Knight-Swift Transportation Holdings Inc
For the period ended Apr 4, 2024. Filed Apr 4, 2024.
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Apr 4, 2024 · Filed Apr 4, 2024
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
| Filed by the Registrant | ☒ | Filed by a Party other than the Registrant | ☐ |
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Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
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| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material under Sec. 240.14a-12 |
Knight-Swift Transportation Holdings Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
| ☒ | No fee required. |
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| ☐ | Fee paid previously with preliminary materials. |
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| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14-a6(i)(1) and 0-11. |
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2002 WEST WAHALLA LANEPHOENIX, AZ | 85027
Notice of Annual Meeting
of Stockholders
We cordially invite you to attend the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Knight-Swift Transportation Holdings Inc. (the “Company”). The meeting will take place at the Company’s corporate offices, which are located at 2002 West Wahalla Lane, Phoenix, Arizona 85027, on Tuesday, May 14, 2024, at 8:30 a.m. Local Time, and at any adjournment thereof. We look forward to your attendance either in person or by proxy.
Annual Meeting Details
| DATETuesday,May 14, 2024 | TIME8:30 a.m.Local Time | LOCATION2002 West Wahalla LanePhoenix, Arizona 85027 | WHO VOTESStockholders ofRecord on Monday,March 18, 2024 |
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Purpose of the Meeting
| 1 | Elect twelve (12) directors, each such director to serve until the 2025 Annual Meeting |
| 2 | Conduct an advisory, non-binding vote to approve named executive officer compensation |
| 3 | Ratify the appointment of Grant Thornton LLP (“Grant Thornton”) as our independent registered public accounting firm for fiscal year 2024 |
| 4 | Vote on a stockholder proposal regarding managing climate risk through science-based targets and transition planning |
| 5 | Transact any other business that may properly come before the meeting |
The foregoing matters are described more fully in the accompanying proxy statement relating to the Annual Meeting. Only stockholders of record at the close of business on March 18, 2024 may vote at the meeting or any postponements or adjournments of the meeting.
By Order of the Board of Directors,
| Todd Carlson, SecretaryApril 4, 2024 | IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE MAY 14, 2024 STOCKHOLDER MEETINGThe Company’s proxy statement for the 2024 Annual Meeting and its Annual Report to stockholders for the fiscal year ended December 31, 2023 are available at www.knight-swift.com. |
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Our Lead Independent Director
Lead Independent Director Responsibilities
| ☑ | Presides at all executive sessions of the Board |
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| ☑ | Presides at all meetings of our Board and the stockholders, where the Chairperson is not present |
| ☑ | Performs all duties of the Chairperson in the absence or disability of the Chairperson |
| ☑ | Coordinates the activities of the independent directors |
| ☑ | Disseminates timely information to the Board for consideration |
| ☑ | Participates in setting and approving Board meeting agendas and materials, in consultation with the Chairperson |
| ☑ | Coordinates Board meeting schedules to assure that there is sufficient time for discussion of all agenda items |
| ☑ | Participates in the retention of outside advisors and consultants who report directly to the Board, if needed |
| ☑ | Communicates with the Compensation Committee and the Nominating and Corporate Governance Committee regarding key compensation, nominating and governance issues |
| ☑ | Collaborates with the CEO and Chairperson in determining the need for special meetings, and calling any such special meeting, as appropriate |
| ☑ | Participates in the performance review of the CEO |
| ☑ | Calls and chairs meetings and executive sessions of the independent directors |
| ☑ | Acts as a liaison for stockholders between the independent directors and the Chairperson, as appropriate |
| ☑ | Acts as a liaison between the Chairperson and the independent directors |
| ☑ | Responds directly to stockholder and other stakeholder questions that are directed to the Lead Independent Director or the independent directors as a group, as the case may be |
| ☑ | Oversees a robust annual Board self-assessment process |
| ☑ | Performs such other duties and exercises such other powers as our by-laws or Board may assign from time to time |
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Letter from our Lead Independent Director
DEAR FELLOW STOCKHOLDERS:
As I write to you for the first time as Lead Independent Director, I am reminded of what a privilege it is to work with a dedicated and engaged group of directors. Below are some highlights of our focus over the past year.
Long-Term Strategic Investments and Dedication to Maximizing Stockholder Returns
The Board and management are continually focused on how to best position the Company in both the near- and long-term through rigorous analysis and timely capitalization on marketplace opportunities. This focus led to our diversification into the less-than-truckload (LTL) space in 2021, through our acquisitions of AAA Cooper and MME, a segment that generated over $1 billion in revenue last year. Throughout 2023 and into 2024, we continue to build out our strategy of creating nationwide LTL coverage by adding 17 terminals across the United States and increasing our door count by 404 doors. We believe our diversification into LTL and subsequent expansion of our LTL network through organic and acquisition growth has enhanced long-term stockholder value by providing more comprehensive solutions for our customers and mitigating some of the effects of the difficult truckload environment in 2023.
