J . B . H U N T T R A N S P O R T S E R V I C E S , I N C .
2018
NOTICE OF ANNUAL MEETING,
PROXY STATEMENT AND
ANNUAL REPORT
With more than 57 years of experience, J.B. Hunt continues
to raise the expectations for companies in transportation
and logistics. The company was founded by an entrepreneur
which created a culture that places innovation at its core.
Over the past few years, J.B. Hunt has taken unprecedented
approaches to tackle some of the industry’s biggest
challenges, such as uncovering new available capacity,
improving the day-to-day experience for truck drivers, and
enhancing its trucking fleet to continue being one of the
safest on the road.
Table of Contents
Letter to our Stockholders and Employees
Notice of Annual Meeting of Stockholders
Proxy Statement
Proxy Summary
Proposal Number One – Election of Directors
Information About the Board
Nominees for Director
Director Compensation
Executive Officers of the Company
Security Ownership of Management
Corporate Governance
Audit Committee
Executive Compensation Committee
Nominating and Corporate Governance Committee
Principal Stockholders of the Company
Executive Compensation
Report of the Executive Compensation Committee
Compensation Discussion and Analysis
Process of Setting Compensation
2018 Compensation
Summary Compensation
Grants of Plan-Based Awards
Outstanding Equity Awards at Calendar Year-end
Restricted Share Units Vested
Nonqualified Deferred Compensation
Potential Post-Employment Benefits
CEO Pay Ratio
Proposal Number Two – Advisory Vote on Executive Compensation
Report of the Audit Committee
Proposal Number Three – Ratification of Independent Registered Public Accounting Firm
Proposal Number Four – Stockholder Proposal Regarding Reporting Political Contributions
Questions and Answers About the Proxy Materials and the Annual Meeting
J.B. HUNT TRANSPORT SERVICES, INC. Table of Contents
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1
Table of Contents
2018 Annual Report
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3.
Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
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99
109
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110
111
112
112
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 112
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Signatures
Index to Consolidated Financial Information
Revenue By Industry
112
112
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142
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J.B. HUNT TRANSPORT SERVICES, INC. Table of Contents
To Our Stockholders and Employees,
First, from John:
I will open this letter with greetings and express my personal appreciation to our nearly 28,000 employees, a good
number of whom I literally have had the privilege of “high fiving” recently. Each year, after we publicly announce the
performance of the company, I make rounds on our corporate campus to say thank you in person to as many of our
employees based in Lowell as I possibly can. It has become a much bigger job than when it started eight years ago
simply due to our growth, a fact with which we are very pleased. I would also like to take this opportunity to send out
a virtual “high five” to every one of our employees outside of Lowell. While I do get out to see our business during the
year, unfortunately, I do not get to see everyone, and you all deserve the same recognition and appreciation.
This year also marks my 30th anniversary with the company, and while my experience of staying with the same
company for so long may be unusual on the outside, it is not uncommon here at J.B. Hunt. We have many people
celebrating 20, 30, even 40-year anniversaries regularly. I think that fact is another powerful statement about this
place. Thank you to all the people I have had the privilege of serving with, so far. You have made the journey a real
blessing. On we go.
And now I would like to invite the Chairman of the Board to join in on the balance of our letter; please welcome
Mr. Kirk Thompson.
The Big Picture:
Well, it is big for starters. We see addressable domestic transportation markets reaching into the hundreds of billions
of dollars in spending levels by our customers. Our approach has long been based on a supply-chain focus in moving
products from the point-of-origin or production through different distribution channels to the point of consumption —
presenting scalable transportation-oriented services ranging from full load, both highway and intermodal, through
consolidation and in store, point-of-purchase inventory replenishment, and completing the cycle with comprehensive,
nationwide final-mile delivery systems. We are well positioned to evolve in all areas of customer demand. As a
multibillion-dollar provider of Intermodal ($4.7B), Dedicated Contract Services ($2.2B), and Highway Services ($1.8B),
we are ready to serve and grow.
Continuing our discussion from last year, we have made important progress in two key strategic efforts called out in
our 2017 letter: Final Mile Services and Marketplace for J.B. Hunt 360°®. These services are specifically focused on
supporting growth in the quickly expanding e-commerce transportation and delivery business.
Consistent with our historical pursuit of our strategic-growth directives, we have identified several international
channels that warrant further exploration to discover how and where our customers need us to serve them.
The company generated over $450 million of revenue in a variety of international services during 2018, including
intermodal and brokerage business in Canada and Mexico, and ongoing development between the contiguous
48 U.S. states and Puerto Rico, as well as our China inbound programs. We recently reorganized our leadership
team for international services, and we are actively seeking new areas to expand into categories that are logically
adjacent to our current platforms, and to determine if we can we make a proper return and whether the focus
channel is big enough to warrant attention from our leadership. In all, we expect the international platforms will
present multibillion-dollar growth opportunities in the coming years, and we intend to participate in those activities
where they best link into our existing service options for our customers.
J.B. HUNT TRANSPORT SERVICES, INC. Letter To Our Stockholders
3
Letter to Our Stockholders
We put emphasis on the size of any demand channel we may prioritize, domestic and international, to be sure
that we only approach new lines of business that have the size and scale to impact the company’s growth focus
moving forward. The reasons that growth is so vital for our long-term health are many, but two stand supreme.
First, our customers require more from us every year — more capacity, value, and solutions. Next, and equally
crucial, is the positive impact profitable growth has on the careers of our people. Presenting a pathway to
rewarding and challenging work has been foundational for the company. J.B. Hunt believes strongly in the value
of growing into existing and new transportation and delivery demand channels, because we have proven that we
can be effective and profitable doing so. In 2011, we set a company-wide goal to achieve $10 billion in revenues
by 2020, with appropriate returns. We are nearing that goal. Next up is considering realistic, market-based growth
goals to strive toward over the next five years.
The Year of 2018:
We added $1.4 billion in top-line revenue during 2018. The closest we have ever come to achieving that level of
growth was in 2011 when we added $733 million. We deployed a record $885 million in net capital expenditures
across the company, primarily in revenue-generating assets. We also invested meaningfully in the people who
drive and operate our equipment, the independent contractors we use, the non-driver personnel who oversee all
aspects of our business and in technology. In many ways we are quite pleased with the successes of 2018, but
we also acknowledge that the year presented the company with several challenges and opportunities.
Please see the tables included in our annual report for all statistics and progress markers.
In addition to all the important statistical data you will find in this report, it is also appropriate to comment on the
level of financial disruption we experienced during 2018. Some key events have brought us closer to substantive
resolution of certain important matters. Two main categories that fall outside of the normal course of our annual
business operations should be discussed here.
First, we reached a class settlement of a lawsuit involving state labor laws after more than a decade of ongoing
court activities. We have taken appropriate steps in response.
Second, we have presented developments in the ongoing arbitration with BNSF Railway Company. We have
announced several charges as a result of certain confidential rulings and have also reported that we still have some
pending decisions before the arbitration panel. While the charges recorded in 2018 are material, they relate to the
arbitrators’ rulings on several confidential disagreements that have lingered. We are evaluating the prospects of
intermodal development in both the western and eastern regions of the domestic U.S. The service reliability issues
we have experienced over the past several years in all regions, including congestion and train speeds, in addition to
changing economic and return profiles, will all present new dynamics for our collective customer base to process and
make decisions about. A key question is whether the railroad companies desire to provide sustainable and reliable
full-load services and develop their networks to accommodate and serve the still-substantial freight volumes that are
convertible from highway to intermodal at the right price with the right level of service.
Investing in our future:
Let’s take a look at what makes J.B. Hunt move. The core component is that we are entrepreneurial and open
to constant change. We have learned that in order to be successful with new ideas, we must allow them enough
“oxygen” to breathe. This requires a different type of management style than we use when we are executing
against more advanced and mature businesses. With new ideas, we first identify the “whys” and “hows” involved.
Some of these questions include: Why will we be great at this? How will the new idea fit into our comprehensive
service approach? How will our customers see us in the competitive fields? How will we make a quality return on
investment? How fast can this idea grow, and how big can it get?
4
J.B. HUNT TRANSPORT SERVICES, INC. Letter To Our Stockholders
Letter to Our Stockholders
Too often, a traditional business review would eliminate great ideas because there may not be a clear line to
absolute success. Take our Marketplace for J.B. Hunt 360 model for example. We were not sure what the
reception would be to a digital platform for matching carriers and shippers, and we also weren’t sure exactly how
the revenue and profitability models would work out. Frankly, we are still experimenting with several options on
structure. But, we were sure that it would be a great improvement on the manual applications currently in place.
We evaluated the cost of building the system and asked our customers what they needed and what they wanted.
We built the model, and by the end of 2018, over $550 million had been processed through the new Marketplace
in just a short year of upstart. This particular investment might have been deprioritized or even eliminated with
conventional thinking. We simply can’t let that happen.
Another breakthrough for our leadership, and our board of directors, is the idea of acquisition. There is a good
amount of data to suggest that acquisitions typically don’t perform as well as hoped. We have long subscribed
to that way of thinking. Only lately, in important areas of strategic growth as in Final Mile Services, have we been
able to reach a different fundamental risk tolerance about acquisitions. Over the past two years, we have acquired
two companies: Special Logistics Dedicated (SLD) and Cory 1st Choice Home Delivery (Cory). Both companies
presented us with market entry and experience into “pool and forward distribution” and “furniture delivery” that we
did not believe we could achieve organically in a competitive timeline. We are pleased with the SLD performance
through its first full year of integration and remain confident about the Cory decision.
Notwithstanding the technology investments mentioned above for the Marketplace, we are comprehensively
rebuilding all information technology for the future across all platforms, internal and external. This includes the
massive undertaking of moving the primary operating systems, which include all customer data, order management,
load management, operational, scheduling, and back office support, off the legacy mainframe. We are substantially
halfway through this effort and believe we will see meaningful progress in the coming year. The prospects of a
modernized, cloud-and server-based information management system are significant. A watchful eye, and important
investments in engineering and data science are the underpinnings for our new systems where we think we can apply
machine learning and artificial intelligence. This type of application will enhance the scheduling and assignment of our
company-owned equipment as well as our interaction with independent contractors and carriers across all services.
A recent example of the power presented by this new technology is how our brokerage division is leveraging the
system’s automated load “offer and acceptance” features. In the past, particularly heading into a weekend, we
routinely would have loads that did not get covered by the end of the day. The traditional brokerage model requires
phone calls and in-person negotiations; therefore, after-hours trading is difficult. Routinely, these uncovered loads
result in underperformance in service and profitability due to last-minute buying decisions. Today, we can leave these
uncovered loads available to our approved carriers in the system who make offers on the open loads during these off
hours. The system knows our thresholds for pricing and can automatically counter until the carrier and the system are
in agreement. These loads are then tendered to the carrier, accepted, and assigned. When we come in on Monday,
instead of a backlog, these loads are booked and covered, serviced by carriers who want the loads, and financial
performance is improved. The numbers are fairly small at this point, but the potential of the program is substantial.
Diversity:
When we look across our employee population, an important trend is developing. The diversity of our people is
growing. This is due to a more intentional approach in seeking the value presented by a more divergent experience
base. As a result, our conversations and ideas are expanding as we introduce more opinions and perceptions
emerging from different backgrounds and outlooks. It is clear that a more varied approach to all aspects of the
company presents real benefit and value in problem solving, creative thinking, improved leadership and people
development, and the work environment in total. One thing that is helping drive the improvements we see in attracting
and retaining a more diverse workforce is in the evolution of the company from being a heavily asset-based carrier to
J.B. HUNT TRANSPORT SERVICES, INC. Letter To Our Stockholders
5
Letter to Our Stockholders
a company with a much expanded focus on customer and carrier experiences and a more advanced commitment to
Information Technology. All these factors give us a wider profile to attract different levels of talent, work experiences,
and educational backgrounds.
During 2018, we created 1,695 incremental driving jobs and 1,245 office personnel jobs. Adding almost 3,000 full
time positions to the company is a resounding accomplishment and presents great confirmation that our growth
strategy opens doors to hiring in new people, which allows our focus on expanding our points of view in hiring
diverse, new talent to be more realizable.
Community:
To refresh, we have fully adopted four principles to guide our community support and focus. They are healthcare,
education, veteran affairs and crisis management. This year, we contributed to both Mercy Hospital in Northwest
Arkansas and the Cleveland Clinic in Cleveland, Ohio. We have found both healthcare organizations to be very
accommodative in supporting our employee needs as a part of our relationship. We have seen similar benefits in the
collaboration with the Arkansas Children’s Hospital system. Our mutually beneficial relationship with the University of
Arkansas continues, and our “Adopt-A-Class” programs continue to connect us locally with classrooms across the
nation. The challenges presented by natural disasters, such as hurricanes, are ever present on our watchlist, and
we respond many ways when called on to assist with these events. We are also pleased to report several initiatives
supporting our efforts in veteran affairs.
First, and perhaps most important, J.B. Hunt established a goal in 2015 of hiring 10,000 Veterans by 2020.
We will reach our goal in 2019. Also, we highlight:
• Wreaths Across America – More than 2,000 J.B. Hunt employees joined thousands of volunteers on
December 15 for Wreaths Across America Day ceremonies throughout the country, placing wreaths on the
headstones of Veterans at participating cemeteries.
• Military Friendly® Employer – J.B. Hunt Transport Services, Inc. was named a 2019 Military Friendly®
Employer by VIQTORY, marking the 12th consecutive year the company has received the distinction.
Institutions earning the Military Friendly® Employer designation were evaluated using both public data sources
and responses from a proprietary survey.
• ESGR (Employer Support of The Guard and Reserve) – The intent of the program is to increase employer
support by encouraging employers to act as advocates for employee participation in the military.
We want to share a quote from an email received recently from a veteran returning home after a long tour in
Afghanistan (with his permission):
“First and foremost, J.B. HUNT just doesn’t “SAY” they hire VETS, J.B. HUNT carries through with it! I salute J.B.
HUNT. I’ve often bragged you up and have referred many a veteran to your company. I know right off hand that
four of them Vets are still working for you in various parts of the country. Now, I’m coming home! I’m very much
excited about being a Very Proud Veteran and coming home to become a Very Proud member on the J.B. Hunt
TEAM once again!”
As you can imagine, we are extremely pleased with this feedback, and importantly the overall embrace our
employees have shown for all of the community focus categories the company has prioritized. We will continue
to endorse an expanding approach to grow as solid corporate citizens.
6
J.B. HUNT TRANSPORT SERVICES, INC. Letter To Our Stockholders
Letter to Our Stockholders
Recognition:
• Named One of America’s Best Employers by Forbes
• Named to Fortune 500 List for Sixth Consecutive Year, Breaking into Top 400
• Earned Top Five Position on FreightWaves Inaugural Freight.Tech 25
• Named Top 10 3PL by Inbound Logistics for Ninth Consecutive Year
• Named 2019 Military Friendly Employer by VIQTORY for Twelfth Consecutive Year
• Earned 2018 SmartWay Award from the EPA for Ninth Consecutive Year
• Ranked Fourth on Transport Topics Top 100 Largest For-Hire Carriers
• Ranked Sixth on Transport Topics Top 50 Logistics Companies
• Named Top 3PL & Cold Storage Provider by Food Logistics for Sixth Time
• Received Three Quest for Quality Awards from Logistics Management
• Named Top 100 Trucker by Inbound Logistics
• Named Top 75 Green Supply Chain Partner by Inbound Logistics
Final Thoughts:
As with every year so far, we had wins and losses. Overall, we believe our approach is effective, our strategy is
sound, and our discipline in being a safe, customer-centric, fiscally responsible company is intact. And most of all,
our people-focused culture is authentic.
We thank you for your trust, ownership, and commitment to this company.
Respectfully,
John N. Roberts
President and Chief Executive Officer, Director
Kirk Thompson
Chairman of the Board of Directors
J.B. HUNT TRANSPORT SERVICES, INC. Letter To Our Stockholders
7
J.B. HUNT TRANSPORT SERVICES, INC.
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
479-820-0000
Internet Site: jbhunt.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 18, 2019
The Annual Meeting of Stockholders of J.B. Hunt Transport Services, Inc. (the Company) will be held April 18, 2019,
at 10 a.m. (CDT) at the Company’s headquarters, located at 615 J.B. Hunt Corporate Drive in Lowell, Arkansas,
for the following purposes:
1
2
3
To elect Directors for a term of
one (1) year
To consider and approve an
advisory resolution regarding the
Company’s compensation of its
named executive officers
To ratify the appointment of
Ernst & Young LLP as the
Company’s independent
registered public accounting firm
for the 2019 calendar year
4
5
To consider a stockholder
proposal regarding reporting
political contributions
To transact such other business
as may properly come before
the Annual Meeting or any
adjournments thereof
Only stockholders of record on February 12, 2019, will be entitled to vote at the meeting or any adjournments
thereof. The stock transfer books will not be closed.
The 2018 Annual Report to Stockholders is included in this publication.
By Order of the Board of Directors
JENNIFER R. BOATTINI
Corporate Secretary
Lowell, Arkansas
March 8, 2019
8
J.B. HUNT TRANSPORT SERVICES, INC. Notice of Annual Meeting
Proxy Statement – Summary
YOUR VOTE IS IMPORTANT
PLEASE EXECUTE YOUR PROXY WITHOUT DELAY
J.B. HUNT TRANSPORT SERVICES, INC.
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
479-820-0000
Internet Site: jbhunt.com
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies by J.B. Hunt Transport Services, Inc.
(the Company), on behalf of its Board of Directors (the Board), for the 2019 Annual Meeting of Stockholders (the
Annual Meeting). The Proxy Statement and the related proxy card are being distributed on or about March 8, 2019.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDERS MEETING TO BE HELD APRIL 18, 2019
This Proxy Statement and our 2018 Annual Report to Stockholders, which includes our Annual Report on Form
10-K, are available at jbhunt.com.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
Item
Election of Directors
Advisory Vote on Executive Compensation
Ratification of Independent Registered Public Accounting Firm
Board
Recommendation
Further Details
FOR
FOR
FOR
Page 20
Page 68
Page 71
Page 74
Stockholder Proposal Regarding Reporting Political Contributions
AGAINST
YOU SHOULD CAREFULLY READ THIS PROXY STATEMENT IN ITS ENTIRETY
The summary information provided above is for your convenience only and is merely a brief description of material
information contained in this Proxy Statement.
