Form 4: RXO Inc. Executive Awarded Restricted Stock and Performance Share Units

Jason S. Kerr, Chief Accounting Officer of RXO Inc., reports the acquisition of restricted stock units (RSUs) and performance share units (PSUs).

Summary

• Jason S. Kerr, Chief Accounting Officer of RXO Inc., filed a Form 4 detailing changes in beneficial ownership.
• On March 22, 2024, Kerr was awarded 6,089 Restricted Stock Units (RSUs).
• Each RSU represents the right to receive one share of Common Stock or a cash payment equal to the fair market value of one share.
• The RSUs vest in three equal annual installments, contingent upon continued employment.
• Kerr was also awarded 6,089 Performance Share Units (PSUs) at target level.
• The PSUs will vest based on total shareholder return relative to a subset of companies in the S&P Transportation Select Industry and EBITDA performance targets over a three-year period.
• Following the reported transaction, Kerr beneficially owns 16,602 shares.
• The filing was signed by Jeffrey D. Firestone, Attorney-in-Fact, on March 26, 2024.

Sentiment

Score: 7

Explanation: The sentiment is neutral to positive. The awarding of RSUs and PSUs is a standard practice and indicates confidence in the executive and the company's future performance. The performance-based vesting of PSUs is a positive sign.

Positives

• The awarding of RSUs and PSUs aligns the executive's interests with those of the shareholders.
• The vesting schedule of the RSUs encourages continued employment and commitment to the company.
• The PSU performance metrics (total shareholder return and EBITDA) incentivize value creation.

Risks

• The value of the RSUs is subject to the market price of RXO Inc.'s common stock.
• The PSUs may not vest fully if the performance targets are not met.
• The executive's departure before full vesting would result in forfeiture of unvested RSUs.

Future Outlook

The vesting of the RSUs and PSUs is contingent upon continued employment and the achievement of performance targets over the next three years.

Industry Context

Equity-based compensation is a common practice in the transportation and logistics industry to incentivize executives and align their interests with shareholders.

Comparison to Industry Standards

• Companies like C.H. Robinson, J.B. Hunt, and Knight-Swift Transportation also utilize equity-based compensation, including RSUs and PSUs, to incentivize their executives.
• Vesting schedules and performance metrics vary across companies, but typically include measures such as revenue growth, profitability, and shareholder return.
• The specific targets for RXO's PSUs (total shareholder return relative to a subset of companies in the S&P Transportation Select Industry and EBITDA performance) are common metrics used in the industry.

Stakeholder Impact

• Shareholders may view the equity-based compensation as a positive sign, aligning management's interests with their own.
• Employees may be motivated by the potential for executive success and its impact on the company's overall performance.

Next Steps

• The Reporting Person will report the vesting of the PSUs when the number of earned shares is determined.

Key Dates