We were excited to close Knight-Swift’s acquisition of U.S. Xpress effective July 1, 2023, a transaction we believe presents the Company with significant future opportunities in the truckload market. U.S. Xpress is one of the largest asset-based truckload carriers in the United States, and we welcomed an additional 7,700 driving associates (including independent contractors) into the Knight-Swift family. Thanks to the hard work and dedication of Knight-Swift and U.S. Xpress team members, we have made immediate and significant improvements in the U.S. Xpress business. We continue to execute on cost and revenue opportunities, having already reached $144 million annualized run rate of realized improvement, and expect U.S. Xpress to be one dollar accretive to EPS by 2026.
Moreover, the Company continued its history of returning capital to stockholders over the past year, with over $1.2 billion being paid in dividends and stock repurchases since the 2017 merger of Knight and Swift.
The Board and management—under the leadership of Adam Miller, who was appointed as our CEO in February 2024—continue to actively explore opportunities in our pursuit of strengthening the Company’s position, both financially and within the industry. In transitioning Mr. Miller from his roles as CFO and President of Swift to CEO, the Board continued to execute on its leadership succession plans, recognizing Mr. Miller’s broad strategic, financial, and operating experience during his more than 20 years at Knight-Swift. To replace Mr. Miller as our Chief Financial Officer, we appointed Andrew Hess, a role for which Mr. Hess is well-prepared as he has led our M&A activity over the last three years and more recently served as Swift’s Senior Vice President of Finance, roles in which he gained a deep understanding of our enterprise. We are enthusiastic about the future under the leadership of Messrs. Miller and Hess.
Continued Focus on Board Diversity
The three directors most recently added to our Board are gender or ethnically diverse, and in late 2023, we welcomed Ms. Amy Boerger to the Board—one of four new Board members we have added in the last three years. Prior to joining the Board, Amy spent 39 years at Cummins, Inc. and her experience with cleaner transportation solutions aligns with Knight-Swift’s standing as an industry pioneer in environmental initiatives. We are excited by the diversity of experience and expertise that Amy brings to the Board and believe her insight will be a valuable addition to the Company’s strategic initiatives, as well as the Audit and Nominating and Corporate Governance Committees.
With Ms. Boerger’s addition to the Board, two-thirds of our Board is independent (with our Audit, Nominating and Corporate Governance, Finance, and Compensation Committees remaining fully independent), over 40% of our
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Board is diverse, and one-third of our Board are women. We continue to seek Board members with a range of experiences, perspectives, and backgrounds, and believe diversity on our Board yields considerable advantages, driving innovation and adaptability, as we continue to navigate the industry’s evolving landscape.
Board Emphasis on Emerging and Critical Issues
Taking a hands-on and proactive approach to changing market factors and emerging issues has long been a critical element of the Company’s approach towards governance. Knight-Swift has a history of embracing innovative change and developing technologies, including our support of ESG initiatives and best practices.
As a charter partner of the EPA’s SmartWay program, we were pleased to have each of Knight, Swift, and Barr-Nunn named to SmartWay’s High Performers list for carbon emissions in recognition of their fuel-efficient operations. Additionally, our operating brands of Knight, Swift, U.S. Xpress, ACT, MME, Barr-Nunn, and Abilene received a rank of one or two for NOx grams per mile and grams per ton-mile in the SmartWay Carrier Performance Rankings released last year, with several of our brands also receiving ranks of one or two for CO2 grams per mile and grams per ton-mile. On the SmartWay carrier performance scale, a ranking of “one” is the best possible ranking for carriers. These recognitions and rankings reflect the prominence of efficiency and environmentally friendly technology and equipment throughout our operations.
We remain committed to identifying, evaluating, investing in, and testing equipment advancements and other fuel-efficient and alternative technologies. In 2023, we continued to pilot zero-emission battery electric vehicles, though we have encountered obstacles preventing large-scale implementation, including cost, weight, range, and infrastructure, and we began testing renewable gas engine tractors. Over the next year, we expect to complete our goal of outfitting our entire fleet of over-the-road tractors with idle reduction technology, an innovation that we believe serves to reduce emissions without sacrificing our performance. We believe that sensible implementation of environmentally conscious practices is a strategic endeavor that aligns not only with industry and market expectations but also with our values, as we strive to remain at the forefront of the industry’s collective push towards lower emissions and sustainability in a manner that is operationally and financially prudent. I hope you will follow along with the progress towards our emissions and sustainability goals by reading our Annual Sustainability Report that we publish each April.