YOUR VOTE IS IMPORTANT. IF YOU ARE A REGISTERED OWNER, YOU MAY VOTE BY INTERNET,
TELEPHONE, OR BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING
IT TO US IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE
IF YOU ARE A BENEFICIAL OWNER, PLEASE FOLLOW THE VOTING INSTRUCTIONS OF YOUR BROKER,
BANK OR OTHER NOMINEE AS PROVIDED WITH THIS PROXY STATEMENT AS PROMPTLY AS POSSIBLE
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
9
Proxy Statement – Summary
DIRECTOR NOMINEES
Name
Occupation
Age
Director
Since
Independent Other Directorships
Committees
Douglas G.
Duncan
Francesca M.
Edwardson
Wayne
Garrison
FedEx Freight
Corporation
(retired)
American
Red Cross
of Greater
Chicago (retired)
J.B. Hunt
Transport
Services, Inc.
(retired)
68
2010
Yes
61
2011
Yes
66
1981
No
Sharilyn S.
Gasaway
Alltel Corp.
(retired)
50
2009
Yes
Gary C.
George
George’s Inc.
68
2006
Yes
Benchmark Electronics,
Inc.
Brambles LTD
Audit Committee
Corporate Governance
Committee
Duluth Holdings, Inc.
Rush University Medical
Center
Lincoln Park Zoo
Compensation
Committee
Corporate Governance
Committee
Audit Committee
Compensation
Committee
Corporate Governance
Committee
Genesis Energy, LP
Waddell & Reed
Financial, Inc.
Louisiana Tech University
(LTU) Foundation
LTU College of Business
Advisory Board
Arkansas Children’s Inc.
Arkansas Children’s
Foundation
Legacy National Bank
Arkansas Children’s Inc.
Arkansas Children’s
Northwest
National Chicken Council
Compensation
Committee
Chair of Corporate
Governance
Committee
Bryan
Hunt, Jr.
Coleman H.
Peterson
Hunt
Automotive
group
Hollis
Enterprises,
LLC
60
1991
No
The New School
70
2004
Yes
Build-A-Bear Workshop
Cracker Barrel Old
Country Store, Inc.
Chair of Compensation
Committee
Corporate Governance
Committee
John N.
Roberts, III
President and
Chief Executive
Officer
54
2010
No
Federal Reserve Bank
of St. Louis
Arkansas Children’s
Northwest
James L.
Robo
NextEra
Energy, Inc.
56
2002
Yes
NextEra Energy, Inc.
NextEra Energy Partners,
LP
Chair of Audit
Committee
Corporate Governance
Committee
Kirk
Thompson
Chairman of
the Board
65
1985
No
Rand Logistics, Inc.
10
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Proxy Statement – Summary
COMPENSATION OBJECTIVES, PRINCIPLES AND PRACTICES
We believe the ability to attract, retain and provide appropriate incentives for professional personnel, including
the senior executive officers and other key employees of the Company, is essential to maintaining the Company’s
leading competitive position, thereby providing for the long-term success of the Company. The overall compensation
philosophy of the Company’s Board of Directors and management is guided by the following principles:
Recruitment and Retention
The Company aims to attract, motivate and retain high-performance
talent to achieve and maintain a leading position in our industry. Our
total compensation package should be strongly competitive with other
transportation and logistics companies.
Performance and Responsibility
Total compensation should be tied to and vary with performance and
responsibility, both at the Company and individual level, in achieving
financial, operational and strategic objectives. Differentiated pay for
high-performing individuals should be proportional to their contributions
to the Company’s success.
Short-term Incentive
A large portion of total compensation should be tied to performance, and
therefore at risk, as position and responsibility increase. Individuals with greater
roles and the ability to directly impact strategic direction and long-term results
should bear a greater proportion of the risk.
Long-term Incentive
Awards of long-term compensation encourage participating employees to
focus on the Company’s long-range growth and development and incent them
to manage from the perspective of stockholders with a meaningful stake in the
Company, as well as to focus on long-term career orientation.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
11
Proxy Statement – Summary
2018 BUSINESS HIGHLIGHTS
Consolidated Revenue
(in millions)
$10,000
$10,000
$8,000
$8,000
$6,000
$6,000
$4,000
$4,000
$2,000
$2,000
$0
$0
$8,615
$8,615
$7,190
$7,190
$6,555
$6,555
$6,165
$6,165
$6,188
$6,188
$5,585
$5,585
$5,055
$5,055
$4,527
$4,527
2011
2011
2012
2012
2013
2013
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
Consolidated Operating Income
(in millions)
Diluted EPS
$800
$800
$700
$700
$600
$600
$500
$577
$577
$530
$444
$530
$500
$400
$444
$716
$721
$632
$716
$721
$624
$632
$624
$681
$681
$400
$300
$300
$200
$200
$100
$100
$0
$0
12
2011
2012
2013
2014
2015
2016
2017
2018
2011
2012
2013
2014
2015
2016
2017
2018
$8.00
$8.00
$7.00
$7.00
$6.00
$6.00
$5.00
$5.00
$4.00
$4.00
$3.00
$3.00
$2.00
$2.00
$1.00
$1.00
$0
$0
$6.18
$6.18
$4.43
$4.43
$3.66 $3.81
$3.66 $3.81
$3.16
$3.16
$2.87
$2.87
$2.59
$2.59
$2.11
$2.11
2011
2012
2013
2014
2015
2016
2017
2018
2011
2012
2013
2014
2015
2016
2017
2018
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Proxy Statement – Summary
INTERMODAL (JBI)
DEDICATED (DCS)
REVENUE
$4.7B
OPERATING
INCOME
$401M
15%
(2%)
91.5
OPERATING
RATIO
REVENUE
$2.2B
OPERATING
INCOME
$193M
INTEGRATED (ICS)
TRUCKLOAD (JBT)
REVENUE
$1.3B
OPERATING
INCOME
$50M
30%
120%
96.2
OPERATING
RATIO
REVENUE
$417M
OPERATING
INCOME
$37M
26%
13%
91.1
OPERATING
RATIO
10%
62%
91.2
OPERATING
RATIO
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
13
Proxy Statement – Summary
J.B. HUNT CORPORATE RESPONSIBILITY
OVERVIEW/MISSION STATEMENT
With a past and present more than 50 years in the making, we know how important it is to look toward the future.
We believe doing business today in ways that help preserve and protect the people we serve and the world in
which we live is the best way to take care of business. From reducing our carbon footprint and keeping the roads
safer to embracing the diversity of our customers and people, we’re in it for the long haul. We do what we can to
make business decisions that have a positive impact on the things that matter most.
Deliberate effort to make
business decisions that
have a positive impact on
the environment
ENVIRONMENTAL
PUBLIC
SAFETY
Ensuring the roads are
safe for our drivers and
everyone on the road
CORPORATE
RESPONSIBILITY
GOVERNANCE
SOCIAL
Addressing important
social issues to do
business to the best of
our ability
Adherence to rules and
practices designed to promote
accountability and transparency
in our relationships with
stakeholders
ENVIRONMENTAL STABILITY
At J.B. Hunt, we put forth a deliberate effort to make business decisions that have a positive impact on the
environment. The Company is in an industry that utilizes fossil fuels to operate and generate profi ts. Management is
conscious of the environmental effects of its operations and strives to be a good steward in the use of nonrenewable
resources. Management is committed to monetizing the effi cient use of fossil fuels, such as adopting the most
advanced technologies provided from original equipment manufacturers, utilizing aftermarket products to reduce
fuel burn, adopting policies to incentivize reduced fuel burn, and assisting manufacturers in developing commercially
viable alternative fuel sources.
Annually, management will present its progress in growing intermodal load conversions from highway
transportation and its progress towards improving its fl eet MPG though its effi ciency efforts and adoption of
commercially viable alternative fuel sources to the Nominating and Governance Committee as part of its oversight
of fossil fuel effi ciency and environmental impact progress.
14
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Proxy Statement – Summary
We are dedicated to creating a more sustainable supply chain for our customers.
Intermodal Conversion
J.B. Hunt leads the industry in converting over-the-road (OTR) shipments to intermodal.
Intermodal doubles the efficiency of truckload with reduced carbon emissions and
lowered cost.
Energy-Efficient Trucks
and Equipment
We strive to keep our fleet energy efficient by continuously improving equipment with
after-market updates and routine maintenance.
Renewable Technology
J.B. Hunt invests in renewable technology solutions. Company asset vehicles are
equipped with solar-powered tracking units that optimize the location and availability
of containers for efficiency. This technology allows J.B. Hunt to increase efficiency and
gain better control over its operations.
Fuel Technology
Fuel is one of the largest sources of carbon emissions within the supply chain. We
strive to find advanced fuel solutions for customers, including the use of biofuels and
ensuring the fuel efficiency of our fleets.
Engineering Solutions
J.B. Hunt has a dedicated engineering team that helps customers optimize their
shipping strategy to minimize total miles, maximize payload, and reduce carbon
emissions per shipment.
Customer Carbon
Footprint
J.B. Hunt’s propriety tool calculates a customer’s carbon footprint. We then
offer solutions, such as decreasing carbon emissions, to reduce their current
environmental impact.
Carbon Diet
We provide support to customers with a company-developed sustainability practice
called the “Carbon Diet.” We educate customers on best practices in supply chain
sustainability and supply the resources needed to be successful.
Electric Vehicles
We continually search for and evaluate opportunities to utilize emerging technologies
in the area of exhaust-free vehicles. J.B. Hunt added its first ever all-electric, medium-
duty box trucks to its private fleet. The trucks have zero tailpipe emissions, eliminating
the noise and carbon footprint of similar trucks.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
15
Proxy Statement – Summary
SOCIAL ISSUES
Doing business to the best of our ability also means acknowledging and addressing important social issues. As a
company, we support numerous initiatives that reflect the values most important to our customers and employees.
We cover a lot of miles in this business in the communities we serve and across the country. The people we
encounter—employees, customers, and vendors—share diverse backgrounds and an equally diverse range of
interests and passions. J.B. Hunt puts forth its best effort to support initiatives reflecting the company values which
are most near and dear to the hearts of those we serve each day.
Human Trafficking
The issue of human trafficking is one that hits close to home in our industry. Victims of
this crime are often hidden in plain sight at places our drivers frequent daily, including
rest stops and truck stops. We work with organizations to educate our drivers on the
issue and how to report suspicious activities.
Veterans Hiring Initiatives
We have committed to hiring 10,000 veterans by 2020. Nearly one in five of our
employees is a military veteran, and we are proud to be consistently recognized for
being a Top 100 Military Friendly Employer by VIQTORY.
Diversity and Inclusion
Initiative
The Company’s Diversity and Inclusion initiative was founded in 2017. This initiative is
spearheaded by our strategic leader who has a doctorate in organizational leadership
and administration and was brought on board to expand the program enterprise-wide.
Diversity and Inclusion reaches enterprise-wide and aims to create an inclusive culture
and environment where employees from all backgrounds can succeed and be heard.
Employee Resource
Groups (ERGs)
Our ERGs offer opportunities for employee professional development, community
engagement, and networking. Comprised of groups for women, Latinos, and veterans,
our ERGs promote camaraderie within the workforce and allow employees with similar
interests to build meaningful work relationships. In 2019, J.B. Hunt will launch the
African American ERG that will focus on issues impacting employees and their families
and promote the camaraderie spirit of other ERGs.
PUBLIC SAFETY
Ensuring the roads are safe for our drivers and everyone on the road is important to us. We train drivers to
understand and comply with required safety measures.
J.B. Hunt has made considerable investments in safety over the past 20 years. Safety is a core value and part of
our corporate culture. It just has to be. We share the road with millions of people across the country every day,
and our livelihood depends on keeping those roads as safe as possible for everyone. In addition to complying with
industry-relevant laws and mandates, J.B. Hunt makes its contribution to public road safety in a variety of ways —
driver training, drug testing, and investing in technologies that make drivers and equipment safer.
We have continuously maintained a satisfactory safety rating from the Federal Motor Carrier Safety Administration
(FMCSA) since 1992. Our out-of-service (OOS) rates for vehicle, driver, and HAZMAT fall substantially below reported
national averages in the Safety Measurement System (SMS). In CSA (Compliance, Safety, Accountability), our safety
performance falls below the threshold in FMCSA’s on-road safety performance BASICs (Behavior Analysis and Safety
Improvement Categories) for unsafe driving, hours of service (HOS), driver fitness, controlled substance/alcohol,
vehicle maintenance, and crash indicator.
16
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Proxy Statement – Summary
Public safety is further promoted through smart purchasing decisions. As new safety technologies are made
available, we carefully evaluate each to determine the overall impact and benefit they could bring to our drivers,
trucks, and equipment.
Intermodal Conversion
J.B. Hunt leads the industry in converting OTR shipments to intermodal. This
conversion of shipments from highway to rail has continually resulted in fewer truck-
involved fatalities.
Defensive Driving Training
J.B. Hunt drivers are certified in a nationwide defensive driving program, involving
classroom and in-vehicle training. All drivers are recertified under this program every
three years.
Monthly and Quarterly
Safety Training
Our drivers participate in regular ongoing web-based and classroom safety training.
Ongoing professional development is designed to provide additional training for drivers,
as well as keep them up to date on regulatory issues and company matters.
Hair Testing
In addition to DOT required urine testing, J.B. Hunt implemented a company policy
requiring hair testing for the presence of controlled substances in 2006. Hair testing
offers an extended view into an individual’s possible drug usage and has resulted in a
reduction in unfavorable results from random and post-incident tests.
Automatic Onboard
Recording Devices/ELD’s
We began implementing automatic onboard recording devices in 2007. As an early
adopter of this technology, we have seen benefits in its ability to manage compliance
with HOS regulations and reduce roadside inspection violations.
Forward Collision
Warning Systems
Installation of forward collision warning systems on our Class 8 tractors began in 2011.
Currently, 95% of our company Class 8 fleet is deployed with this equipment which
includes an automatic emergency braking system. We have seen a significant reduction
in rear-end collision frequency and costs since implementation of these systems.
Video-Recorded
Technology
Installation of video-recording equipment began in 2016, with 44% of our Class 8 fleet
currently being deployed with forward-facing cameras. This equipment provides lane
departure warnings and enhanced radar functionalities for some systems, such as
braking on stationary objects. The primary benefit of this technology is improving
driver safety performance. J.B. Hunt is also piloting rearview digital camera technology
on its fleet that will expand driver visibility and potentially improve aerodynamics and
fuel economy.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
17
Proxy Statement – Summary
GOVERNANCE HIGHLIGHTS
We believe that good corporate governance helps to ensure the Company is managed for the long-term benefit of
our stockholders and accordingly observe the following key corporate governance principles:
Director Independence
The Company maintains a Board of Directors composed of a majority of
individuals who satisfy the criteria for independence under the NASDAQ
listing standards.
Lead Director and Independent
Director Executive Sessions
Independent directors generally meet in executive session as part of each
regularly scheduled Board meeting, with the position of Independent Lead
Director being established to direct these executive sessions and authority
to call additional meetings of independent directors as deemed necessary.
Board Committees
The Company requires all committees of the Board be comprised solely of
independent directors and formal charters have been established outlining the
purpose, composition, and responsibility of each committee, with all having
authority to retain outside, independent advisors and consultants as needed.
Board Qualifications
The Board has established qualification guidelines for director nominees and
performs continual evaluation of current director performance and qualifications.
Board Attendance and
Overboarding
The Board has adopted a formal Director Attendance Policy and requires
limitations and preapproval of director membership on other corporate boards.
Board Diversity
The Board maintains diversity in both gender and ethnic representation by
identifying nominees whose backgrounds, attributes and experiences, taken as a
whole, will contribute to the high standards of Board service to the Company.
Code of Conduct
The Company has adopted a formal Code of Ethical and Professional Standards
applicable to all directors, officers and employees of the Company.
18
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Proxy Statement – Summary
ACCOLADES
While the roots of innovation stretch as far back as the business’s beginnings, some of J.B. Hunt’s latest
implementations are definitive of a cutting-edge company. From helping businesses operate more effectively
to enhancing the safety of its company fleet, J.B. Hunt is developing and implementing new technologies that,
through human insight and artificial intelligence, complement its commitment to creating the most efficient
transportation systems in the North America.
Recognitions
• Named One of America’s Best Employers by Forbes
• Named to Fortune 500 List for Sixth Consecutive Year, Breaking into Top 400
• Earned Top Five Position on FreightWaves Inaugural Freight.Tech 25
• Named Top 10 3PL by Inbound Logistics for Ninth Consecutive Year
• Named 2019 Military Friendly Employer by VIQTORY for Twelfth Consecutive Year
• Earned 2018 SmartWay Award from the EPA for Ninth Consecutive Year
• Ranked Fourth on Transport Topics Top 100 Largest For-Hire Carriers
• Ranked Sixth on Transport Topics Top 50 Logistics Companies
• Named Top 3PL & Cold Storage Provider by Food Logistics for Sixth Time
• Received Three Quest for Quality Awards from Logistics Management
• Named Top 100 Trucker by Inbound Logistics
• Named Top 75 Green Supply Chain Partner by Inbound Logistics
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
19
PROPOSAL ONE
Election of Directors
Our Board nominates Douglas G. Duncan, Francesca M. Edwardson, Wayne Garrison, Sharilyn S. Gasaway,
Gary C. George, Bryan Hunt, Coleman H. Peterson, John N. Roberts, III, James L. Robo, and Kirk Thompson as
directors to hold office for a term of one year, expiring at the close of the 2020 Annual Meeting of Stockholders
or until their successors are elected and qualified or until their earlier resignation or removal. The Board believes
that these incumbent directors standing for re-election are well-qualified and experienced to direct and manage
the Company’s operations and business affairs, and will represent the interests of the stockholders as a whole.
Biographical information on each of these nominees is set forth below in “Nominees for Director.”
If any director nominee becomes unavailable for election, which is not anticipated, the named proxies will vote for
the election of such other person as the Board may nominate, unless the Board resolves to reduce the number of
directors to serve on the Board and thereby reduce the number of directors to be elected at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR EACH OF THE DIRECTOR NOMINEES LISTED
HEREIN
L
A
S
O
P
O
R
1P
INFORMATION YOU NEED TO MAKE AN INFORMED DECISION
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Number of Directors and Term of Directors and Executive Officers
The Company’s Bylaws provide that the number of directors shall not be less than three or more than 12, with the
exact number to be fixed by the Board. The Board currently consists of 10 directors. Directors serve a term of one
year from their election date to the Annual Meeting of Stockholders.
