s achievement of APTI in certain ranges. Mr. O’Brien’s 2018 incentive compensation and equity compensation increased compared to 2017. This was primarily due to enterprise performance exceeding our 2018 target performance goal, which resulted in an above-target incentive payout and a higher performance vesting percentage in 2018 compared to prior years. Mr. O’Brien was awarded 6,010 performance shares and 21,410 time-based incentive stock options in 2018. These shares and options are available to begin vesting in 2019.

Christopher J. O’Brien 2018 Incentive Compensation Plan

Base Salary
Target
Incentive as %
of Base Salary
Maximum
Incentive as
% of Base
Salary
Enterprise
Target APTI
Growth %
Enterprise
Actual APTI
Growth %
$500,000
 
60
%
 
120
%
 
7
%
 
21
%

Total 2018 Realized Annual Compensation: The table below illustrates Mr. O’Brien’s total realized compensation in 2018 of $2,282,917, an increase of 121.6 percent from 2017. Our strong performance in 2018 resulted in

2019 Proxy Statement      
   
29

2018 EXECUTIVE COMPENSATION

enterprise APTI growth of 21 percent, significantly exceeding target growth of 7 percent and therefore Mr. O’Brien earned a large increase in non-equity incentive compensation. In addition, our earnings per share growth of 33 percent resulted in performance equity vesting of 43 percent.

 
Salary
Non-Equity Incentive
Total Cash
% of
Target
Incentive
Achieved
Equity Earned(1)
Total Realized
Compensation
2018
$
500,000
 
$
499,201
 
$
999,201
 
 
166
%
$
1,283,716
 
$
2,282,917
 
2017
 
500,000
 
 
179,224
 
 
679,224
 
 
60
%
 
351,189
 
 
1,030,413
 
2016
 
500,000
 
 
200,786
 
 
700,786
 
 
80
%
 
348,571
 
 
1,049,357
 
(1)See the disclosures made under the headings Performance Shares, page 22, and Stock Options, page 23, pertaining to the actual vesting percentages earned.

Michael J. Short, President of Global Freight Forwarding

Mr. Short’s base salary in 2018 was $500,000. He earned $316,464 annual incentive compensation for 2018. Mr. Short’s 2018 incentive compensation decreased compared to 2017, however his equity compensation increased compared to 2017. His incentive compensation decrease was primarily due to Global Forwarding performance coming in under target by 4 percent in 2018. His equity compensation, based on enterprise performance, increased due to an increase in the equity vesting in 2018 compared to prior years. In 2018, Mr. Short received 5,680 performance shares and 20,220 time-based incentive stock options. These shares and options are available to begin vesting in 2019.

Michael J. Short 2018 Incentive Compensation Plan

Base Salary
Target
Incentive as %
of Base Salary
Maximum
Incentive as
% of Base
Salary
Global
Forwarding
Target APTI Growth %
Global
Forwarding
Actual APTI Growth %
$500,000
 
70
%
 
140
%
 
10
%
 
6
%

Total 2018 Realized Annual Compensation: The table below illustrates Mr. Short’s total realized compensation in 2018 of $1,819,790, a 46.4 percent increase over 2017. Our strong performance in 2018 resulted in enterprise APTI growth of 21 percent, significantly exceeding target growth of 7 percent and therefore Mr. Short earned a large increase in non-equity incentive compensation. In addition, our earnings per share growth of 33 percent resulted in performance equity vesting of 43 percent.

 
Salary
Non-Equity Incentive
Total Cash
% of
Target
Incentive
Achieved
Equity Earned(1)
Total Realized
Compensation
2018
$
500,000
 
$
316,464
 
$
816,464
 
 
90
%
$
1,003,326
 
$
1,819,790
 
2017
 
500,000
 
 
393,549
 
 
893,549
 
 
112
%
 
349,610
 
 
1,243,159
 
2016
 
500,000
 
 
302,724
 
 
802,724
 
 
101
%
 
274,318
 
 
1,077,042
 
(1)See the disclosures made under the headings Performance Shares, page 22, and Stock Options, page 23, pertaining to the actual vesting percentages earned.