Another highlight of 2023 was the continued recognition of our ESG programs. We were especially proud to be awarded the 2023 American Trucking Association Diversity, Equity, and Inclusion Change Leader Award in recognition of our commitment to promoting a diverse and inclusive environment and culture. This award represents the culmination of the programs and initiatives that the Company has established and fostered over many years. We are gratified to see our employees continually develop by taking advantage of the numerous opportunities we offer, including participating in our Employee Resource Groups, learning through our online corporate leadership development programs and online corporate universities, and pursuing formal degree programs at accredited colleges or universities.
We remain committed to a robust governance framework that allows us to respond to industry and broader marketplace dynamics, and our Board is actively engaged in addressing trending corporate governance issues.
On behalf of our Board we appreciate your trust in our leadership and look forward to your support at the 2024 Annual Meeting.
Sincerely,
David Vander Ploeg
Lead Independent Director
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Voting Matters and Board Recommendations
| Item · Board Vote Recommendation · Page | |||
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| 1 | Elect twelve (12) directors, each such director to serve until the 2025 Annual Meeting | ü FOR | 17 |
| 2 | Conduct an advisory, non-binding vote to approve named executive officer compensation | ü FOR | 54 |
| 3 | Ratify the appointment of Grant Thornton as our independent registered public accounting firm for fiscal year 2024 | ü FOR | 55 |
| 4 | Vote on a stockholder proposal regarding managing climate risk through science-based targets and transition planning | û AGAINST | 58 |
2023 Company Financial Highlights
OPERATING PERFORMANCE
| $7.1BTotal revenue | $6.3BRevenue, excluding fuel surcharge revenue | 95.3%Operating ratio | 93.1%Adjusted operating ratio 1 |
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CAPITAL DEPLOYMENT
| $1.2BOperating cash flows | $383MFree cash flow 1 | $182MLease liability paydowns | $91.1MDividends paid |
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Composition of Board
| TENURE (years) 2 | AGE (years) 3 | DIVERSITY 4 | INDEPENDENCE 5 |
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1 See non-GAAP reconciliations beginning at page 66 of this proxy statement.
2 10-year average tenure with respect to our independent directors.
3 Average age of 60 years.
4 Of our 12 directors, four bring gender diversity to our Board, and two bring racial diversity to our Board.
5 Of our 12 directors, eight are independent.
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Environmental, Social, and Corporate Governance
At Knight-Swift Transportation, reducing our environmental impact, supporting our drivers, and building on continuous improvement are all a part of how we drive a successful business. In 2023, we not only met, but exceeded, our short-term emissions reduction goal ahead of schedule, continued to be one of the safest operators on the road, increased educational opportunities for employees, and increased women in leadership. We care deeply about the causes our employees are passionate about and continued our robust tradition of charitable giving.
| Greenhouse Gas Emissions | Knight-Swift exceeded our 2025 goal of 5% CO2 per mile reduction in 2023, achieving a 7% overall reduction in CO2 emissions per mile since 2019, fully accounting for all acquisitions since that time. This overall reduction was due to a combination of our success at increasing renewable diesel and bio-blended fuel usage across our fleet, as well as our continued efforts in improving fuel economy. Battery-electric vehicle (BEV) deployment took place throughout 2023 with mixed results and we continue to partner with multiple manufacturers to provide real-time feedback on early generation technologies. In 2023, we placed nine BEVs (six day cabs and three yard trucks) into service and expect to take delivery of additional vehicles in 2024, including eight additional battery-electric yard trucks. We continue to progress through our pre-production test of the Cummins 15L natural gas engine and are monitoring hydrogen powered tractors and technologies for breakthroughs in commercial feasibility. These technologies are still maturing, and we will continue to pursue available alternatives to meet our long-term emissions reduction target. |
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| Accident and Safety Management | We are committed to safe operations. We conduct an intensive driver qualification process, including defensive driving training. We require prospective drivers to meet higher qualification standards than those required by the Department of Transportation (DOT), including extensive background checks and hair follicle drug testing. We regularly communicate with drivers to promote safety and instill safe work habits through effective use of various media and safety review sessions. Because of our commitment to safety, we continue to have a best-in-class DOT reportable crash rate. |
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| Community Support | We are committed to making a positive difference in the lives of our employees and the communities where we live, serve and work. Our employee assistance and community grant programs are funded by voluntary payroll contributions followed by dollar-for-dollar employer matches. In 2023, we continued our tradition of providing support through our employee assistance, community and scholarship grants, and other charitable contributions. Our total charitable giving for the year was more than $1.9 million, which included over 425 independent gifts and grants. |