Directors are elected by a majority of votes cast with respect to each director, provided that the number of
nominees does not exceed the number of directors to be elected.
The stockholders of the Company elect at the Company’s Annual Meeting successors for directors whose terms
have expired. The Board elects members to fill new membership positions and vacancies in unexpired terms
on the Board. No director will be eligible to stand for re-election or be elected to a vacancy once he or she has
reached 72 years of age. Executive officers are elected by the Board and hold office until their successors are
elected and qualified or until their earlier death, retirement, resignation or removal.
20
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
PROPOSAL ONE Election of Directors
NOMINEES FOR DIRECTOR Terms expire 2019
Douglas G. Duncan
Age: 68
Director Since: 2010
Committees: Audit Committee, Nominating and Corporate Governance Committee
Principle Occupation: FedEx Freight Corporation (retired)
Recommendation: The Board has determined that Mr. Duncan’s 30-years of transportation
experience, including management positions in operations, sales and marketing and ultimately
chief executive officer, qualify him to continue to serve as a Director of the Company.
Experience: Mr. Duncan retired as President and Chief Executive Officer of FedEx Freight
Corporation, a wholly owned subsidiary of FedEx Corporation in February 2010. FedEx Freight
Corporation is a leading provider of regional and national less-than-truckload (LTL) freight
services. Mr. Duncan was the founding chief executive officer of FedEx Freight. He also served
on the Strategic Management Committee of FedEx Corporation. Before the formation of FedEx
Freight, he served for two years as President and Chief Executive Officer of Viking Freight. He
served on the Executive Committee of the American Trucking Associations and as Chairman of
the American Transportation Research Institute. A graduate of Christopher Newport University,
Mr. Duncan served on the university’s Board of Visitors.
Other Directorships (Prev. 5 Yrs.): Benchmark Electronics, Inc. (Chair of the Nominating and
Governance Committee), Brambles LTD
Family Relationships: None
Francesca M. Edwardson
Age: 61
Director Since: 2011
Committees: Executive Compensation Committee, Nominating and Corporate Governance
Committee
Principle Occupation: American Red Cross of Greater Chicago (retired)
Recommendation: The Board has determined that Ms. Edwardson continues to qualify
to serve as a Director of the Company based on her lengthy and successful experience in
both the transportation industry and legal environment, which provide respected insight and
guidance to both the board and management.
Experience: Ms. Edwardson retired as the Chief Executive Officer of the American Red
Cross of Chicago and Northern Illinois, a business unit of the American Red Cross, in 2016,
a position she held since 2005. She previously served as Senior Vice President and General
Counsel for UAL Corporation, a predecessor company to United Continental Holdings, Inc.
She has also been a partner in the law firm of Mayer Brown and the Executive Director of the
Illinois Securities Department. Ms. Edwardson is a graduate of Loyola University in Chicago,
Illinois, holding degrees in economics and law.
Other Directorships (Prev. 5 Yrs.): Duluth Holdings, Inc (Chair of Compensation Committee),
Rush University Medical Center, Lincoln Park Zoo
Family Relationships: None
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
21
PROPOSAL ONE Election of Directors
Wayne Garrison
Age: 66
Director Since: 1981
Committees: None
Principle Occupation: J.B. Hunt Transport Services, Inc. (retired)
Recommendation: The Board has determined that Mr. Garrison’s extensive experience in the
industry and over 40 years with J.B. Hunt in multiple roles provides invaluable experience to
the board and stockholders, qualifying him to continue to serve as a Director of the Company.
Experience: Mr. Garrison served as Chairman of the Board of the Company from 1995 to
December 31, 2010, and continues to serve as a member of the Board of Directors. Joining
the Company in 1976 as Plant Manager, Mr. Garrison has also served as Vice President
of Finance in 1978, Executive Vice President of Finance in 1979, President in 1982, Chief
Executive Officer in 1987 and Vice Chairman of the Board from January 1986 until May 1991.
Other Directorships (Prev. 5 Yrs.): None
Family Relationships: None
Sharilyn S. Gasaway
Age: 50
Director Since: 2009
Committees: Audit Committee, Compensation Committee, Nominating and Corporate
Governance Committee
Principle Occupation: Alltel Corp. (retired)
Recommendation: The Board has determined that Ms. Gasaway’s experience in accounting,
finance, mergers and acquisitions, and regulatory matters, all gained through her extended
tenures within the financial environment, which provide unquestionable value to the Company,
qualify her to continue to serve as a Director of the Company.
Experience: Ms. Gasaway served as Executive Vice President and Chief Financial Officer
of Alltel Corp., the Little Rock, Arkansas-based Fortune 500 wireless carrier, from 2006 to
2009. She was part of the executive team that spearheaded publicly traded Alltel’s transition
through the largest private equity buyout in the telecom sector and was an integral part of the
successful combination of Alltel and Verizon. She also served as Alltel’s Corporate Controller
and Principal Accounting Officer from 2002 to 2006. Joining Alltel in 1999, she served as
Director of General Accounting, Controller, and Vice President of Accounting and Finance.
Prior to joining Alltel, she worked for eight years at Arthur Andersen LLP. Ms. Gasaway has a
degree in accounting from Louisiana Tech University and is a Certified Public Accountant.
Other Directorships (Prev. 5 Yrs.): Genesis Energy, LP (Chair of Audit Committee), Waddell
& Reed Financial, Inc., Louisiana Tech University Foundation, Louisiana Tech University College
of Business Advisory Board, Arkansas Children’s, Inc., Arkansas Children’s Foundation
Family Relationships: None
22
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
PROPOSAL ONE Election of Directors
Gary C. George
Age: 68
Director Since: 2006
Committees: Nominating and Corporate Governance Committee (Chair), Executive
Compensation Committee
Principle Occupation: George’s Inc.
Recommendation: The Board has determined that Mr. George continues to qualify to serve
as a Director of the Company based on his extensive business and management knowledge
gained through his leadership of a large diversified corporation.
Experience: Mr. George is Chairman of George’s, Inc., a private, fully integrated poultry
company with operations in Arkansas, Missouri, Virginia and Tennessee. He is a graduate of
the University of Arkansas with a degree in business administration. He served on the Board
of Trustees for the University of Arkansas from 1995 through 2005 and was Chairman of the
Board of Trustees in 2005.
Other Directorships (Prev. 5 Yrs.): Legacy National Bank (Chairman),
Arkansas Children’s, Inc., Arkansas Children’s Northwest, National Chicken Council
Family Relationships: None
Bryan Hunt
Age: 60
Director Since: 1991
Committees: None
Principle Occupation: Hunt Automotive Group
Recommendation: The Board has determined that Mr. Hunt’s historical and current
knowledge of the company and valuable contributions to the Board of J.B. Hunt since 1991
continue to qualify him to serve as a Director of the Company.
Experience: Mr. Hunt served as an employee of the Company from 1983 through 1997. He is
the Managing Member of Best Buy Here Pay Here of Arkansas, a private company with used-car
operations in Arkansas, Missouri and Oklahoma; Progressive Car Finance, a private company
that provides subprime financing for automobile dealers; and 71B Auto Auction and I-135 Auto
Auction, both private companies engaged in the auction of automobiles, trucks, boats and other
motor vehicles to dealers and the general public in Arkansas and Kansas. A graduate of the
University of Arkansas, he has a degree in marketing and transportation.
Other Directorships (Prev. 5 Yrs.): The New School
Family Relationships: Son of co-founders J.B. and Johnelle Hunt
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
23
PROPOSAL ONE Election of Directors
Coleman H. Peterson
Age: 70
Director Since: 2004
Committees: Executive Compensation Committee (Chair), Nominating and Corporate
Governance Committee
Principle Occupation: Hollis Enterprises, LLC
Recommendation: The Board has determined that Mr. Peterson’s vast experience within
the discipline of human resource management, including his lengthy tenure with a large
international corporation, provides valuable guidance to the organization, qualifying him to
continue to serve as a Director of the Company.
Experience: Mr. Peterson is the President and CEO of Hollis Enterprises LLC, a human
resources consulting firm founded in 2004. He is retired from Wal-Mart Stores, Inc. as
Executive Vice President of its People Division. During his tenure, Mr. Peterson was responsible
for recruitment, retention and development of the world’s largest corporate workforce. Prior to
his experience with Wal-Mart, Mr. Peterson spent 16 years with Venture Stores, with his last
position being Senior Vice President of Human Resources. He holds bachelor’s and master’s
degrees from Loyola University of Chicago.
Other Directorships (Prev. 5 Yrs.): Cracker Barrel Old Country Store, Inc. (Chair Compensation
Committee), Build-A-Bear Workshop
Family Relationships: None
John N. Roberts, III
Age: 54
Director Since: 2010
Committees: None
Principle Occupation: President and Chief Executive Officer, J.B. Hunt Transportation
Services, Inc.
Recommendation: The Board has determined that Mr. Roberts continues to qualify to serve
as a Director of the Company based on his continual success while serving as the Company’s
current President and Chief Executive Officer.
Experience: Mr. Roberts is the Company’s President and Chief Executive Officer. A graduate
of the University of Arkansas, he served as Executive Vice President and President of Dedicated
Contract Services from 1997 to December 31, 2010. Joining the Company in 1989, he began
his career as a Management Trainee and subsequently served as an EDI Services Coordinator,
Regional Marketing Manager for the Intermodal and Truckload business units, Business
Development Executive for DCS and Vice President of Marketing Strategy for the Company.
Other Directorships (Prev. 5 Yrs.): Federal Reserve Bank of St. Louis,
Arkansas Children’s Northwest
Family Relationships: None
24
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
PROPOSAL ONE Election of Directors
James L. Robo
Age: 56
Director Since: 2002
Committees: Audit Committee (Chair), Nominating and Corporate Governance Committee,
Independent Lead Director
Principle Occupation: NextEra Energy, Inc.
Recommendation: The Board has determined that Mr. Robo’s financial expertise, leadership
experience, and business experience gained through his leadership of a large complex
corporation, qualify him to continue to serve as a Director of the Company.
Experience: Mr. Robo is Chairman and Chief Executive Officer of NextEra Energy, Inc., a leading
clean energy company. He is Chairman of the company’s rate-regulated electric utility subsidiary,
Florida Power & Light Company, as well as Chairman and CEO of NextEra Energy Partners, LP,
a growth-oriented limited partnership formed by NextEra Energy to acquire, manage and own
contracted clean energy projects. Prior to joining NextEra Energy in 2002, Mr. Robo spent 10
years at General Electric Company. He served as President and Chief Executive Officer of GE
Mexico from 1997 until 1999 and as President and Chief Executive Officer of the GE Capital TIP/
Modular Space division from 1999 until February 2002. From 1984 through 1992, Mr. Robo
worked for Mercer Management Consulting. He received a BA summa cum laude from Harvard
College and an MBA from Harvard Business School, where he was a Baker Scholar.
Other Directorships (Prev. 5 Yrs.): NextEra Energy, Inc. (Chairman), NextEra Energy
Partners, LP (Chairman)
Family Relationships: None
Kirk Thompson
Age: 65
Director Since: 1985
Committees: None
Principle Occupation: Chairman of the Board, J.B. Hunt Transportation Services, Inc.
Recommendation: The Board has determined that Mr. Thompson’s extensive experience in
the industry and over 40 years with J.B. Hunt in multiple roles provides invaluable experience
to the organization and qualify him to continue to serve as a Director of the Company.
Experience: Mr. Thompson is the Company’s Chairman of the Board. He served as President
and Chief Executive Officer from 1987 to December 31, 2010. A graduate of the University of
Arkansas and a Certified Public Accountant, Mr. Thompson joined the Company in 1973. He
served as Vice President of Finance from 1979 until 1984, Executive Vice President and Chief
Financial Officer until 1985, and President and Chief Operating Officer from 1986 until 1987,
when he was elected President and Chief Executive Officer.
Other Directorships (Prev. 5 Yrs.): Rand Logistics, Inc.
Family Relationships: None
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
25
PROPOSAL ONE Election of Directors
DIRECTOR COMPENSATION
Overview of Nonemployee Director Compensation Program
The Company pays only nonemployee directors for their services as directors. Directors who are also officers or
employees of the Company are not eligible to receive any of the compensation described below.
For the annual period between the Company’s 2018 and 2019 Annual Meetings, compensation for nonemployee
directors serving on the Board was as follows:
•
•
•
•
•
•
•
an annual retainer of $215,000 paid in Company stock, cash or any combination thereof
an annual retainer of $20,000, paid in cash, to each member of the Audit Committee
an annual retainer of $15,000, paid in cash, to each member of the Executive Compensation Committee
an annual retainer of $10,000, paid in cash, to each member of the Nominating and Corporate
Governance Committee
an additional annual retainer of $25,000, paid in cash, to the Audit Committee Chairman
an additional annual retainer of $15,000, paid in cash, to the Executive Compensation Committee Chairman
an additional annual retainer of $10,000, paid in cash, to the Nominating and Corporate Governance
Committee Chairman
•
reimbursement of expenses to attend Board and Committee meetings
No changes were made to the above compensation schedule for nonemployee directors for the period between
the Company’s 2019 and 2020 Annual Meetings.
Process for Reviewing and Setting Nonemployee Director Compensation
The Executive Compensation Committee reviews the adequacy and competitiveness of the nonemployee
director compensation program annually and makes recommendations to the full Board for approval. Each year,
the Committee directs its compensation consultant to provide an independent assessment of the Company’s
nonemployee director compensation program. The consultant analyzes and compares the Company’s program
against the same peer group used to benchmark executive officer compensation (see page 46 for further details
about the peer group). The Committee targets total nonemployee director compensation levels at a competitive
range of peer group total compensation. The Committee also considers total aggregate Board compensation and
other factors when making recommendations to the Board for approval.
26
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
PROPOSAL ONE Election of Directors
Nonemployee Board of Director Compensation Paid in Calendar Year 2018
Fees
Paid in
Cash ($)
Fees
Paid in
Stock ($)
Restricted
Share
or Stock
Option
Awards ($)
Non-Equity
Incentive Plan
Compensation ($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)
All Other
Compensation ($)(1) Total ($)
Board Member
Douglas G. Duncan
245,000
—
Francesca M. Edwardson
25,000
214,890
Wayne Garrison
215,000
—
Sharilyn S. Gasaway
152,500
107,445
Gary C. George
35,000
214,890
Bryan Hunt
215,000
—
Coleman H. Peterson
40,000
214,890
James L. Robo
55,000
214,890
—
—
—
—
—
—
—
—
(1) Reimbursement of expenses to attend Board and Committee meetings
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,465 251,465
7,985 247,875
63,796 278,796
— 259,945
— 249,890
— 215,000
5,871 260,761
17,036 286,926
Each nonemployee member of the Board had the choice of receiving his or her annual retainer of $215,000 in
Company stock, cash or any combination thereof. Those directors choosing to receive their full retainer in Company
stock received 1,772 shares based on the $121.27 closing market price on April 19, 2018. Sharilyn S. Gasaway
elected to receive half of her retainer in stock, totaling 886 shares, based on the closing market price shown above.
Douglas G. Duncan, Wayne Garrison, and Bryan Hunt elected to receive their annual retainer in cash.
To more closely align his or her interests with those of the stockholders, each Board member is required to own
three times his/her estimated annual compensation in Company stock within five years of his/her initial stockholder
election to the Board. All Board members comply with this requirement.
Nonemployee members of the Board did not participate in either a company-sponsored pension or deferred
compensation plan in calendar year 2018.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
27
PROPOSAL ONE Election of Directors
Chairman of the Board
The role of Chairman of the Board is an employed executive position of the Company. Therefore, the Chairman of
the Board participates in all primary compensation components available to executive officers of the Company as
discussed in our Compensation Discussion and Analysis of this Proxy Statement, with the exception of short-term
cash incentive awards. He does not receive any director fees for his service on the Company’s Board of Directors.
Chairman Compensation Paid in Calendar Year 2018
Restricted
Share or
Stock Option
Awards ($)
Non-Equity
Incentive Plan
Compensation ($)
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings ($)
All Other
Compensation ($)(1) Total ($)
Board Member
Salary ($)
Kirk Thompson,
Chairman of the Board
363,269
—
—
—
12,770 376,039
(1) Includes $9,500 taxable allowance for financial counseling services and $3,270 Company contributions to 401(k) plan.
28
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Officers of the Company
Jennifer R. Boattini, 46, joined the Company in 2006 as Director of Litigation and Contract Management
and currently serves as Senior Vice President of Legal and Litigation, General Counsel. She also serves as the
Company’s Corporate Secretary.
Kevin Bracy, 48, joined the Company in 1998 as a Financial Analyst and currently serves as Senior Vice President
of Finance, Treasurer and Assistant Secretary.
Darren Field, 48, joined the company in 1994 as a Night Dispatcher and currently serves as Executive Vice
President of Intermodal.
Craig Harper, 61, joined the Company in 1992 as Vice President of Marketing and currently serves as Executive
Vice President. Prior to joining the Company, he worked for Rineco Chemical Industries as its Chief Executive Officer.
Bradley Hicks, 46, joined the Company in 1996 as a Management Trainee and currently serves as Executive Vice
President of Dedicated Contract Services.
Nicholas Hobbs, 56, joined the Company in 1984 as a Management Trainee and currently serves as Executive
Vice President and President of Dedicated Contract Services.
John Kuhlow, 48, joined the Company in 2006 as Assistant Corporate Controller and currently serves as Senior
Vice President of Finance, Controller and Chief Accounting Officer. Prior to joining the Company, he was a Senior
Audit Manager for KPMG LLP. Mr. Kuhlow is a Certified Public Accountant.
Terrence D. Matthews, 60, joined the Company in 1986 as a National Accounts Manager and currently serves
as Executive Vice President and President of Intermodal. Prior to joining the Company, he worked as a National
Accounts Manager for North American Van Lines.
Eric McGee, 45, joined the Company in 1998 as a National Account Service Monitor and currently serves as
Executive Vice President of Highway Services.
