J.B. Hunt stockholders to decide on political contributions reporting, board against proposal

Shareholders of J.B. Hunt Transport Services will vote on how the carrier reports political contributions, and the proposal is the only one the company’s board of directors wants shareholders to vote against at its annual meeting.

The proposal will come to a vote during the annual stockholders meeting at 10 a.m. April 20 at the company’s corporate office in Lowell, according to its proxy statement filed Thursday (Mar. 9) with the U.S. Securities and Exchange Commission. Other proposals include elections for the company’s board of directors, its management incentive plan and executive pay.

The International Brotherhood of Teamster General Fund, based in Washington D.C., wants J.B. Hunt to provide its policies and procedures for political spending, whether direct or indirect, in semi-annual report to the board of directors and on its website. The fund, a proponent of the shareholder proposal on political contributions reporting, plans to vote for it at the annual meeting, according to the proxy statement.

If approved the proposal would require the company to produce the report within 12 months of the annual meeting and show all recipients and the amount contributed to each one. In its supporting statement, the fund wants “transparency and accountability in corporate political spending. Disclosure is in the best interest of the company and its shareholders.” It cited a Supreme Court case regarding Citizens United: “disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

The fund saidJ.B. Hunt doesn’t make “direct political contributions.” But it is a member of trade associations, such as the U.S. Chamber of Commerce that spend money on political issues.

“Such contributions may be indirectly attributed to (J.B. Hunt), posing risks to the company’s reputation and shareholder value.”

Public data doesn’t “provide a complete picture of the company’s indirect political spending,” according to the statement. Under the proposal, the company would report “all payments to third parties that could be used for election-related purposes.” The report would show a list of trade associations it’s a member of and payments to each. It would also show payments to any third-party organization, including nonprofits, that “may be used for political purposes.”

The proposal would “bring our company in line with CSX, UPS and Norfolk Southern, which present such information on their website,” noted the Teamsters.

But J.B. Hunt’s board of directors don’t think the proposal is necessary or in the best interests of shareholders. The company operates in a “highly regulated industry,” and elected officials “can have a significant impact” on it and the business. The company “generally does not make direct political contributions,” but the board believes “targeted and responsible involvement in the legislative, regulatory and electoral processes is prudent to protect and promote the interests of the company’s stockholders, employees and customers. From time to time,” the company may “make focused lobbying expenditures or contributions to third-party organizations.”

While the company’s limited political involvement is important, spending related to it represents “only a small fraction of our total annual expenses,” less than 0.005% for fiscal 2016. Because it’s restricted by federal law, J.B. Hunt doesn’t financially support campaigns related to federal elections.

It’s involved in trade organizations to keep up with “industry standards and best practices, emerging trends and other business or technical issues,” which might impact the company. The company isn’t part of these organizations “to advance political purposes” and doesn’t agree with all their “positions, views or objectives.”

The board doesn’t think a report would provide “meaningful information to investors.” Also, the information could be used by special interest groups to pressure the company to oppose actions taken by these organizations or to stop supporting positions or initiatives that are in the best interests of the company and its stockholders, employees and customers, and such efforts could be counter to the company’s best interest to the extent it diverts management’s focus from the operation of our business.”

Shareholders also will vote on whether to amend the company’s management incentive plan. If approved, it would limit share recycling and the number of available shares for non-employee directors, clarify the “effect of the company’s assumption of awards granted under another plan” and that restricted stock recipients and share unit awards don’t receive voting or dividend rights unless the award is vested. It would also add payment methods for any existing or future options granted under the plan and a provision to accelerate vesting following a control change, expand ways to satisfy a “participant’s withholding obligations” and have a broader provision on amending the plan. The plan, which was previously changed in 2012, must be approved by shareholders every five years.

As a result of the Dodd-Frank Act, shareholders can vote on executive compensation, but the vote is nonbinding. The following was the 2016 compensation for executives:
• John Roberts III, president and CEO, $5.54 million;
• David Mee, CFO, executive vice president of finance and administration, $2.45 million;
• Shelley Simpson, executive vice president, chief marketing officer and president of integrated capacity solutions and truckload, $2.22 million;
• Nicholas Hobbs, executive vice president, president of dedicated contract services, $2.19 million; and
• Terrence Matthews, executive vice president and president of intermodal, $1.31 million.

Up for re-election on the board of directors are Douglas Duncan, Francesca Edwardson, Wayne Garrison, Sharilyn Gasaway, Gary George, J. Bryan Hunt Jr., Coleman Peterson, Roberts, James Robo and Kirk Thompson. Terms are for one year.

The following was the executive compensation for the board for 2016: Duncan, $249,624; Edwardson, $237,643; Garrison, $211,000; Gasaway, $258,500; George, $243,000; Hunt, $204,500; Peterson, $252,683; Robo, $279,559; Thompson, $356,050; and White, $21,000.

White retired from the board April 21, 2016.

The following are those who own more than 5% of the company’s shares as of Dec. 31.
• Johnelle Hunt, 19.30 million, 17.3%
• Vanguard Group, 9.02 million, 8%
• Wellington Management Group, 6.5 million, 5.8%
• BlackRock, 6.07 million, 5.4%