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2019 Proxy Statement

2018 EXECUTIVE COMPENSATION

Section 162(m) Disclosure

Section 162(m) of the Internal Revenue Code precludes us from taking a federal income tax deduction for compensation paid in excess of $1 million to our “covered employee” (which as of 2018 includes the chief executive officer, chief financial officer, and our three other most highly compensated executive officers). Prior to 2018, this deduction limitation did not apply to qualified “performance-based” compensation and a company’s chief financial officer was not considered to be a “covered officer”. Consequently, compensation paid in 2018 and later years to our NEOs in excess of $1 million will not be deductible unless it qualifies for transitional relief applicable to certain binding, written performance-based compensation arrangements that were in place as of November 2, 2017.

Despite these new limits on the deductibility of performance-based compensation, the Compensation Committee continues to believe that a significant portion of our executives’ compensation should be tied to the company’s performance and that shareholder interests are best served if its discretion and flexibility in structuring and awarding compensation is not restricted even though some compensation awards may have resulted in the past, and are expected to result in the future, in non-deductible compensation expense to us. Therefore, it is not anticipated that the changes to Section 162(m) will significantly impact the design of our compensation program going forward.

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31

2018 EXECUTIVE COMPENSATION

Summary Compensation Table

Name of Executive Officer and Principal Position
Year
Salary
Bonus
(1)
Stock
Awards
(2)
Option
Awards
(3)
Non-Equity
Incentive
Plan
Compensation
(4)
All Other
Compensation
Total
John P. Wiehoff
 
2018
 
$
1,167,000
 
$
0
 
$
2,515,458
 
$
2,428,542
 
$
2,427,366
 
$
20,490
 
$
8,558,856
 
President and Chief
 
2017
 
 
1,167,000
 
 
0
 
 
2,383,725
 
 
2,383,349
 
 
871,475
 
 
28,638
 
 
6,834,187
 
Executive Officer
 
2016
 
 
1,167,000
 
 
0
 
 
2,369,215
 
 
1,825,236
 
 
937,270
 
 
23,344
 
 
6,322,065
 
Andrew C. Clarke
 
2018
 
 
550,000
 
 
0
 
 
447,805
 
 
439,333
 
 
640,642
 
 
11,000
 
 
2,088,780
 
Chief Financial Officer
 
2017
 
 
550,000
 
 
0
 
 
451,075
 
 
451,693
 
 
230,004
 
 
10,800
 
 
1,693,572
 
 
 
2016
 
 
525,000
 
 
0
 
 
470,598
 
 
354,186
 
 
210,826
 
 
10,600
 
 
1,571,210
 
Robert C. Biesterfeld Jr.
 
2018
 
 
600,000
 
 
0
 
 
1,110,877
(5) 
 
1,081,727
(5) 
 