David G. Mee, 58, joined the Company in 1992 as Vice President Tax and currently serves as Executive Vice
President of Finance and Administration and Chief Financial Officer. Prior to joining the Company, he was a Senior
Tax Manager for KPMG LLP. Mr. Mee is a Certified Public Accountant.
Stuart Scott, 52, joined the Company in 2016 as Executive Vice President and Chief Information Officer. Prior to
joining the Company, he served as Chief Information Officer (CIO) at Tempur-Sealy International, CIO at Microsoft,
and CIO for various General Electric businesses.
Shelley Simpson, 47, joined the Company in 1994 as a Management Trainee and currently serves as Executive
Vice President, Chief Commercial Officer, and President of Highway Services.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
29
Security Ownership of Management
The following table sets forth the beneficial ownership of the Company’s common stock as of February 12, 2019,
by each of its current directors (including all nominees for director), the Named Executive Officers (the NEOs), and
all other executive officers and directors as a group. Unless otherwise indicated in the footnotes below, “beneficially
owned” means the sole or shared power to vote or direct the voting of a security or the sole or shared power to
dispose or direct the disposition of a security.
Owner
Douglas G. Duncan
Francesca M. Edwardson
Wayne Garrison
Sharilyn S. Gasaway
Gary C. George
Nicholas Hobbs
Bryan Hunt
Terrence D. Matthews
David G. Mee
Coleman H. Peterson
John N. Roberts, III
James L. Robo
Shelley Simpson
Kirk Thompson
Number of Shares
Beneficially Owned
Directly (1)
Number of Shares
Beneficially Owned
Indirectly (2)
Percent of
Class (%) (3)
10,828
18,392
1,650,000
20,426
36,158
83,717
70,697
80,181
117,206
38,173
300,165
—
86,060
40,559
2,600
—
51,503
275
1,072,077 (4)
168
—
38,842
500
—
—
43,295
46,228
—
*
*
1.6
*
1.0
*
*
*
*
*
*
*
*
*
All executive officers and directors as
a group (22)
*Less than 1 percent
2,684,230
1,261,970
3.6
30
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Security Ownership of Management
(1) Includes shares owned by the director or executive officer that are:
(a) held in a 401(k) or deferred compensation account
(b) held in trusts for the benefit of an immediate family member for which the director or executive officer is the trustee
(c) pledged shares as shown below:
Bryan Hunt
David G. Mee
John N. Roberts, III
Kirk Thompson
All executive officers and directors as a group
68,469
79,650
160,000
30,000
351,794
(2) Indirect beneficial ownership includes shares owned by the director or executive officer:
(a) as beneficiary or trustee of a personal trust
(b) by a spouse or as trustee or beneficiary of a spouse’s trust
(c) held in trusts for the benefit of an immediate family member for which the director or executive officer’s spouse is the trustee
(d) in a spouse’s retirement account
(3) Calculated on the basis of 108,738,788 shares of common stock outstanding of the Company on February 12, 2019.
(4) The reporting person disclaims beneficial ownership of these shares, which are held in limited partnerships or trusts. This report shall
not be deemed an admission that the reporting person is the beneficial owner of such securities for the purposes of Section 16 or for
any other purposes. Includes 4,690 shares currently pledged by the reporting person.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
31
Corporate Governance
We believe that good corporate governance helps to ensure that the Company is managed for the long-term
benefit of our stockholders. We continually review and consider our corporate governance policies and practices,
the SEC’s corporate governance rules and regulations, and the corporate governance listing standards of
NASDAQ, the stock exchange on which our common stock is traded. Key corporate governance principles
observed by the Board and Company include:
• maintaining a Board composed of a majority of directors who satisfy the criteria for independence under the
NASDAQ listing standards,
establishment of the position of Independent Lead Director,
utilization of independent director executive session meetings,
requiring that all committees of the Board be comprised solely of independent directors,
establishment of formal charters outlining the purpose, composition, and responsibility of each committee of
the Board,
granting authority to all committees of the Board to retain outside, independent advisors and consultants as
needed,
establishment of qualification guidelines for director nominees,
continual evaluation of current director performance and qualifications,
limitation and preapproval of director membership on other corporate boards,
•
•
•
•
•
•
•
•
• maintaining Board diversity in both gender and ethnic representation,
•
•
•
review the Company’s plan for succession of management,
adoption of a formal Director Attendance Policy, and
adoption of a formal Code of Ethical and Professional Standards applicable to all directors, officers and
employees of the Company.
You can access and print the Charters of our Audit Committee, Executive Compensation Committee
(Compensation Committee), and Nominating and Corporate Governance Committee (Corporate Governance
Committee), as well as our Corporate Code of Ethical and Professional Standards for Directors, Officers and
Employees, Whistleblower Policy, and other Company policies and procedures required by applicable law,
regulation or NASDAQ corporate governance listing standards on the “Corporate Governance” page of the
“Investors” section of our website at jbhunt.com. Additionally, you can request copies of any of these documents
by writing to our Corporate Secretary at the following address:
J.B. Hunt Transport Services, Inc.
Attention: Corporate Secretary
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
32
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Corporate Governance
Director Independence
The Board is composed of a majority of directors who satisfy the criteria for independence under the NASDAQ
corporate governance listing standards. In determining independence, each year the Board affirmatively
determines, among other items, whether the directors have no material relationship with the Company or any of
its subsidiaries pursuant to the NASDAQ corporate governance listing standards. When assessing the “materiality”
of a director’s relationship with the Company, if any, the Board considers all relevant facts and circumstances,
not merely from the director’s standpoint, but from that of the persons or organizations with which the director
has an affiliation and the frequency or regularity of the services, whether the services are being carried out at
arm’s length in the ordinary course of business, and whether the services are being provided substantially on the
same terms to the Company as those prevailing at the time from unrelated parties for comparable transactions.
Material relationships can include commercial, banking, industrial, consulting, legal, accounting, charitable and
familial relationships. The Board also considers any other relationship that could interfere with the exercise of
independence or judgment in carrying out the duties of a director.
Applying these independence standards, the Board has determined that Douglas G. Duncan, Francesca M.
Edwardson, Sharilyn S. Gasaway, Gary C. George, Coleman H. Peterson, and James L. Robo are all independent
directors. After due consideration, the Board has determined that none of these nonemployee directors have
a material relationship with the Company or any of its subsidiaries (either directly or indirectly as a partner,
stockholder or officer of any organization that has a relationship with the Company or any of its subsidiaries) and
that they all meet the criteria for independence under the NASDAQ corporate governance listing standards.
Risk Management and Oversight
As previously described in their biographies, current members of our Board represent diverse backgrounds of
business and academic experience. The Board, as a whole, performs the risk oversight of the Company and does
not assign the task or responsibility to any one member or a committee. Therefore, the Board believes that the
members each possess unique yet complementary experiences and backgrounds that create diverse points of
view, opinions, personalities and management styles that allow for the proper risk management and oversight of
the Company.
Independent Lead Director
The Board has established the position of Independent Lead Director, to which James L. Robo was appointed.
The Independent Lead Director directs the executive sessions of independent directors at the Board meetings at
which the Chairman is not present and has authority to call meetings of independent directors. The Independent
Lead Director facilitates communication between the Chairman, the CEO and the independent directors, as
appropriate, and performs such other functions as the Board directs.
Independent Director Meetings
Independent directors generally meet in executive session as part of each regularly scheduled Board meeting, with
discussion led by the Independent Lead Director.
Director Recommendations by Stockholders
In addition to recommendations from Board members, management or professional search firms, the Corporate
Governance Committee will consider director candidates properly submitted by stockholders who individually or
as a group have beneficially owned at least 2% of the outstanding shares of the Company’s common stock for
at least one year from the date the recommendation is submitted. Stockholders must submit director candidate
recommendations in writing by Certified Mail to the Company’s Corporate Secretary not less than 120 days prior
to the first anniversary of the date of the Proxy Statement relating to the Company’s previous Annual Meeting.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
33
Corporate Governance
Accordingly, for the 2020 Annual Meeting of Stockholders, director candidates must be submitted to the Company’s
Corporate Secretary by November 9, 2019. Director candidates submitted by stockholders must contain at least the
following information:
•
•
•
•
•
•
•
the name and address of the recommending stockholder,
the number of shares of the Company’s common stock beneficially owned by the recommending stockholder
and the dates such shares were purchased,
the name, age, business address and residence of the candidate,
the principal occupation or employment of the candidate for the past five years,
a description of the candidate’s qualifications to serve as a director, including financial expertise and why
the candidate does or does not qualify as “independent” under the NASDAQ corporate governance listing
standards,
the number of shares of the Company’s common stock beneficially owned by the candidate, if any, and
a description of the arrangements or understandings between the recommending stockholder and the
candidate, if any, or any other person pursuant to which the recommending stockholder is making the
recommendation.
In addition, the recommending stockholder and the candidate must submit, with the recommendation, a signed
statement agreeing and acknowledging that:
•
•
•
•
the candidate consents to being a director candidate and, if nominated and elected, he or she will serve
as a director representing all of the Company’s stockholders in accordance with applicable laws and the
Company’s Articles of Incorporation and Bylaws,
the candidate, if elected, will comply with the Company’s corporate governance guidelines and any other
applicable rule, regulation, policy or standard of conduct applicable to the Board and its individual members,
the recommending stockholder will maintain beneficial ownership of at least 2% of the Company’s issued
and outstanding common stock through the date of the Annual Meeting for which the candidate is being
recommended for nomination and that, upon the candidate’s nomination and election to the Board, the
recommending stockholder intends to maintain such ownership throughout the candidate’s term as director, and
the recommending stockholder and the candidate will promptly provide any additional information requested
by the Corporate Governance Committee and/or the Board to assist in the consideration of the candidate,
including a completed and signed Questionnaire for Directors and Officers on the Company’s standard form
and an interview with the Corporate Governance Committee or its representative.
For a complete list of the information that must be included in director recommendations submitted by
stockholders, please see the “Director Recommendations by Stockholders Policy” on the “Corporate Governance”
page of the “Investors” section of our website at jbhunt.com. The Corporate Governance Committee will consider
all director candidates submitted through its established processes and will evaluate each of them, including
incumbents, based on the same criteria. However, the Corporate Governance Committee may prefer incumbent
directors and director candidates whom they know personally or who have relevant industry experience and in-
depth knowledge of the Company’s business and operations.
34
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Corporate Governance
The policies and procedures as set forth above are intended to provide flexible guidelines for the effective
functioning of the Company’s director nomination process. The Board intends to review these policies and
procedures periodically and anticipates that modifications may be necessary from time to time as the Company’s
needs and circumstances change.
Board Composition and Director Qualifications
The Corporate Governance Committee periodically assesses the appropriate size and composition of the Board and
whether any vacancies on the Board are expected. In the event that vacancies are anticipated or otherwise arise, the
Corporate Governance Committee will review and assess potential director candidates. The Corporate Governance
Committee utilizes various methods for identifying and evaluating candidates for director. Candidates may come to
the attention of the Corporate Governance Committee through recommendations of Board members, management,
stockholders or professional search firms. Generally, director candidates should, at a minimum:
• possess relevant business and financial expertise and experience, including a basic understanding of
fundamental financial statements,
•
•
have exemplary character and integrity and be willing to work constructively with others,
have sufficient time to devote to Board meetings and consultation on Board matters, and
• be free from conflicts of interest that violate applicable law or interfere with director performance.
In addition, the Corporate Governance Committee seeks director candidates who possess the following qualities
and skills:
•
•
•
•
•
•
the capacity and desire to represent the interests of the Company’s stockholders as a whole,
occupational experience and perspective that, together with other directors, enhances the quality of the Board,
leadership experience and sound business judgment,
accomplishments in their respective field, with superior credentials and recognition,
knowledge of the critical aspects of the Company’s business and operations, and
the ability to contribute to the mix of skills, core competencies and qualifications of the Board through
expertise in one or more of the following areas:
– accounting and finance
– mergers and acquisitions
– investment management
– law
– academia
– strategic planning
– investor relations
– executive leadership development
– executive compensation
– service as a senior officer of, or a trusted adviser to senior management of, a publicly held company.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
35
Corporate Governance
The independent members of the Board each possess the general skills, experience, attributes and qualifications
that make them a proper fit for the Company’s Board as described above. Specific strengths and qualities
possessed by each member that makes him or her eligible to serve on the Company’s Board include:
Douglas G. Duncan – 30 years of experience in the transportation industry
Francesca M. Edwardson – business experience in the transportation industry, law, human resources, and
corporate governance
Sharilyn S. Gasaway – accounting, finance, mergers and acquisitions, and regulatory experience
Gary C. George – business experience related to managing a diversified business headquartered in Springdale,
Arkansas
Coleman H. Peterson – human resource experience with a large international workforce, corporate governance,
and retail experience
James L. Robo – financial expertise, leadership experience, and business experience related to equipment and
the transportation industry
Messrs. Garrison, Hunt, Roberts and Thompson, as nonindependent directors, have extensive work experience
and history with the Company from its origins, which the Board believes is critical to its composition.
Overboarding
To further facilitate each director’s ability to effectively serve as a member of the Board, each director is limited to
serving on no more than four boards of directors of publicly held companies in total, including that of the Company.
In addition, a director is required to obtain Board approval prior to joining the board of another publicly held company,
which allows the Board to exercise its judgment regarding various considerations and potential conflicts of interest.
Board Diversity
As indicated by the criteria above, the Board prefers a mix of background and experience among its members.
Furthermore, the Board is diverse both in gender and ethnic representation, with 30% of our current members
reflecting female or minority demographics. The Board does not follow any ratio or formula to determine the
appropriate mix. Rather, it uses its judgment to identify nominees whose backgrounds, attributes and experiences,
taken as a whole, will contribute to the high standards of Board service to the Company. The effectiveness of this
approach is evidenced by the directors’ participation in insightful and robust yet mutually respectful deliberation
that occurs at Board and Committee meetings.
Board Leadership Structure
The Company split the titles, roles and responsibilities of the Chairman of the Board and Chief Executive Officer in
1985. The Company and the Board believe that, while the duties may be performed by the same person without
consequence to either Company operations or stockholders’ interest, separation of duties allows the Chairman to
focus more on active participation by the Board and oversight of management, while the Chief Executive Officer is
better able to focus on day-to-day operations of the Company.
36
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Corporate Governance
Communications With The Board
Stockholders and other interested parties may communicate with the Board, Board Committees, the independent
or the nonmanagement directors, each as a group or any director individually by submitting their communications
in writing to the attention of the Company’s Corporate Secretary. All communications must identify the recipient
and author, state whether the author is a stockholder of the Company, and be forwarded to the following address
via Certified Mail:
J.B. Hunt Transport Services, Inc.
Attention: Corporate Secretary
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
The directors of the Company have instructed the Corporate Secretary not to forward to the intended recipient any
communications that are reasonably determined in good faith by the Corporate Secretary to relate to improper or
irrelevant topics or that are substantially incomplete.
Board Meetings
The Board held four scheduled meetings during the 2018 calendar year. All directors attended at least 75% of the
aggregate of the Board meetings and committee meetings on which each served during 2018. All members of
the Board attended the 2018 Annual Meeting of Stockholders. The Company has adopted a Director Attendance
Policy to stress the importance of attendance, director preparedness, and active and effective participation at
Board and Board Committee meetings.
Board Committees
Standing committees of the Board include the Audit, Executive Compensation, and Nominating and Corporate
Governance committees. Committee members are elected annually by the Board and serve until their successors
are elected and qualified or until their earlier death, retirement, resignation or removal.
The following table summarizes the membership of the Board and each of its committees and the number of times
each met during calendar year 2018:
Director
Audit
Compensation
Corporate Governance
Douglas G. Duncan
Francesca M. Edwardson
Sharilyn S. Gasaway
Gary C. George
Coleman H. Peterson
James L. Robo
Number of Meetings in 2018
X
X
Chair
8
X
X
X
Chair
3
X
X
X
Chair
X
X
3
On January 23, 2019, the Corporate Governance Committee recommended, and the Board approved, the same
committee assignments as 2018 for 2019.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
37
Corporate Governance
AUDIT COMMITTEE
Under the terms of its charter, the Audit Committee represents and assists the Board in fulfilling its oversight
responsibility relating to the integrity of the Company’s financial statements and the financial reporting process,
the systems of internal accounting and financial controls, the internal audit function, the annual independent audit
of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the
independent auditor’s qualifications and independence, the performance of the Company’s internal audit function,
and the performance of its independent auditors.
In fulfilling its duties, the Audit Committee, among other things, shall:
•
appoint, terminate, retain, compensate and oversee the work of the independent registered public
accounting firm,
• preapprove all services provided by the independent registered public accounting firm,
•
•
•
oversee the performance of the Company’s internal audit function,
review the qualifications, performance and independence of the independent registered public accounting firm,
review external and internal audit reports and management’s responses thereto,
• monitor the integrity of the financial reporting process, system of internal accounting controls, and financial
•
•
statements and reports of the Company,
oversee the Company’s compliance with legal and regulatory requirements,
review the Company’s annual and quarterly financial statements, including disclosures made in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” set forth in periodic reports filed
with the SEC,
• discuss with management earnings news releases,
• meet with management, the internal auditors, the independent auditors and the Board,
• provide the Board with information and materials as it deems necessary to make the Board aware of
significant financial accounting and internal control matters of the Company,
•
oversee the receipt, investigation, resolution and retention of all complaints of a financial nature submitted
under the Company’s Whistleblower Policy, and
•
otherwise comply with its responsibilities and duties as set forth in the Company’s Audit Committee Charter.
The Board has determined that each member of the Audit Committee satisfies the independence and other
requirements for audit committee membership of the NASDAQ corporate governance listing standards and SEC
requirements. The Board has also determined that all members of the Audit Committee have the attributes of an
audit committee financial expert as defined by the SEC. The Board determined that these members acquired such
attributes through their experience in preparing, auditing, analyzing or evaluating financial statements, or actively
supervising one or more persons engaged in such activities, and their experience of overseeing or assessing the
performance of companies and public accountants with respect to preparation, auditing or evaluation of financial
statements. For additional information concerning the Audit Committee, see “Report of the Audit Committee” set
forth below.
