‘Really significant victory’
XPO shareholders say no to ‘Fat Cat’ pay plan
At its annual general meeting held online earlier in the United States, shareholders of XPO Logistics rejected the company’s ‘Say-on-Pay’ proposal. This was in response to XPO’s chief executive officer Bradley Jacobs being granted a cash incentive award of up to US $80m.
The proposed executive payment was especially controversial as it has been recently revealed that XPO has claimed an estimated £100m since the beginning of the pandemic via the UK government’s job retention scheme.
This is the first time in its history that XPO’s shareholders have rejected the pay plan and has come despite the company reporting a strong economic performance during the pandemic (last year it recorded $16.5bn dollars in revenue).
The vote is non-binding but sends a strong message that shareholders are not happy with the huge amounts being awarded to XPO senior executives.
The company came under scrutiny at the AGM for the discrepancy between how it rewards its top executives compared to its workers on the frontline. British workers effectively took a 20 per cent pay cut while furloughed after XPO rejected requests to top-up the remaining 20 per cent. The UK workers who continued working through Covid-19, did so with no hazard pay nor bonus in recognition of their sacrifice.
A British XPO worker who attended the AGM asked the board to comment on the amount claimed under the furlough scheme – the company declined to acknowledge his question.
“This is a really significant victory and demonstrates that even the largest shareholders understand that the XPO executive pay plan was untenable,” commented Unite national officer Matt Draper.
“This vote should be seen as a watershed moment that employers can’t and won’t get away with lining their pockets with taxpayers’ money paid through the furlough scheme.”
A GMB spokesperson added, “A message has been sent loud and clear to Brad Jacobs that pocketing taxpayers’ money for furlough and disrespecting his own workforce is simply unacceptable. Other corporate bosses should take note and ensure the workers they rely on for their profits get their fair share.”
ITF Inland Transport Section Secretary Noel Coard said,“Shareholders have said no to their fat cat pay rises. It’s now time for XPO to listen to its workers and address their legitimate concerns.”
The background to this historic decision came after the unions representing workers at XPO Logistics called for a full investigation after it emerged the American chief executive of the company received an incentive award of up to $80m (£57m), while the company is estimated to have received more than £100m from the UK government in furlough payments.
The pandemic bonus payment to Bradley Jacobs, XPO CEO, came amid growing scrutiny of paying senior managers’ large bonus and dividend payments – while their companies are receiving government support.
XPO employs more than 25,000 workers in the UK and carries out transport and logistics work for many of the leading supermarkets including Morrisons, Co-op, Waitrose and Iceland.
Unlike the chief executive, XPO staff, who have risked their health and that of their families by continuing to work throughout the pandemic, did not receive any form of Covid-19 pandemic bonus, despite the unions Unite and GMB, lobbying for such a payment to be made.
XPO also refused to make up the pay of the wages of workers who have been furloughed, who receive only the basic 80 per cent government rate.
Analysis of the government figures of furlough payments revealed that XPO claimed at least £3.28m in December 2020 and up to £10.5m in February 2021. If this figure is averaged over the entire period of the scheme to date, then XPO will have received more than £100m in furlough payments. XPO may also have received millions of pounds in taxpayer-funded business rates relief.
Despite claiming millions in furlough payments, XPO last year recorded $16.5bn in revenue with a record breaking second half of the year. In July 2020 Jacobs received a long term cash award of up to $80m and an annual bonus of $3.3m for his handling of the Covid pandemic.
‘Kick in the teeth’
The bonuses given to the chief executive are a complete kick in the teeth for the XPO workers who have risked their health to keep the company operating throughout the pandemic,” commented Unite national officer Matt Draper.
“There is clearly one rule for the bosses and another for the workers on the frontline who have been denied any kind of bonus. What makes this even more sickening is that UK taxpayers’ money appears to have gone straight into the pockets of the company’s American chief executive,” Draper added.
XPO is due to spin off the logistics arms of its business under the new name GXO, which will be headquartered in London. The new company GXO, will look to quickly expand by continuing XPO’s strategy of mergers, acquisitions and takeovers.
The company is already extending its contract with online retailer ASOS and has secured a five year contract with the UK government to store goods and vehicles for the UK Border Force. Jacobs is set to profit from such a move, as he will own 17 per cent of both companies. The details were disclosed ahead of the company’s AGM, yesterday.
This is not the first time that concerns have been raised about XPO’s business practices. In October 2020, a global group of unions released a report on XPO detailing allegations of wage theft through misclassification and subcontracting chains of exploitation, as well as serious health and safety breaches, discrimination and sexual harassment.
The International Transport Workers’ Federation Inland Transport Section Secretary reported that, “XPO is a bad operator globally. The company’s health and safety record, especially in terms of its Covid response, has been such that you would expect the CEO to be penalised, not rewarded.”
Both Unite and GMB have both raised serious concerns about the company’s response to Covid-19, especially in its warehousing facilities. In March 2020 the XPO-run ASOS warehouse in Barnsley was dubbed ‘a cradle of disease’ by the GMB union, where working conditions had previously been likened to that of a ‘dark satanic mill’.
In June 2020 an Iceland facility in Swindon run by XPO had an outbreak of Covid in which 70 employees tested positive. Unite said employees were fearful of returning to work and criticised XPO for not quarantining the site to protect workers.
Ahead of the company’s AGM Unite called on XPO Logistics’ shareholders and customers, including the UK government and major supermarkets, to work with unions to ensure that the company values its workers, compensates them fairly and respects international labour standards.
And it paid off. The shareholders weren’t prepared to endorse what was nothing short of ‘Fat Cat-ery’.
Their actions mean that companies like XPO will be held accountable. Shareholders are pushing for more transparency and fairness, looking at whether resources are being used to meet short term political priorities, or to build a sustainable business that treats all its workers fairly.
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You can see how these figures were calculated here
By Barckley Sumner