849,620
 
 
11,000
 
 
3,653,224
 
Chief Operating
 
2017
 
 
475,000
 
 
0
 
 
451,075
 
 
451,693
 
 
245,848
 
 
10,800
 
 
1,634,416
 
Officer
 
2016
 
 
450,000
 
 
0
 
 
470,598
 
 
314,874
 
 
250,378
 
 
10,600
 
 
1,496,450
 
Christopher J. O'Brien
 
2018
 
 
500,000
 
 
0
 
 
447,805
 
 
439,333
 
 
499,201
 
 
11,000
 
 
1,897,339
 
Chief Commercial
 
2017
 
 
500,000
 
 
0
 
 
425,851
 
 
426,630
 
 
179,224
 
 
10,800
 
 
1,542,505
 
Officer
 
2016
 
 
500,000
 
 
0
 
 
444,634
 
 
334,530
 
 
200,786
 
 
10,600
 
 
1,490,549
 
Michael J. Short
 
2018
 
 
500,000
 
 
0
 
 
423,217
 
 
414,914
 
 
316,464
 
 
11,000
 
 
1,665,595
 
President-Global
 
2017
 
 
500,000
 
 
0
 
 
400,626
 
 
401,426
 
 
393,549
 
 
10,800
 
 
1,706,401
 
Freight Forwarding
 
2016
 
 
500,000
 
 
0
 
 
418,020
 
 
314,874
 
 
302,724
 
 
10,600
 
 
1,546,218
 
(1)The 2016, 2017, and 2018 performance share grants are available to vest over a five-year period based on the financial performance of the company. The actual vesting percentage for each year is determined by the following formula: year-over-year growth rate in diluted net income per share plus ten percentage points. Any shares unvested after five years are forfeited back to the company. The actual vesting percentage was 12 percent in 2016, 9 percent in 2017, and 43 percent in 2018. Assumptions used in the calculation of the amounts reported in this table are included in Note 6 to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
(2)The 2016, 2017, and 2018 stock option grants are time-based awards that vest pro-rata over the five calendar years after the year of grant. Assumptions used in the calculation of the amounts reported in this table are included in Note 6 to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
(3)The dollar amount in this column represents the amount the named executive officer earned during the respective year under their non-equity annual incentive plan. The amount earned is paid out as cash compensation early in the following year.
(4)All other compensation for our NEOs is summarized in the Supplemental All Other Compensation table.
(5)These figures include compensation adjustments as a result of Mr. Biesterfeld's promotion to Chief Operating Officer effective March 1, 2018.

Supplemental All Other Compensation Table

Name of Executive Officer
Year
Perks and
Other
Personal
Benefits
Tax
Reimbursements
(1)
Registrant
Contributions
to Defined
Contributions
Insurance
Premiums
Other
Total
John P. Wiehoff
 
2018
 
$
0
 
$
0
 
$
11,000
 
$
0
 
$
9,490
(2) 
$
20,490
 
Andrew C. Clarke
 
2018
 
 
0
 
 
0
 
 
11,000
 
 
0
 
 
0
 
 
11,000
 
Robert C. Biesterfeld Jr.
 
2018
 
 
0
 
 
0
 
 
11,000
 
 
0
 
 
0
 
 
11,000
 
Christopher J. O'Brien
 
2018
 
 
0
 
 
0
 
 
11,000
 
 
0
 
 
0
 
 
11,000
 
Michael J. Short
 
2018
 
 
0
 
 
0
 
 
11,000
 
 
0
 
 
0
 
 
11,000
 
(1)Represents matching contributions under the company’s qualified 401(k) plan.
(2)Represents the value of Mr. Wiehoff’s personal use of the corporate aircraft as required under applicable SEC rules.

32 
   
2019 Proxy Statement

2018 EXECUTIVE COMPENSATION

Dividend Equivalents Paid on Unvested Shares

 
 
(1)
Name of Executive Officer
Year
Dividend Equivalents
John P. Wiehoff
 
2018
 
$
243,782
(2) 
 
 
2017
 
 
229,525
(2) 
 
 
2016
 
 
195,417
(2) 
 
 
 
 
 
 
 
Andrew C. Clarke
 
2018
 
 
45,794
(2) 
 
 
2017
 
 
36,624
(2) 
 
 
2016
 
 
26,313
(2) 
 
 
 
 
 
 
 
Robert C. Biesterfeld Jr.
 
2018
 
 
52,634
(2) 
 
 
2017
 
 
35,346
(2) 
 
 
2016
 
 
25,845
(2) 
 
 
 
 
 
 
 
Christopher J. O'Brien
 
2018
 
 
47,043
(2) 
 
 
2017
 
 
46,162
(2) 
 
 
2016
 
 
41,089
(2) 
 
 
 
 
 
 
 
Michael J. Short