38
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Corporate Governance
EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (the Compensation Committee) shall:
• determine and approve base salary compensation of the Company’s senior executive officers,
• determine and approve annual equity-based awards for the Company’s “insiders” as defined in Section 16
of the Securities Exchange Act of 1934, with the exception of the Chairman of the Board and the
Chief Executive Officer,
•
•
•
•
•
•
evaluate and recommend to the independent members of the Board for their approval base salary and annual
equity-based awards for the Chairman of the Board and the Chief Executive Officer,
review and approve the annual performance goals and objectives of the Company’s senior executive officers,
including the Chief Executive Officer,
establish and certify the achievement of performance goals,
oversee the Company’s incentive compensation and equity-based compensation plans,
assess the adequacy and competitiveness of the Company’s executive and director compensation programs,
review and discuss with management the Compensation Discussion and Analysis (CD&A) and recommend
whether such analysis should be included in the Proxy Statement filed with the SEC,
• produce an Annual Report on executive compensation for inclusion in the Company’s Proxy Statement,
•
•
review and approve any employment agreements, severance agreements or arrangements, retirement
arrangements, change in control agreements/provisions, and any special or supplemental benefits for each
officer of the Company,
approve, disapprove, modify or amend any non-equity compensation plans designed and intended to provide
compensation primarily for officers,
• make recommendations to the Board regarding adoption of equity-based compensation plans,
•
administer, modify or amend equity-based compensation plans,
• monitor the diversity of the Company’s workforce, and
•
otherwise comply with its responsibilities and duties as set forth in the Company’s Compensation
Committee Charter.
None of the individuals serving on the Compensation Committee has ever been an officer or employee of the
Company. The Board has determined that all members of the Compensation Committee satisfy the independence
requirements of the NASDAQ corporate governance listing standards. All members of the Compensation
Committee qualify as “nonemployee directors” for purposes of Rule 16b-3 of the Exchange Act and as “outside
directors” for purposes of Section 162(m) of the Internal Revenue Code, as amended.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
39
Corporate Governance
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee (the Corporate Governance Committee) shall:
•
•
annually review the Company’s corporate governance guidelines and policies,
assist the Board in identifying, screening and recruiting qualified individuals to become Board members,
• propose nominations for Board membership and committee membership,
•
•
•
•
•
•
assess the composition of the Board and its committees,
oversee the performance of the Board and committees thereof,
review the Company’s plan for succession of management,
oversee the Company’s strategies addressing environmental and social issues,
review and approve all related-party transactions (as required by law, NASDAQ rules, or SEC regulations), and
otherwise comply with its responsibilities and duties as set forth in the Company’s Corporate Governance
Committee Charter.
The Board has determined that all members of the Corporate Governance Committee satisfy the independence
requirements of the NASDAQ corporate governance listing standards.
Code of Business Conduct and Ethics
The Board has adopted a Corporate Code of Ethical and Professional Standards for Directors, Officers and
Employees (the Code of Ethics) that applies to all of the Company’s directors, officers and employees. The
purpose and role of this Code of Ethics is to focus our directors, officers and employees on areas of ethical risk,
provide guidance to help them recognize and deal with ethical issues, provide mechanisms to report unethical or
unlawful conduct, and help enhance and formalize our culture of integrity, honesty and accountability. As required
by applicable law, the Company will post on the “Corporate Governance” page of the “Investors” section of its
website at jbhunt.com any amendments or waivers of any provision of this Code of Ethics made for the benefit of
executive officers or directors of the Company.
Corporate Governance Guidelines
The Board has adopted corporate governance guidelines and policies to assist it in exercising its responsibilities
to the Company and its stockholders. These guidelines address, among other items, director qualifications and
responsibilities, Board Committees and nonemployee director compensation.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires each director, officer and any individual beneficially owning more
than 10% of the Company’s common stock to file with the SEC reports of security ownership and reports on
subsequent changes in ownership. These reports are generally due within two business days of the transaction
giving rise to the reporting obligation.
To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, all Section 16(a) filings were made in a timely manner, with
the exception of Wayne Garrison and Darren Field, each who had one late filing to report the sale of shares and Kirk
Thompson, who had one late filing to report the purchase of shares through the reinvestment of cash dividends paid.
40
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Corporate Governance
Certain Relationships and Related Transactions
The Corporate Governance Committee is charged with the responsibility of reviewing and preapproving all related-
party transactions (as defined in SEC regulations) and periodically reassessing any related-party transaction
entered into by the Company. The Committee does not currently have any formal policy or procedures with
respect to its review and approval of related-party transactions, but considers each such transaction or proposed
transaction on a case-by-case basis.
Bryan Hunt, one of our current directors, is the son of Johnelle Hunt, a principal stockholder of the Company.
Two sons-in-law of Kirk Thompson, Chairman of the Board of the Company, were employed by the Company
in calendar year 2018. The first earned $402,431 and the second earned $308,339 in 2018 compensation.
Shelley Simpson’s husband was employed by the Company in calendar year 2018 and earned $395,727 in 2018
compensation. Jennifer R. Boattini’s husband was employed by the Company in calendar year 2018 and earned
$318,216 in 2018 compensation.
In the ordinary course of business, the Company has entered into a Dedicated Contract Services® agreement with
George’s, Inc., which is considered a related party. The customer agreements consist primarily of fleets of tractors
and specialty trailers delivering feed and live poultry to and from plants located in Cassville, Missouri; Edinburg,
Virginia; Harrisonburg, Virginia; and Mt. Jackson, Virginia, as well as other agreed-upon services on an as-needed
basis. Gary C. George is Chairman of George’s, Inc. Mr. George was not involved in the establishment of these
service agreements, nor did he solicit the Company’s services on behalf of George’s, Inc. Total revenue earned in
calendar year 2018 under these service agreements was $11.9 million. Services provided under these contracts
are and will be carried out at arm’s length in the ordinary course of business and are being provided substantially
on the same terms as those of unrelated parties for comparable transactions.
In March 2017, the Company made a gift of $2.75 million to the University of Arkansas. The gift is payable in
varying increments over a five-year period beginning in calendar year 2017. Both John N. Roberts, III and Shelley
Simpson are members of the Dean’s Executive Advisory Board for the Sam M. Walton College of Business at the
University of Arkansas. Mr. Roberts and Ms. Simpson did not solicit the contribution on behalf of the organization.
In May 2018 and August 2018, the Company made gifts of $2,000 and $150,000, respectively, to Seven Hills
Homeless Center. David G. Mee is a board member of the organization. Mr. Mee did not solicit this contribution on
behalf of the organization.
In December 2018, the Company made a gift of $2.5 million to Mercy Health Foundation NWA. The gift is payable
in equal increments over a five-year period beginning in calendar year 2018. Shelley Simpson is a member of the
board of directors of Mercy Health Northwest Arkansas. Mrs. Simpson did not solicit the contribution on behalf of
the organization.
Compensation Committee Interlocks and Insider Participation
During the 2018 calendar year, none of the Company’s executive officers served on the Board of Directors
or Compensation Committees of any entity whose directors or officers served on the Company’s Board or
Compensation Committee. No current or past executive officers or employees of the Company served on the
Compensation Committee.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
41
Principal Stockholders of the Company
The following table sets forth all persons known to be the beneficial owner of more than 5% of the Company’s
common stock as of December 31, 2018. Unless otherwise indicated in the footnotes below, “beneficially owned”
means the sole or shared power to vote or direct the voting of a security or the sole or shared power to dispose or
direct the disposition of a security.
Name and Address
Number of Shares
Percent of Class
Johnelle Hunt(1)
3333 Pinnacle Hills Parkway
Rogers, AR 72756
Vanguard Group, Inc.(2)
100 Vanguard Blvd.
Malvern, PA 19355
Capital Research Global Investors(3)
333 South Hope Street
Los Angeles, CA 90071
BlackRock, Inc.(4)
55 East 52nd Street
New York, NY 10055
18,326,686
16.9 %
9,995,702
9,883,063
6,194,877
9.2 %
9.0 %
5.7 %
(1) Based on the stockholder’s Form 5, filed with the SEC on February 13, 2019.
(2) Based on the most recent SEC filing by Vanguard Group, Inc. on Schedule 13G/A dated February 11, 2019. Of the total shares
shown, the nature of beneficial ownership is as follows: sole voting power, 107,033 shares; shared voting power, 16,729 shares; sole
dispositive power, 9,875,308 shares; and shared dispositive power, 120,394 shares. The Company makes no representation as to
the accuracy of the information reported in such beneficial ownership reports.
(3) Based on the most recent SEC filing by Capital Research Global Investors on Schedule 13G dated February 14, 2019. Of the total
shares shown, the nature of beneficial ownership is as follows: sole voting power, 9,883,063 shares; shared voting power, zero
shares; sole dispositive power, 9,883,063 shares; and shared dispositive power, zero shares. The Company makes no representation
as to the accuracy of the information reported in such beneficial ownership reports.
(4) Based on the most recent SEC filing by BlackRock, Inc. on Schedule 13G/A dated February 6, 2019. Of the total shares shown, the
nature of beneficial ownership is as follows: sole voting power, 5,401,638 shares; shared voting power, zero shares; sole dispositive
power, 6,194,877 shares; and shared dispositive power, zero shares. The Company makes no representation as to the accuracy of
the information reported in such beneficial ownership reports.
42
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The 2018 Executive Compensation Committee (the Compensation Committee) was composed of Coleman H.
Peterson, Chairman, Francesca M. Edwardson, Sharilyn S. Gasaway, and Gary C. George, none of whom is
an officer or employee of the Company and all of whom have been determined by the Board of Directors of the
Company (the Board) to be independent. Additionally, all members of the Compensation Committee qualify as
“nonemployee directors” for purposes of Rule 16b-3 of the Exchange Act and as “outside directors” for purposes
of Section 162(m) of the Internal Revenue Code, as amended (the Code).
The Compensation Committee operates under a written charter adopted by the Board, a copy of which is available
on the “Corporate Governance” page of the “Investors” section of the Company’s website at jbhunt.com. In
carrying out its responsibilities, the Compensation Committee, among other things:
•
•
•
•
•
•
•
•
evaluates and recommends to the independent Board members, for their approval, the annual salaries and
bonuses of the Chairman of the Board and the Chief Executive Officer,
reviews and approves annual corporate goals and objectives of the Chairman of the Board and the Chief
Executive Officer and other Section 16 reporting officers,
recommends for approval to the independent Board members equity-based compensation awards under the
Company’s Management Incentive Plan (the MIP), as amended and restated, for the Chairman of the Board
and the Chief Executive Officer,
reviews and approves equity-based compensation awards under the Company’s MIP, as amended and
restated, for the Section 16 reporting officers,
establishes and certifies the achievement of performance goals under the Company’s incentive and
performance-based compensation plans,
reviews and approves compensation recommendations for the Company’s directors,
reviews other Company executive compensation programs, and
reviews and approves the Compensation Committee report to the stockholders and the Compensation
Discussion and Analysis (the CD&A) report included in the Proxy Statement.
The Chairman of the Board recommends to the Compensation Committee the form and amount of compensation
to be paid to the Chief Executive Officer. The Chief Executive Officer provides recommendations to the
Compensation Committee regarding the form and amount of compensation to be paid to executive officers who
report directly to him. Additionally, the Chairman of the Board, the Chief Executive Officer and the Chief Financial
Officer regularly attend Compensation Committee meetings, except for executive sessions. Upon request,
management has provided to the Compensation Committee historical and prospective breakdowns of primary
compensation components for each executive officer, wealth accumulation analyses and internal pay equity
analyses as described in more detail below.
At our 2018 Annual Meeting, the stockholders approved, on an advisory basis, the compensation of the named
executive officers (98.9% of votes cast). The Compensation Committee believes this level of stockholder support
reflects a strong endorsement of the Company’s compensation policies and decisions. The Compensation
Committee has considered the results of the last advisory vote on executive compensation in determining the
Company’s compensation policies and decisions for 2019, and has determined that these policies and decisions
are appropriate and in the best interests of the Company and its stockholders at this time. In addition, at our 2017
Annual Meeting, the stockholders voted for approval of a frequency of holding advisory votes every year with
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
43
Executive Compensation
respect to named executive officer compensation (93.4% of votes cast). Accordingly, an advisory vote on executive
compensation has been included as Proposal Number Two within this Proxy Statement.
In 2018, the Compensation Committee engaged Meridian Compensation Partners, LLC (Meridian) to review
the Company’s executive compensation policies and practices. Meridian was also directed to assist with the
development of a comparable peer group for executive compensation purposes and to benchmark compensation
levels for the NEOs. Meridian is retained by, and reports to, the Compensation Committee to provide
compensation analyses and consultation at the Committee’s request.
The Compensation Committee met three times in 2018 to discuss, among other items, the salaries, bonuses
and other compensation of the senior executive officers and other key employees of the Company, including the
Chairman of the Board and the Chief Executive Officer. The Compensation Committee did not act by unanimous
consent at any time in 2018.
Historically, the Compensation Committee meets during the first quarter to finalize discussion regarding the
Company’s performance goals for the previous and current year with respect to performance-based compensation
to be paid to executive officers and to approve its report for the Proxy Statement. These goals are approved within
90 days of the beginning of the year, pursuant to the Code. In addition, during this and other regularly scheduled
meetings throughout the year, the Compensation Committee meets to:
• discusses any new compensation issues,
•
•
•
•
•
review base compensation, bonus and MIP award analyses,
approve the engagement of the compensation consultant for annual executive and director compensation
surveys,
review and discuss information provided by the compensation consultant and the recommendations made by
the Chairman of the Board and the Chief Executive Officer,
review the performance of the Company and the individual officers,
approve short-term cash bonus and long-term incentive awards, and
• determine executives’ base salaries.
Management also advises the full Board, including the Compensation Committee members, throughout the year of
any new issues and developments regarding executive compensation.
The Compensation Committee has reviewed and discussed the following CD&A with management, and based
upon such review and discussions, the Compensation Committee recommended to the Board that the CD&A be
included in the Company’s Proxy Statement.
J.B. Hunt Transport Services, Inc.
2018 Executive Compensation Committee
Coleman H. Peterson, Chairman
Francesca M. Edwardson
Sharilyn S. Gasaway
Gary C. George
44
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The Compensation Discussion and Analysis provides information regarding the compensation paid to our
President and Chief Executive Officer, Chief Financial Officer and certain other executive officers who were the
most highly compensated in calendar year 2018. These individuals, referred to collectively as “named executive
officers” or NEOs, are identified below:
•
John N. Roberts, III – President and Chief Executive Officer
• David G. Mee – Executive Vice President, Finance/Administration, Chief Financial Officer
• Shelley Simpson – Executive Vice President, Chief Commercial Officer and President of Highway Services
• Nicholas Hobbs – Executive Vice President and President of Dedicated Contract Services
• Terrence D. Matthews – Executive Vice President and President of Intermodal
Compensation Philosophy and Principles
The Compensation Committee acknowledges that the transportation industry is highly competitive and that
experienced professionals have career mobility. The Company believes that it competes for executive talent
with a large number of companies, some of which have significantly larger market capitalizations and others of
which are privately owned. Retention of key talent remains critical to our success. The Company’s need to focus
on retention is compounded by its size and geographic location. The Company’s compensation program is
structured to attract, retain and develop executive talent with the ability to assume a broad span of responsibilities
and successfully lead complex business units to market-leading positions in the industry. The Compensation
Committee believes that the ability to attract, retain and provide appropriate incentives for professional personnel,
including the senior executive officers and other key employees of the Company, is essential to maintaining
the Company’s leading competitive position, thereby providing for the long-term success of the Company.
The Compensation Committee’s goal is to maintain compensation programs that are competitive within the
transportation industry. Each year, the Compensation Committee reviews the executive compensation program
with respect to external competitiveness and linkage between executive compensation and creation of stockholder
value and determines what changes, if any, are appropriate.
The overall compensation philosophy of the Compensation Committee and management is guided by the following
principles:
• Compensation levels should be sufficiently competitive to attract and retain key talent. The Company aims
to attract, motivate and retain high-performance talent to achieve and maintain a leading position in our
industry. Our total compensation package should be strongly competitive with other transportation and
logistics companies.
• Compensation should relate directly to performance and responsibility. Total compensation should be tied to
and vary with performance and responsibility, both at the Company and individual level, in achieving financial,
operational and strategic objectives. Differentiated pay for high-performing individuals should be proportional
to their contributions to the Company’s success.
• Short-term incentive compensation should constitute a significant portion of total executive compensation.
A large portion of total compensation should be tied to performance, and therefore at risk, as position and
responsibility increase. Individuals with greater roles and the ability to directly impact strategic direction and
long-term results should bear a greater proportion of the risk.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
45
Executive Compensation
•
Long-term incentive compensation, the Company’s Management Incentive Plan (the MIP), should be closely
aligned with stockholders’ interests. Awards of long-term compensation encourage executive officers to focus
on the Company’s long-range growth and development and incent them to manage from the perspective of
stockholders with a meaningful stake in the Company, as well as to focus on long-term career orientation.
Participants in the MIP are required to own Company stock. The requirements are discussed in this CD&A
under the caption “Stock Ownership Guidelines.”
The Company’s executive compensation program is designed to reward the achievement of initiatives regarding
growth, productivity and people, including:
•
setting, implementing and communicating strategies, goals and objectives to ensure that the Company grows
revenue and earnings at rates that are comparable to or greater than those of our peers and that create value
for our stockholders,
• motivating and exhibiting leadership that aligns the interests of our employees with those of our stockholders,
• developing a grasp of the competitive environment and taking steps to position the Company for growth and
as a competitive force in the industry,
•
constantly renewing the Company’s business model and seeking strategic opportunities that benefit the
Company and its stockholders, and
•
implementing a discipline of compliance and focusing on the highest standards of professional conduct.
PROCESS OF SETTING COMPENSATION
Benchmarking Against a Peer Group
The Compensation Committee engaged Meridian to perform a competitive market assessment for the NEOs to
evaluate base salary, target annual incentives, target total cash compensation, long-term incentives and total direct
compensation.
The assessment involved the use of a peer group, as noted below, consisting of 14 transportation and logistics
companies in the national marketplace. This peer group was updated in 2017 to further include companies of
comparable size, complexity of operations, or similar customer base. These companies represent both business
competition and the most relevant labor market for our executives.
CH Robinson Worldwide, Inc.
CSX Corporation
Expeditors Int’l of Washington, Inc.
Hub Group, Inc.
Kansas City Southern
Knight-Swift Transportation Holdings, Inc.
Norfolk Southern Corporation
Old Dominion Freight Line, Inc.