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| Workforce Culture | We foster a culture of collaboration, innovation, and trust. We believe in empowering team members to reach their full potential by providing a supportive and inclusive work environment. Collectively, we strive for excellence, embracing continuous learning and development, all while providing as many pathways to success as possible. •Over 5,800 training courses available •Over 43,000 individual learners •Over 285,000 learning hours completed •470 participants in our tuition covered college program, Go the Distance •6 unique Employee Resource Groups•Women in leadership positions (Director +) has increased to 22% |
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| Corporate Governance | We believe that effective corporate governance is the cornerstone for building sustainable long-term value and we remain dedicated to ensuring that our stakeholders’ interests are at the heart of our strategy.•Executive compensation plan design that aligns our executives’ interests with corporate strategy, including ESG component in Cash Bonus Plan•Strong independent Board oversight: 2/3 independent Board, with fully independent Audit, Compensation, Nominating and Corporate Governance, and Finance Committees, and robust Lead Independent Director role•Nominating and Corporate Governance Committee oversight of ESG risks, plans, policies, and disclosures•Board diversity (33% women directors, two of 12 directors bringing racial diversity)•Separation of Chairperson and CEO roles•Annual election of directors•Majority voting standard for director elections•Rigorous annual Board self-assessment |
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| Women represent 33% of our Board of Directors |
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Cybersecurity and Information Security
| Oversight of Cybersecurity and Information Security Risk by Nominating and Corporate Governance Committee | |
| Our Board recognizes the importance of maintaining the trust and confidence of our customers, driving associates, and employees and has tasked the Nominating and Corporate Governance Committee with oversight of information security risk. The Nominating and Corporate Governance Committee is composed entirely of independent directors and therefore independently oversees information security. As a part of its objective, independent oversight of the key risks facing our company, the Nominating and Corporate Governance Committee devotes significant time and attention to data and systems protection, including cybersecurity and information security risk.The Nominating and Corporate Governance Committee oversees management’s approach to staffing, policies, processes, and practices designed to gauge and address cybersecurity and information security risk. Our Nominating and Corporate Governance Committee receives regular presentations and reports throughout the year on cybersecurity and information security risk. These presentations and reports address a broad range of topics, including updates on technology trends, regulatory developments, legal issues, policies and practices, the threat environment and vulnerability assessments, and specific and ongoing efforts to prevent, detect, and respond to internal and external critical threats. In late 2020, we appointed a Vice President of IT Security and have hired additional team members to ensure we have personnel in place to identify and address cybersecurity matters. In addition, the Nominating and Corporate Governance Committee reviews all information security risks with management, including the Company’s Chief Information Officer and the management Risk Committee, to make sure such risks are appropriately identified, monitored, tested, and mitigated.Additionally, the Nominating and Corporate Governance Committee receives timely reports from management on key developments and incidents across our industry, as well as specific information about peers and vendors. | |
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| Cybersecurity and Information Security Governance Highlights | |
| l | Comprehensive reporting to our Nominating and Corporate Governance Committee (both scheduled and real-time) in response to key developments |
| l | Multi-format reporting approach, with presentations to Nominating and Corporate Governance Committee as well as memoranda addressing key issues |
| l | Cross-functional approach to addressing cybersecurity risk, with Technology, Operations, Risk, Legal, and Corporate Audit functions presenting to the Nominating and Corporate Governance Committee on key topics |
| l | Collaborative approach, working with a wide range of key stakeholders to manage risk, and share and respond to intelligence |
| l | Annual penetration testing by an external expert that specializes in information technology security with overview of results provided to the Nominating and Corporate Governance Committee |
| l | Annual review by the Nominating and Corporate Governance Committee of the Company’s cybersecurity insurance policy to ensure adequate coverage exists, minimizing the financial impact of a cybersecurity event |
| l | No fines, penalties, or settlements against the Company in its history for information security breaches |
| l | No material information security breaches in the last four years |
| Under the Nominating and Corporate Governance Committee’s oversight, management works closely with key stakeholders, including regulators, government agencies, law enforcement, peers, and industry groups, and develops and invests in talent and innovative technology in order to manage cybersecurity and information security risk. Our company has information security employees augmented by service providers, enabling us to monitor and promptly respond to threats and incidents, innovate and adopt new technologies, as appropriate, and drive industry efforts to address shared cybersecurity risks. All employees, contractors, and those with access to our company’s systems receive comprehensive education on responsible information security, data security, and cybersecurity practices and how to protect data against cyber threats. | |
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The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.