Republic Services Inc.
Ryder System, Inc.
Schneider National Inc.
Stericycle Inc.
Waste Management Inc.
XPO Logistics Inc.
For 2018, Swift Transportation Company was replaced by Knight-Swift Transportation Holdings, Inc. as a result of
a corporate merger. No other changes were made to the peer group in 2018.
46
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
Compensation Analysis Tools
In addition to the competitive compensation survey information for each officer that was compiled, the
Compensation Committee also reviewed historical executive compensation. The Compensation Committee
anticipates that pertinent compensation information will continue to be developed and enhanced to allow the
Committee to perform the most relevant analyses practicable.
Our objective for total executive compensation is to target a competitive range around the 50th percentile of the
peer group. We believe that a sizeable portion of overall compensation should be at risk and tied to stockholder
value. Historically, our bonuses have been tied to operating income, earnings before taxes (EBT), revenue,
earnings per share (EPS), or other identified metrics. As these items increase, so do executive bonuses. Long-term
incentives are used as tools to reward executives for current and future performance, to encourage an executive to
remain with the Company and to align the executive’s interests with those of our stockholders. As part of our long-
term incentive strategy, executives are expected to maintain stock ownership values as a multiple of their base
salaries. Long-term incentives for NEOs are performance-based. While certain components of compensation are
directly tied to the Company’s reported financial performance, sufficient accounting and operational controls are in
place and tested effectively to ensure that the Company’s compensation practices and policies, including those for
nonexecutives, are not reasonably likely to have a material adverse effect on the Company.
Our Company has a 401(k) plan that assists participants in providing for retirement. The Company contributes to
each NEO’s account per year based on the NEO’s voluntary contribution amount. The equity buildup in unvested
equity-based awards and stock owned currently is critical to each executive’s ability to adequately provide for
his or her retirement. As previously mentioned and explained in detail later, we have a Company stock ownership
policy for our executives, but we do not have a “hold until retirement” restriction. We do not believe that such a
restriction is prudent for the employee or necessary to protect our Company.
Long-Term Compensation Analyses and Policies
With respect to long-term, equity-based awards, the Company maintains the MIP. The MIP was originally adopted
and approved by the Board on March 17, 1989, and an amended and restated MIP was subsequently approved
by the stockholders on May 11, 1995. The MIP has been amended and restated since the time of its adoption,
and all amendments requiring approval of the stockholders have been approved, with the last approval occurring
at our Annual Meeting of Stockholders held in 2017. Currently, there are 44 million shares of common stock
authorized for issuance under the MIP, of which approximately 6.3 million shares are available for future equity-
based awards.
Performance-based restricted share units, time-vested restricted share units and stock options of the Company
may be granted under the MIP in an effort to link future compensation to the long-term financial success of the
Company. These equity-based awards are granted to executive officers, including the NEOs, and other key
employees and are intended to attract and retain employees, to provide incentives to enhance job performance,
and to enable those persons to participate in the long-term success and growth of the Company through an equity
interest in the Company.
The Compensation Committee typically grants performance-based restricted share units to the NEOs of the
Company. Each grant typically vests ratably over five years based on service and performance conditions. Each
portion that vests in a particular year, or each tranche, of performance-based awards is contingent on the Company’s
attainment of predetermined performance metrics established by the Compensation Committee. Historically, the
Compensation Committee has set operating income targets for each tranche of performance-based restricted share
units granted to NEOs. Therefore, while an NEO may receive a grant that vests over a period of years, the operating
income performance metric must be met for each tranche in order for the NEO to receive the full value of grant.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
47
Executive Compensation
Failure to meet the operating income metric for any tranche would cause that portion of the total grant to be forfeited
by the NEO. The Compensation Committee believes that performance-based restricted share units are currently
more effective than stock options in achieving the Company’s compensation objectives, as these grants are subject
to less market volatility and are less dilutive to stockholders. NEOs realize immediate value as restricted share units
vest, with such value increasing as the Company’s stock performance increases. Cash dividends are not paid and
there are no voting rights on unvested restricted share units.
The Company does not have a formal policy, but has an established practice described below, with respect to
the granting of any form of equity compensation. The Company does not have a policy or practice of either timing
equity-based compensation grants to current or new executive officers, or timing the release of material, nonpublic
information to affect the value of executive compensation. Recommendations for all Section 16 filers, except for
the Chairman of the Board and the Chief Executive Officer, are presented to the Compensation Committee by
the Chief Executive Officer. The Chairman of the Board recommends to the Compensation Committee the award
for the Chief Executive Officer. The Compensation Committee approves or adjusts the award using the above
tools for all Section 16 filers, except for the Chairman of the Board and the Chief Executive Officer. The awards for
the Chairman of the Board and Chief Executive Officer are recommended by the Compensation Committee and
submitted for final approval to the Company’s independent Board members. This process occurs during our first-
quarter Board and Committee meetings in late January of each year to better coincide with the reporting of annual
financial and operating results. We consider this our annual award date. The Compensation Committee does not
expect to delegate approval authority to grant awards to management or any subcommittee at this time or in the
near future. The grant date is typically set by the Compensation Committee. In 2018, 427,205 annual award grants
were made on January 24, the date of the first-quarter Board meeting of 2018. Grants have been made in months
other than the annual award dates on a very limited basis. The limited exceptions to this grant-date practice have
included, for example, the hiring of a key employee or the promotion of an employee to an executive office.
As stated above, the Company does not have a policy or practice of timing the grant of equity-based awards
and the release of material, nonpublic information in a manner that would affect compensation for new or current
executive officers, nor has it deliberately or knowingly done so. In the event that material, nonpublic information
becomes known to the Compensation Committee, the Company or its employees at a time when such information
could affect or otherwise impact the imminent grant of equity-based compensation, management and the
Compensation Committee will take the existence of such information under advisement and determine whether to
delay the grant of such equity-based compensation to a later date to avoid the appearance of any impropriety.
Deductibility of Compensation and Other Regulatory Considerations
Section 162(m) of the Code places a limit of $1 million on the amount of compensation the Company may deduct
for federal income tax purposes in any one year with respect to the Company’s Chief Executive Officer, the Chief
Financial Officer and the next three most highly compensated executive officers whose compensation is required
to be disclosed in the Company’s annual Proxy Statement (the Covered Employees). Historically, there has been an
exception to this $1 million limitation for performance-based compensation that meets certain requirements, and the
Chief Financial Officer has been excluded from the definition of a Covered Employee. Effective January 1, 2018, under
the Tax Cuts and Jobs Act, the exception for performance-based compensation was eliminated, and compensation
paid to the Chief Financial Officer is now subject to the $1 million deduction limitation. The amendments to Section
162(m) include a grandfather provision for compensation under a written contract in effect on November 2, 2017, that
is not materially modified after such date. The Company therefore believes that the performance-based equity awards
granted to its named executive officers before November 2, 2017, will continue to be eligible for the performance-
based exception provided certain requirements are met.
48
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
In reviewing the effectiveness of the Company’s compensation program, the Compensation Committee considers
the anticipated tax treatment to the Company and to its executives of various payments and benefits. Additionally,
the deductibility of certain compensation payments depends upon the timing of an executive’s vesting or exercise
of previously granted awards, as well as interpretations and changes in the tax laws and other factors beyond
the Compensation Committee’s control. For these and other reasons, including the need to maintain flexibility in
compensating executive officers in a manner designed to promote varying corporate goals, the Compensation
Committee will not necessarily, nor in all circumstances, limit executive compensation to that which is deductible
under the Code. The Company has not adopted a policy requiring all compensation to be deductible.
The Compensation Committee intends to preserve the deductibility of awards granted before November 2, 2017,
to the extent reasonably practicable under the current law. The MIP contains specific language and requirements
regarding performance-based awards granted to a Covered Employee intended to be “qualified performance-based
compensation” as defined by the Code. These awards shall be based on the attainment of one or more objective
performance goals established in writing by the Committee. Performance goals must be based on one or more
criteria approved by the MIP (e.g., revenue, operating income, return on assets) and be based on an objective
formula or standard. The Committee is currently using approved targeted annual operating income levels as the
performance criteria for all outstanding qualified performance-based restricted share awards. Prior to any vesting of
an award, the Committee must certify in writing that all of the necessary performance goals have been met.
Base salary, bonuses, non-performance-based restricted share units, and performance-based restricted share
units that do not qualify under the grandfather provision of the amended Section 162(m) do not qualify as
performance-based compensation under the Code. In 2018, $92,998 and $425,799 in NEO compensation paid
to Shelley Simpson and Nicholas Hobbs, respectively, was not deductible by the Company. The Compensation
Committee does not expect the changes to Section 162(m) under the Tax Cuts and Jobs Act to materially affect its
practice of compensating its executives through performance-based programs.
Derivative Trading, Hedging, Pledging and Trading Plans
The Company has a policy that prohibits directors, officers or employees from engaging in short sales or in
transactions involving derivatives based on the Company’s common stock, such as option contracts, straddles,
collars, hedges and writing puts or calls. In addition, the Company’s policy requires that directors and executive
officers must obtain authorization from the Board before entering into a trading plan that, under the SEC’s Rule
10b5-1, would permit the sale of the Company’s stock including at times when the director or executive officer is in
the possession of material nonpublic information. In addition, while the Board does not have a formal policy regarding
pledging of the Company’s common stock, the Board annually reviews any pledges of the Company’s common stock
by directors and executive officers to assess whether such pledges pose any unnecessary risks to the Company.
Stock Ownership Guidelines
To motivate the Company’s officers and senior management to emulate its stockholders, the Company expects its
management to own Company stock at levels described in the table shown below.
Stock ownership is defined as stock owned:
• directly or indirectly, and/or
•
through the Company’s 401(k) Employee Retirement Plan.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
49
Executive Compensation
Position
Chief Executive Officer
Executive Vice Presidents
Senior Vice Presidents
Vice Presidents
Ownership Multiple of Base Salary
6 times
3.5 times
2.75 times
2.5 times
The Compensation Committee has determined that as of the most recent annual award date, all of the Company’s
officers and members of senior management covered by these guidelines had met their ownership goals.
Stock Retention Policy
In addition to the stock ownership guidelines indicated above, the Company requires all shares obtained by an
NEO from the vesting or exercise of restricted share units and stock options to be retained until the established
ownership levels have been achieved. The Company does not have any other stock retention policy.
Recovery of Awards
The Company does not have a policy, other than required by law, requiring replacement of awards or payments
as a result of an officer’s illegal transactions or restatements. However, the Compensation Committee has formally
adopted and explicitly communicated the “clawback” provisions of the Dodd-Frank Wall Street Reform and
Consumer Protection Act with regard to annual cash bonus awards paid to the Company’s executive officers. With
regard to equity-based awards, the MIP gives the Company broad discretion to reduce, cancel, seek to forfeit
or recoup any Plan participant’s awards upon the breach of any agreement with or obligation to the Company,
violation of any Company policy or procedure, or engagement in conduct that is otherwise detrimental to the
business or reputation of the Company. Since becoming a public company in 1983, the Company has had no
illegal actions by its officers or restatements of financial information.
Summary
The Company intends to continue its practice of compensating its executives through programs that emphasize
performance. To that end, executive compensation is tied directly to the performance of the Company and is
structured to ensure that, due to the nature of the business and the degree of competitiveness for executive talent,
there is an appropriate balance between:
• base salary and incentive compensation,
•
•
short-term and long-term compensation, and
cash and noncash compensation.
Each is determined and measured by:
•
•
•
•
50
competitive compensation data,
financial, operational and strategic goals,
long-term and short-term performance of the Company compared with its peer group, and
individual contribution to the success of the Company.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
2018 COMPENSATION
Elements of Compensation
The Company’s primary compensation components are summarized below. Generally, the Company’s compensation
program consists of an annual base salary, short-term cash incentive awards, and an annual long-term, equity-based
award. Primary benefits for executives include participation in the Company’s 401(k) plan, health, dental and vision
plans, and various insurance plans, including disability and life insurance, all of which are available to all employees on
a nondiscriminatory basis. The Company provides limited perquisites to executive officers and other key employees
as described in more detail on page 58 under the section titled “Other Perquisites.”
Total direct compensation for executive officers, including the NEOs, consists of one or more of the following
components:
• base salary,
•
•
•
•
annual performance-based incentive cash bonus awards,
long-term incentive/equity-based compensation,
health and welfare benefits, and
other benefits.
The Compensation Committee, with recommendations from management, works to create what it believes is
the best mix of these components in delivering total direct compensation. In determining annual compensation,
the Compensation Committee reviews all elements of compensation separately and in the aggregate. These
compensation components are comparable to those of the Company’s competitors and peer group.
In its review of executive compensation, and, in particular, in determining the amount and form of incentive awards
discussed below, the Compensation Committee generally considers several factors. Among these factors are:
• market information with respect to cash and long-term compensation for its peer group,
•
•
•
•
amounts paid to the executive officer in prior years as salary,
annual bonus and other compensation,
the officer’s responsibilities and performance during the calendar year, and
the Company’s overall performance during prior calendar years and its future objectives and challenges.
At transportation companies, generally the largest elements of compensation are paid in the form of annual short-
term incentives and long-term compensation. Compensation mix and industry profitability vary as the industry
faces many risk factors, such as the economy and fuel prices.
Cash compensation for our NEOs varies as the operating income of the Company changes or with the growth
of the combination of revenue and EBT, due to the nature of our bonus plans described below. Grants of
performance-based restricted share units are typically made annually. Performance-based restricted share units
are based on each employee’s level of responsibility and are generally computed as a multiple of base salary.
It has been the policy of the Company to put a significant portion of the executive’s compensation at risk. This
is accomplished by our cash bonus plans, which are directly tied to operating income, revenue and EBT growth
and the issuance of performance-based restricted share units. Equity-based awards from the MIP may also vary
in vesting from two to 10 years. These awards are subject to forfeiture if the employee leaves the Company.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
51
Executive Compensation
Furthermore, the future vesting of performance-based equity awards is contingent on the Company’s attainment of
predetermined performance metrics established by the Committee. The Committee and management believe that
the proportion of compensation at risk should rise as the employee’s level of responsibility increases.
The Compensation Committee has retained Meridian as its compensation consultant. Meridian reports directly to the
Compensation Committee and has no other engagements with the Company. In 2017, Meridian prepared a study
providing information and an independent analysis of the Company’s executive compensation program and practices.
The results of this study included observations about the Company’s target 2018 executive compensation.
The Compensation Committee does not rely solely on predetermined formulas or a limited set of criteria when it
evaluates the individual performances of the NEOs. The Compensation Committee considers actual results against
pre-established goals and also bases its compensation decisions for the NEOs on:
•
•
•
•
•
•
•
•
•
•
leadership,
the execution of business plans,
strategic results,
operating results,
growth in operating income, revenue and EBT, or other identified metrics
size and complexity of the business,
experience,
strengthening of competitive position,
analysis of competitive compensation practices, and
assessment of the Company’s performance.
Where possible, the above criteria were compared with the peer group selected as well as the Chief Executive
Officer’s input for his direct reports and the Chairman of the Board’s input for the Chief Executive Officer.
52
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
Base Salary
The Compensation Committee believes that competitive levels of cash compensation, together with equity-based
and other incentive programs, are necessary for motivating and retaining the Company’s executives. Salaries provide
executives with a base level of monthly income and help achieve the objectives outlined above by attracting and
retaining strong talent. Base salaries are evaluated annually for all executive officers, including the Chief Executive
Officer. Generally, base salaries are not directly related to specific measures of corporate performance, but are
determined by the relevance of experience, the scope and complexity of the position, current job responsibilities,
retention and relative salaries of the peer group members. The Compensation Committee may elect not to increase
an executive officer’s annual salary, and has so elected in prior years. However, if warranted, the Compensation
Committee may increase base salary where an executive officer takes on added responsibilities or is promoted.
In January 2018 and 2019, the Compensation Committee reviewed each NEO’s base salary and, after applying the
aforementioned guidelines, approved the salary increases listed below.
2017 Salary
2018 Salary
Increase For 2018 2019 Salary
Increase For 2019
John N. Roberts, III
825,000
845,000
David G. Mee
485,000
497,125
Shelley Simpson
485,000
497,125
Nicholas Hobbs
475,000
486,875
Terrence D. Matthews
485,000
497,125
2.4%
2.5%
2.5%
2.5%
2.5%
890,000
525,000
525,000
525,000
525,000
5.3%
5.6%
5.6%
7.8%
5.6%
Annual Bonus Awards
The Company had in place for several years a bonus plan that was tied to EPS. In January 2018, this plan
was modified and is now tied to operating income (company plan), because operating income is a better
metric to determine operational efficiency and removes uncontrollable effects of change in income tax law. The
Compensation Committee has also established a second bonus plan, referred to as the Performance Growth
Incentive (PGI) plan, which was tied to year-over-year revenue and earnings before interest and taxes growth.
In January 2018, this plan was modified and is now tied to year-over-year revenue and EBT growth. When
management presents its budget for the year, the Compensation Committee establishes separate matrices of
reported results with corresponding bonus payout levels for each of the cash bonus plans. These forecasted
revenue and earnings results are based on customer freight trends, strategies for growth and controlling costs,
and corporate strategies to maximize stockholder return. Once presented to the Board, the financial budget and
bonus plan matrices remain fixed, though management continually reforecasts expectations based on actual
results and on changing facts and assumptions. Changes in uncontrollable factors such as general economic
conditions, railroad or port authority service issues, or rapidly fluctuating fuel costs can have a significant impact
on the Company’s actual financial results. Therefore, as the Company performs against the original budget, the
executive’s bonus performs against the pre-established matrices.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
53
Executive Compensation
Annual Bonus Payouts
For 2018, the company plan was based on annual reported operating income and consisted of a single payout to
be made in January 2019 based on the full year 2018 operating income matrix approved by the Compensation
Committee. The established matrix consisted of operating income ranging from $685 million to $855 million,
translating to annual bonus payout percentages ranging from 5% to 55% of an executive’s base salary. The 2018
annual bonus payout targets compared with actual reported operating income and actual payout percentages
were as follows:
Operating Income ($) (millions)
Bonus Payout % of Salary
Period
Annual
Minimum
Target Reported (1)
Minimum
Target
Actual (1)
685
795
681
5.0
30.0
30.0
Actual earned bonus amounts for each NEO under the company plan are as follows:
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Terrence D. Matthews
Total Annual ($)
253,500
149,138
149,138
146,063
149,138
54
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
For 2018, the PGI bonus plan was based on targeted annual operating revenue, excluding fuel surcharges
(net revenue), and EBT growth rates and also utilized a single payout in January 2019, after full year financial
results were publicly reported. For 2018, the established PGI matrix consisted of a net revenue growth rate of
15% and EBT growth rates ranging from 20% to 30%. These ranges translate into annual bonus payouts ranging
from $634 thousand to $1.1 million for the Chief Executive Officer and $229 thousand to $467 thousand of all
other NEOs. The PGI plan is a blended bonus calculation requiring the minimum threshold of both net revenue
and EBT to be met before payout occurs. The 2018 annual PGI bonus payout targets compared with actual
reported results and actual payouts were as follows:
Net Revenue / EBT Growth %
Bonus Payout ($) (000’s)
Period
Minimum
Target Reported (1)
Minimum
Target
Actual (1)
Annual - Chief Executive Officer
15.0 / 20.0
15.0 / 20.0
17.4 / 7.7
Annual - All other NEOs
15.0 / 20.0
15.0 / 20.0
17.4 / 7.7
634
229
634
229
845
342
Actual earned bonus amounts for each NEO under the PGI plan are as follows:
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Terrence D. Matthews
Total Annual ($)
845,000
341,667
341,667
341,667
341,667
(1) When calculating the 2018 annual bonus payouts, the Compensation Committee, in its discretion and at the recommendation of
management, excluded the effect of certain previously announced infrequent charges incurred in 2018, which related to events
originating in prior years. The resolution of those events were not a reflection of 2018 operational performance. The Committee
certified that the company plan would pay at the percentage of salary associated with a $795 million operating income and the PGI
plan would pay the bonus associated with 15% net revenue and 25% EBT growth. The Compensation Committee used similar
discretion in January 2018 when calculating the 2017 annual bonus payouts, by excluding the benefit to EPS of the Company’s
adjustments to its deferred tax balances for the change in future tax rates prescribed by the Tax Cuts and Jobs Act enacted during
the fourth quarter of 2017, using a similar rationale that the benefit to 2017 EPS was not a true reflection of 2017 operational
performance. As a result, no 2017 bonus payout was made under the company plan, which was based on EPS at that time.
Long-Term, Equity-Based Award
Each executive is eligible to receive a long-term incentive award of performance-based restricted share units.
Performance-based restricted share units are intended to help achieve the objectives of the compensation
program, including the retention of high-performing and experienced talent, a career orientation and strong
alignment with stockholders’ interests. The performance-based restricted share units are awarded and settled from
shares reserved for issuance under the MIP. The Compensation Committee approves or adjusts the award based
on the above criteria for all Section 16 filers who are employees of the Company. The awards for the Company’s
Chairman of the Board and Chief Executive Officer are presented for final approval to the Company’s independent
Board members. The Compensation Committee believes that performance-based restricted share units must be
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
55
Executive Compensation
sufficient in size to provide a strong, long-term performance and retention incentive for executives and to increase
their vested interest in the Company. Performance-based restricted share units are used as long-term incentives
because they are less dilutive to shares outstanding and to profits. Performance-based restricted share units
generally vest from two to 10 years.
In determining the number of performance-based restricted share unit grants for each NEO, the Compensation
Committee reviewed peer market data provided by Meridian and a detailed analysis of each NEO’s vested and
unvested stock holdings. In considering unvested stock holdings, the Committee reviewed a forecast of the timing
of potential future restricted stock unit vesting for each NEO over the next 10 years.
The Compensation Committee subjectively considered the following objectives (without any particular weighting)
when determining the form and amount of performance-based restricted share units granted to NEOs in 2018:
•
•
•
•
•
align NEOs’ long-term interests with those of the Company’s stockholders,
strengthen retention hooks for NEOs over the long term,
ensure competitiveness of NEOs’ total compensation opportunity through an emphasis on performance-
based long-term stock compensation,
reinforce share holdings of NEOs,
align NEOs’ compensation with the Company’s long-term leadership succession planning initiatives, and
• bolster the continuity of the entire management team through an upcoming period of critical strategic goals
and milestones for the Company.
For 2018, the Compensation Committee and/or independent directors approved the following performance-based
restricted share unit grants to the NEOs:
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Terrence D. Matthews
Units (#)
Fair Value ($)
39,793
14,247
14,247
14,247
14,247
4,877,428
1,746,255
1,746,255
1,746,255
1,746,255
The fair value of the awards was based on a 2.5% discount from the Company’s closing stock price of $125.65 on
January 24, 2018. The discount represents the present value of expected dividends to be paid on the Company’s
common stock, using the current dividend rate and the risk-free interest rate, over the vesting period. The
Company believes that this discount is appropriate to value the performance-based restricted share units, as the
units do not collect or accrue dividends until the awards vest and are settled with Company stock.
56
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
The 2018 NEO awards shown above are performance-based restricted share units. These grants vest (in
annual increments over a four-year period), beginning January 31, 2019, upon the Company’s attainment of
predetermined operating metrics established and approved by the Compensation Committee. The Compensation
Committee acknowledges that the separate components of total direct compensation are not always in the 50th
percentile of their respective peer groups, as determined earlier, but it believes that its mix of current and long-term
compensation is more appropriate to align the NEO’s compensation with the stockholders’ interests in both the
near and longer term.
The Committee also reviewed its compensation strategy in general and specific components of total direct
compensation and determined that none of the Company’s compensation programs, individually or as a whole,
would create risks that are reasonably likely to have a material adverse effect on the Company. The Committee
presented its review and conclusion to the entire Board.
Deferred Compensation
The Company administers a Deferred Compensation Plan for certain of its officers. The employee participant
may elect on an annual basis to defer part of his or her salary and/or annual bonus awards. This plan assists
key employees in planning for retirement. The Company contributes nothing to the plan, and participants are not
permitted to defer shares of Company stock.
Health and Welfare Benefits
The Company provides benefits such as medical, vision, life insurance, long-term disability coverage, and 401(k)
plan opportunities to all eligible employees, including the NEOs. The Company provides up to $750,000 in life
insurance coverage and up to $10,000 per month in long-term disability coverage. The value of these benefits is
not required to be included in the Summary Compensation Table since they are available to all employees on a
nondiscriminatory basis. The Company matches certain employee contributions to the 401(k) plan. The Company
provides no postretirement medical or supplemental retirement benefits to its employees.
The Company also provides vacation, sick leave and other paid holidays to employees, including the NEOs, that
are comparable to those provided at other transportation companies. The Company’s commitment to provide
employee benefits is due to our recognition that the health and well-being of our employees contributes directly to
a productive and successful work life that produces better results for the Company and for its employees.
Personal Benefits
The Company provides certain perquisites to management employees, including the NEOs, as summarized below.
Company Aircraft
The Company actively participates in shared ownership of aircraft services with NetJets. With the approval of the
Chief Executive Officer, the NEOs and other management employees use Company aircraft services for business
purposes. Personal use of Company aircraft services is provided to executive officers on a very limited basis and to
other management employees in the event of emergency or other urgent situations.
Company Vehicles
The Company does not provide Company-owned cars to executives.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
57
Executive Compensation
Other Perquisites
The Company provides executive officers a taxable allowance of up to $10,000 a year for financial counseling
services, which may include legal, financial, estate and/or tax planning, and tax return preparation. This benefit is
based on the actual cost of the services. The Company also provides country club memberships to certain of its
executive officers. These memberships are valued based on the actual costs of the membership, including dues,
regardless of whether use was personal or business. The Company believes that these clubs provide a quiet venue
for negotiations and entertainment of clients, bankers, investment bankers, stockholders, etc.
Severance Agreements
The Company does not have employment contracts or predetermined personal severance agreements with any
of its executives. However, according to the terms of the awards granted under the previously mentioned MIP, all
outstanding restricted share units are subject to accelerated or immediate vesting upon the occurrence of a double
triggering event, which requires both a “change in control” and the NEO’s retirement, termination by the Company
without cause, or resignation for good reason.
Generally, a “change in control” is deemed to occur when more than 30% of the outstanding shares of common
stock of the Company change ownership in a transaction that is a merger, reorganization or consolidation,
when the persons who constitute the Company’s incumbent board of directors cease to constitute a majority
of the board, or upon the consummation of a merger, reorganization, consolidation or similar form of corporate
transaction involving the Company that requires the approval of the Company’s stockholders where more than
50% of the outstanding shares change ownership or a complete liquidation or dissolution of the Company or the
sale or disposition of all or substantially all of the assets of the Company.
58
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
SUMMARY COMPENSATION
The following table summarizes the total compensation earned by or paid to the Chief Executive Officer, Chief
Financial Officer and the next three most highly compensated executive officers of the Company who served in
such capacities as of December 31, 2018, for services rendered to the Company. These five officers are referred to
as the NEOs in this Proxy Statement.
Name and Principal
Position
Year Salary ($)(1)
Share
Units
($)(2)(3)
Option
Awards ($)(2)
Non-Equity
Incentive Plan
Compensation ($)(1)
Deferred
Compensation ($)
All Other
Compensation ($)
Total ($)(3)
John N. Roberts, III
President and CEO
2018
845,298 4,877,428
2017
833,865
—
2016
807,747 4,616,239
David G. Mee
EVP, Finance &
Administration,
CFO
2018
498,618 1,746,255
2017
488,154
—
2016
480,660 1,899,262
Shelley Simpson
EVP, CCO and
President of
Highway Services
2018
496,600 1,746,255
2017
485,000
—
2016
476,923 1,671,408
Nicholas Hobbs
EVP and President
of Dedicated
Contract Services
2018
485,505 1,746,255
2017
475,000
—
2016
454,808 1,671,408
Terrence D.
Matthews
EVP and President
of Intermodal
2018
500,630 1,746,255
2017
490,202
—
2016
478,819
759,690
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,098,500
—
96,000
490,805
—
57,000
490,805
—
57,000
487,730
—
54,000
490,805
—
57,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
25,010 6,846,236
25,387
859,252
25,385 5,545,371
18,720 2,754,398
18,989
507,143
21,954 2,458,876
20,483 2,754,143
19,973
504,973
16,268 2,221,599
18,430 2,737,920
18,788
493,788
18,424 2,198,640
19,872 2,757,562
19,758
509,960
19,618 1,315,127
(1) Non-equity incentive plan compensation (paid as a bonus) and salary amounts shown above are reported as gross earnings. Totals
may include amounts transferred into the deferred compensation plan and/or into the Company’s 401(k) plan. All non-equity awards
are reported in the year in which they are earned.
(2) Amounts reflect grant date fair value of each individual’s specific award, which will be earned over the vesting period (4 to 5 years)
and the achievement of performance metrics established by the Compensation Committee at the time of grant. No stock options
were granted during 2018, 2017 or 2016.
(3) In 2017 the Compensation Committee moved the timing of annual equity-based awards to January of each year and accordingly, no
performance-based restricted share units were granted in 2017.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
59
Executive Compensation
Components of All Other Compensation for Calendar Year 2018
Name
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Terrence D. Matthews
Perquisites and Other
Personal Benefits ($)
Company Contributions
to 401(k) Plan ($)
16,760
10,470
12,233
10,180
12,436
8,250
8,250
8,250
8,250
7,436
Total ($)
25,010
18,720
20,483
18,430
19,872
Components of Perquisites for Calendar Year 2018
Name
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Terrence D. Matthews
Personal Use of
Company Plane ($) (1)
Legal and
Accounting
Fees ($)
Club Dues ($)
Total Perquisites
and Other Personal
Benefits ($)
—
—
—
—
—
6,215
—
4,488
2,400
1,735
10,545
10,470
7,745
7,780
10,701
16,760
10,470
12,233
10,180
12,436
(1) The value of personal aircraft usage reported above is based on the Company’s actual invoiced amount from NetJets for the variable
costs incurred on each trip. Since the Company’s aircraft is used primarily for business travel, this methodology excludes fixed costs
that do not change based on usage, such as depreciation and management fees. On certain occasions, an executive’s spouse or
other family member may accompany the executive on a flight when such person is invited to attend the event for appropriate business
purposes. No additional direct operating cost is incurred in such situations under the foregoing methodology; however, the value of
personal use of Company aircraft is imputed for federal income tax purposes as income to the NEO. John N. Roberts III, David G. Mee,
Shelley Simpson and Terrance D. Matthews had such imputed income in 2018. This value is calculated pursuant to Internal Revenue
Service guidelines using Standard Industry Fare Level rates, which are determined by the U.S. Department of Transportation, and
included in the NEO’s base salary in the Summary Compensation Table shown on page 59 of this Proxy Statement.
Grants of Plan-Based Awards
The following table reflects estimated possible payouts under equity and non-equity incentive plans to the NEOs
during 2018. The Company’s equity-based and non-equity incentive-based awards are granted to the NEOs
based upon pre-established performance goals set annually by the Compensation Committee with a performance
period equal to the calendar year for which the performance goals are set.
The MIP is an annual plan consisting of equity-based awards only. The number of performance-based restricted
share units awarded is measured based on the executive’s level of responsibility and other matters described on
page 55 under “Long-Term, Equity-Based Award.” Dividends are not paid on awards of performance-based or
time-vested restricted share units.
In 2018, NEOs were eligible to earn cash bonuses under the non-equity incentive award plans based on the
Company’s operating income, revenue and EBT for the calendar year. Please refer to page 53 under “Annual
Bonus Award” for further detail.
60
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
Estimated Possible Payouts
Under Non-Equity Incentive
Awards
Estimated Possible Payouts
Under Equity Incentive Plan
Awards
Stock
Awards
Option
Awards
Grant
Date Threshold ($) Target ($) Maximum ($)(1)
Threshold (#) Target (#)(2) Maximum (#)
Number of
Shares of
Stock or
Units (#)
Number of
Securities
Underlying
Options (#)
Exercise or
Base Price
of Option
Awards ($/Sh)
Grant Date Fair
Value of Stock
and Option
Awards ($)(3)
1/24/18
676,250
887,500
1,520,750
7,958
39,793
39,793
1/24/18
254,023
378,305
740,086
2,849
14,247
14,247
1/24/18
254,023
378,305
740,086
2,849
14,247
14,247
1/24/18
253,511
375,230
734,448
2,849
14,247
14,247
1/24/18
254,023
378,305
740,086
2,849
14,247
14,247
—
—
—
—
—
—
—
—
—
—
—
4,877,428
—
1,746,255
—
1,746,255
—
1,746,255
—
1,746,255
Name
John. N.
Roberts, III
David G.
Mee
Shelley
Simpson
Nicholas
Hobbs
Terrence D.
Matthews
(1) This column reflects the maximum non-equity incentive award each NEO was eligible to receive for 2018 under the percentage
assigned to each NEO for the cash bonus pools. The actual awards earned are reported in the Summary Compensation Table
shown on page 59 of this Proxy Statement.
(2) This column reflects the number of performance-based restricted share units that were granted to the NEOs in 2018.
(3) The fair value of the awards was based on a 2.5% discount from the Company’s closing stock price of $125.65 on January 24, 2018,
measured at the target performance level. The discount represents the present value of expected dividends to be paid on the
Company’s common stock, using the current dividend rate and the risk-free interest rate, over the vesting period. The Company
believes that this discount is appropriate to value the performance-based restricted share units, as the units do not collect or accrue
dividends until the awards vest and are settled with Company stock.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
61
Executive Compensation
Outstanding Equity Awards at Calendar Year-end
As of December 31, 2018, there were no outstanding stock options held by the NEOs. The following table sets
forth information concerning restricted share units held by the NEOs as of December 31, 2018.
Number of Shares
or Units of Stock
That Have Not
Vested (#) (1)
Market Value of
Shares or Units of
Stock That Have
Not Vested ($) (2)
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (#) (1)
Equity Incentive
Plan Awards:
Market Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested ($) (2)
Name
John N. Roberts, III
David G. Mee
9,095
23,384
37,113
39,793
20,000
3,000
9,138
19,303
14,247
3,000
7,776
16,256
7,776
16,256
14,247
9,000
14,247
846,199
2,175,647
3,452,994
3,702,341
1,860,800
279,120
850,200
1,795,951
1,325,541
279,120
723,479
1,512,458
723,479
1,512,458
1,325,541
837,360
1,325,541
Shelley Simpson
9,000
20,000
837,360
1,860,800
Nicholas Hobbs
6,000
20,000
3,000
558,240
1,860,800
279,120
Terrence D. Matthews
62
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
(1) Restricted share units are time-vested or performance-based awards. Effective vesting dates, pending achievement of required
performance goals set for performance-based awards, are noted below.
Time-Based Awards
Shelley Simpson
Nicholas Hobbs
Performance-Based Awards
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Terrence D. Matthews
Shares Vesting
Vesting Date
Shares Vesting
Vesting Date
3,000
3,000
3,000
3,000
3,000
6,666
7/15/19
7/15/20
7/15/21
7/15/19
7/15/20
7/15/21
6,666
6,667
6,667
6,667
6,667
3,000
7/15/21
7/15/22
7/15/23
7/15/22
7/15/23
7/15/19
Shares Vesting
Vesting Date
Shares Vesting
Vesting Date
9,095
11,692
11,692
12,371
12,371
10,000
10,000
3,000
6,027
3,111
5,079
3,000
3,888
3,888
5,182
8,026
3,888
3,888
5,182
8,026
3,048
3,000
3,000
3,000
5,699
7/15/19
7/15/19
7/15/20
7/15/19
7/15/20
7/15/20
7/15/21
7/15/19
7/15/19
7/15/20
7/15/19
7/15/19
7/15/19
7/15/20
7/15/19
7/15/20
7/15/19
7/15/20
7/15/19
7/15/20
7/15/21
7/15/19
7/15/20
7/15/21
1/31/19
12,371
15,917
7,958
7,959
7,959
8,128
6,096
5,699
2,849
2,849
2,850
3,048
5,699
2,849
2,849
2,850
5,699
2,849
2,849
2,850
2,849
2,849
2,850
7/15/21
1/31/19
1/31/20
1/31/21
1/31/22
7/15/20
7/15/21
1/31/19
1/31/20
1/31/21
1/31/22
7/15/21
1/31/19
1/31/20
1/31/21
1/31/22
1/31/19
1/31/20
1/31/21
1/31/22
1/31/20
1/31/21
1/31/22
(2) Values are based on the last closing market price of $93.04 on December 31, 2018.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
63
Executive Compensation
Restricted Share Units Vested
The following table sets forth information concerning restricted share units vested during 2018.
Name
John N. Roberts, III
Total
David G. Mee
Total
Shelley Simpson
Total
Nicholas Hobbs
Total
Terrence D. Matthews
Total
64
Number of Shares
Acquired on Vesting (#)
Value Realized on
Vesting ($) (1) (2)
15,000
9,000
9,095
11,691
12,371
57,157
2,000
3,000
3,110
2,916
3,048
14,074
3,000
2,000
3,000
3,888
3,048
14,936
3,000
2,000
3,000
3,888
3,048
14,936
3,000
2,000
4,860
5,080
14,940
1,827,450
1,096,470
1,108,044
1,424,315
1,507,159
6,963,437
243,660
365,490
378,891
355,256
371,338
1,714,635
365,490
243,660
365,490
473,675
371,338
1,819,653
365,490
243,660
365,490
473,675
371,338
1,819,653
365,490
243,660
592,094
618,896
1,820,140
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
(1) Value realized on the acquired shares shown above is gross earnings. Values are earned over multiple years. The receipt of vested
shares in calendar year 2018 should not be interpreted to mean that all value was earned in the year the shares were received. Each
executive retained a portion of the available vested shares as shown below:
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Terrence D. Matthews
31,806
7,126
8,310
8,011
8,163
(2) Values represent the fair market value of the underlying common stock on the date of vesting.
Components of Nonqualified Deferred Compensation for Calendar Year 2018
We have a nonqualified deferred compensation plan that allows eligible employees to defer a portion of their
compensation. Participants can elect to defer up to a maximum of 50% of their base salary as well as up to 85% of
their bonus for the year. The compensation deferred under this plan is credited with earnings or losses of investments
elected by plan participants. Each participant is fully vested in all deferred compensation and earnings; however,
these amounts are subject to general creditor claims until actually distributed to the employee. A participant may
elect to receive deferred amounts in one payment or in quarterly installments payable over a period of two to 25 years
upon reaching the age of 55, having 15 years of service, or becoming disabled. Our total liability under this plan was
$15,719,118 as of December 31, 2018, and $16,411,843 as of December 31, 2017. These amounts are included
in other long-term liabilities in our Consolidated Balance Sheets. Participant withholdings are held by a trustee and
invested as directed by participants. These investments are included in “other assets” in our Consolidated Balance
Sheets and totaled $15,719,118 as of December 31, 2018, and $16,411,843 as of December 31, 2017.
Name
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Executive
Contributions
in 2018 ($) (1)
Registrant
Contributions
in 2018 ($)
Aggregate
Earnings in
2018 ($)
Aggregate
Withdrawals
and
Distributions ($)
Aggregate
Balance at
2018 ($) (1)
—
—
—
—
—
—
—
—
—
—
—
—
—
(335,546)
—
—
—
—
—
—
—
—
—
3,911,995
Terrence D. Matthews
247,630
(1) Amounts of executive contributions are included as part of the NEO’s salary in the Summary Compensation Table detailed above.
Total executive contributions for the three-year period ending December 31, 2018 were $728,399 for Mr. Matthews.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
65
Executive Compensation
Potential Post-Employment Benefits
The Company does not have employment contracts or predetermined personal severance agreements with any
of its executives. However, according to the terms of the awards granted under the previously mentioned MIP, all
outstanding restricted share units are subject to accelerated or immediate vesting upon the occurrence of a double
triggering event, which requires both a “change in control” and the NEO’s retirement, termination by the Company
without cause, or resignation for good reason.
Generally, a “change in control” is deemed to occur when more than 30% of the outstanding shares of common
stock of the Company change ownership in a transaction that is a merger, reorganization or consolidation,
when the persons who constitute the Company’s incumbent board of directors cease to constitute a majority
of the board, or upon the consummation of a merger, reorganization, consolidation or similar form of corporate
transactions involving the Company that requires the approval of the Company’s stockholders where more than
50% of the outstanding shares change ownership or a complete liquidation or dissolution of the Company or the
sale or disposition of all or substantially all of the assets of the Company.
Potential benefits to the NEOs due to his or her separation of service without cause, retirement or resignation for
good reason following a “change in control” are shown below. The amounts represent the immediate vesting of all
outstanding restricted share units and are valued using the last closing market price of $93.04 on December 31, 2018.
John N. Roberts, III
David G. Mee
Shelley Simpson
Nicholas Hobbs
Terrence D. Matthews
$10,177,180
6,111,612
6,538,758
6,259,638
2,162,901
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
(the Dodd-Frank Act), we are providing the following information about the relationship of the annual total
compensation of our “median employee” and the annual total compensation of our CEO.
For 2018, our last completed fiscal year:
•
The median of the annual total compensation of all of the Company’s employees, other than our CEO, was
$62,150.
•
The annual total compensation of our CEO was $6,846,236.
• Based on this information, the ratio for 2018 of the annual total compensation of our CEO to the median of the
annual total compensation of all other employees was 110 to 1.
In determining the median of the annual total compensation of all of the Company’s employees, other than our
CEO, we were required in 2018 to identify the Company’s “median employee” for 2017. Item 402(u) of Regulation
S-K requires us to identify the Company’s median employee once every three years, unless a change in employee
population or compensation arrangements is likely to result in a significant change in our CEO pay ratio disclosures.
The Company determined that no such change occurred during 2018. Accordingly, for the 2018 pay ratio calculation,
we used the same “median employee” identified during our 2017 analysis of our employee population.
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Executive Compensation
To identify the “median employee” in 2017, we performed the following:
• We conducted a full analysis of our employee population as of our determination date of November 30, 2017.
• We excluded employees residing in Mexico and Canada from our calculation under the De Minimis Exemption.
Employees located in Mexico and Canada constituted 0.09% and 0.01% of our total employee population,
respectively, which consisted of 22 individuals in Mexico and 3 individuals in Canada as of our determination date.
• Our employee population, after taking into consideration the aforementioned adjustments, consisted of 23,872
individuals. Of these employees, 23,632 individuals were full-time (or full-time equivalent) employees, with the
remainder employed on a part-time (less than 30 hours per week) basis. 99.9% of our employees (23,872
individuals) were located in the United States.
• We used a definition that was not total compensation and instead chose the aggregate of the employee’s
base pay and cash incentive bonuses paid during the period of January 1, 2017, through November 30, 2017.
These balances were then annualized, with any anomalous reported earnings being replaced with a substantially
similar employee balance. Reasons for the replacement of anomalous earnings were primarily due to a lack of
adequate length of employment history with the company or the employee incurring a leave of absence during
the analysis period.
• Using this methodology, we determined that the “median employee” was the average of two single employees
– a regional driver and an over-the-road driver.
Finally, to determine the annual total compensation of the “median employee” for 2018, we identified and
calculated the elements of compensation for each of the two identified employees in accordance with the
requirements of Item 402(c)(2)(x) of Regulation S-K. The median of the annual total compensation of all of the
Company’s employees, other than our CEO, represents the average of the annual total compensation of each of
these two “median employees.”
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
67
PROPOSAL TWO
Advisory Vote on Executive
Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank Act, enables our
stockholders to vote to approve, on an advisory (nonbinding) basis, the compensation of our NEOs as disclosed
in the Proxy Statement in accordance with SEC rules. At our Annual Meeting in 2017, our stockholders voted to
recommend that the Company hold future “say-on-pay” votes annually until the Company is next required to hold
an advisory vote on the frequency with which the Company will hold future “say-on-pay” votes, which will be in
2023. Accordingly, we are providing a vote on the resolution set forth below as required by the Dodd-Frank Act
and Section 14A of the Securities Exchange Act of 1934.
As discussed in our Compensation Discussion and Analysis (CD&A) on page 45, our executive compensation
programs for our NEOs, as well as other executives, are designed to be competitive within the transportation
industry and to link executive compensation with the creation of stockholder value. The overall compensation
philosophy is guided by the following principles:
• Compensation levels should be sufficiently competitive to attract and retain key talent. The Company aims to
attract, motivate and retain high-performance talent to achieve and maintain a leading position in its industry.
Our total compensation package should be strongly competitive with other transportation companies.
• Compensation should relate directly to performance and responsibility. Total compensation should be tied to
and vary with performance and responsibility, both at the Company and individual level, in achieving financial,
operational and strategic objectives. Differentiated pay for high-performing individuals should be proportional
to their contributions to the Company’s success.
• Short-term incentive compensation should constitute a significant portion of total executive compensation.
A large portion of total compensation should be tied to performance, and therefore at risk, as position and
responsibility increase. Individuals with greater roles and the ability to directly impact strategic direction and
long-term results should bear a greater proportion of the risk.
•
Long-term incentive compensation, the Company’s MIP, should be closely aligned with stockholders’
interests. Awards of long-term compensation encourage executive officers to focus on the Company’s long-
range growth and development and incent them to manage from the perspective of stockholders with a
meaningful stake in the Company, as well as to focus on long-term career orientation. Participants in the MIP
are required to own Company stock. The requirements are discussed in the CD&A under the caption “Stock
Ownership Guidelines.”
Generally, the Company’s compensation program consists of an annual base salary, short-term cash incentive
awards, and an annual long-term, performance-based equity-based award. The Compensation Committee,
with recommendations from management, works to create what it believes is the best mix of these components
in delivering total direct compensation. Base salaries are not directly related to specific measures of corporate
performance, but are determined by the relevance of experience, the scope and complexity of the position, current
job responsibilities, retention and peer group salaries. The short-term cash incentive awards are tied to operating
income, revenue and EBT. The long-term, equity-based awards utilize restricted share units. The restricted share
units awarded to the Company’s NEOs are performance-based restricted share units, which vest over multiple
years annually upon the Company’s attainment of predetermined operating metrics established and approved by
the Compensation Committee.
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
PROPOSAL TWO Advisory Vote on Executive Compensation
We believe that the Company’s executive compensation programs have been effective in incenting the achievement
of our positive results. We are asking our stockholders to indicate their support for our NEO compensation as
described in the Proxy Statement. This proposal, commonly known as a “say on pay” proposal, gives you as a
stockholder the opportunity to express your views regarding our fiscal year 2018 executive compensation policies
and procedures for NEOs. The vote is not intended to address any specific item of compensation, but rather the
overall compensation of our NEOs and the policies and procedures described in the Proxy Statement. Accordingly,
we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
RESOLVED, that the stockholders of J.B. Hunt Transport Services, Inc. approve, on an advisory
basis, the compensation of the NEOs as disclosed pursuant to Item 402 of Regulation S-K in the
Compensation Discussion and Analysis, compensation tables and related narrative discussion in the
Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders.
Although this is an advisory vote that will not be binding on the Compensation Committee or the Board, we
will carefully review the results of the vote. The Compensation Committee will consider stockholders’ concerns
and take them into account when designing future executive compensation programs. The Board therefore
recommends that you indicate your support of the Company’s executive compensation in fiscal year 2018, as
outlined in the above resolution.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR PROPOSAL NUMBER TWO
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Report of the Audit Committee
The Audit Committee
The 2018 Audit Committee was composed of James L. Robo, Chairman, Douglas G. Duncan, and Sharilyn S.
Gasaway. Each served as a member of the Audit Committee during the full 2018 calendar year. The Company’s
Board has determined that all members of the Audit Committee satisfy the independence and other requirements
for audit committee membership pursuant to the NASDAQ corporate governance listing standards and has also
determined that Messrs. Robo and Duncan and Ms. Gasaway each has the attributes of an audit committee
financial expert as defined by SEC requirements.
The Audit Committee operates under a written charter adopted by the Board. A copy of the Audit Committee
Charter is available on the “Corporate Governance” page of the “Investors” section of the Company’s website at
jbhunt.com. In carrying out its responsibilities, the Audit Committee, among other things:
• monitors the integrity of the financial reporting process, systems of internal accounting controls, and financial
statements and reports of the Company,
•
•
•
•
appoints, retains, compensates and oversees the Company’s independent auditors, including reviewing the
qualifications, performance and independence of the independent auditors,
reviews and preapproves all audit, attest and review services and permitted nonaudit services,
oversees the performance of the Company’s internal audit function, and
oversees the Company’s compliance with legal and regulatory requirements.
In 2018, the Audit Committee met eight times. The Audit Committee schedules its meetings with a view to ensure
that it devotes appropriate attention to all of its responsibilities and duties. The Audit Committee’s meetings
include, whenever appropriate, executive sessions with the Company’s independent auditors and the Company’s
internal auditors, in each case outside the presence of the Company’s management.
In performing its oversight role, the Audit Committee reviewed the audited consolidated financial statements for the
2018 calendar year and met and held discussions with management, the Company’s internal auditors and E&Y,
the Company’s independent registered public accounting firm, to discuss those financial statements and the audit
related thereto. Management has represented to the Audit Committee that the Company’s consolidated financial
statements were prepared in accordance with generally accepted accounting principles.
The Audit Committee discussed with the independent auditors matters required to be discussed by Auditing
Standard 1301 of the Public Company Accounting Oversight Board, as may be modified, supplemented or
amended, which includes, among other items, matters related to the conduct of the audit of the Company’s
consolidated financial statements. The independent auditors also provided the Audit Committee with written
disclosures and the letter required by Rule 3526 of the Public Company Accounting Oversight Board, as may
be modified, supplemented or amended, which relates to the auditors’ independence from the Company and its
related entities, and the Audit Committee discussed with the independent auditors their independence.
Based on the Audit Committee’s discussions with management, the internal auditors and the independent auditors
as described above, and upon its review of the representation of management and the independent auditors and
the reports of the independent auditors, the Audit Committee recommended to the Board that the Company’s
audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the
calendar year ended December 31, 2018, as filed with the SEC.
J.B. Hunt Transport Services, Inc.
2018 Audit Committee Members
James L. Robo, Chairman
Douglas G. Duncan
Sharilyn S. Gasaway
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
PROPOSAL THREE
Ratification of Independent
Registered Public Accounting Firm
The Audit Committee has selected E&Y as the Company’s independent registered public accounting firm to examine
the consolidated financial statements of the Company for the 2019 calendar year. The Board seeks an indication
from our stockholders of their approval or disapproval of the Audit Committee’s selection of E&Y as the Company’s
independent registered public accounting firm for the 2019 calendar year.
E&Y has been our independent auditor since 2005. No relationships exist other than the usual relationships
between auditor and client. Representatives of E&Y are expected to be present at the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a statement if they desire to do so. If our stockholders
do not ratify the appointment of E&Y at the Annual Meeting, the Audit Committee will consider such event in its
selection of the Company’s independent registered public accounting firm for the 2019 calendar year. Additionally,
even if the appointment is ratified, the Audit Committee, at its discretion, may direct the appointment of a different
independent registered public accounting firm at any time during the 2019 calendar year if it determines that such a
change would be in the best interests of the Company and its stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE FOR RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE 2019 CALENDAR YEAR
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AUDIT AND NONAUDIT FEES
The Audit Committee preapproves the audit and nonaudit services to be rendered to the Company, as well as the
fees associated with such services. Generally, management will submit to the Audit Committee a detailed list of
services that it recommends the Audit Committee engage the independent auditors to provide for the calendar
year. The Audit Committee is informed from time to time regarding the nonaudit services actually provided
pursuant to the preapproval process. During the year, the Audit Committee periodically reviews the types of
services and dollar amounts approved and adjusts such amounts, as it deems appropriate. Unless a service to be
provided by the independent auditors has received general preapproval, it will require specific preapproval by the
Audit Committee. The Audit Committee also periodically reviews all nonaudit services to ensure that such services
do not impair the independence of the Company’s independent registered public accounting firm. The Audit
Committee approved all services provided by E&Y for the 2018 and 2017 calendar years. These services included
the audit of the Company’s annual financial statements, audit of the Company’s internal control over financial
reporting, review of the Company’s quarterly financial statements, audit of the Company’s employee benefit
plan, consent for and review of registration statements filed by the Company with the SEC, and tax consultation
services. See “Report of Audit Committee” set forth earlier for a discussion of auditor independence.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
71
PROPOSAL THREE Ratification of Independent Registered Public Accounting Firm
The following table shows the fees billed by E&Y for audit and other services provided to the Company for the
2018 and 2017 calendar years, respectively:
Audit fees (1)
Audit-related fees (2)
Tax fees (3)
All other fees
2018 ($)
1,315,600
28,500
391,748
—
2017 ($)
1,414,370
27,500
534,472
—
(1) Audit fees consisted of the audit of the Company’s annual financial statements, including the audit of the effectiveness of internal
control over financial reporting, the review of the Company’s quarterly reports on Form 10-Q, and consent for and review of
registration statements filed by the Company with the SEC.
(2) Audit-related fees consisted of an audit of the Employee Benefit Plan.
(3) Tax fees consisted principally of federal and state income tax consulting.
The Audit Committee has considered whether the nonaudit services provided by E&Y, including the services
rendered in connection with income tax consultation, were compatible with maintaining E&Y’s independence and
has determined that the nature and substance of the limited nonaudit services did not impair the status of E&Y as
the Company’s independent registered public accounting firm. E&Y did not bill the Company for any other services
during calendar years 2018 and 2017.
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
PROPOSAL THREE Ratification of Independent Registered Public Accounting Firm
Policy on Audit Committee Preapproval of Audit and Permissible Nonaudit Services of Independent
Auditor
The Audit Committee has the responsibility of appointing, setting compensation for and overseeing the work of
the independent auditor and has established a policy to preapprove all audit and permissible nonaudit services
provided by the independent auditor.
Prior to the engagement of the independent auditor for next year’s audit, management will submit to the Audit
Committee for approval an aggregate of services expected to be rendered during that year for each of four
categories of services:
• Audit services include audit work performed related to the financial statements, as well as work that
generally only the independent auditor can reasonably be expected to provide, including comfort letters,
statutory audits, attestation services, and consultation regarding financial accounting and/or reporting
standards.
• Audit-related services are for assurance and related services that are traditionally performed by the
independent auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits,
and special procedures required to meet certain regulatory requirements.
• Tax services include all services performed by the independent auditor’s tax personnel except those services
specifically related to the audit of the financial statements, including fees in the areas of tax compliance, tax
planning and tax advice.
• Other services are those not captured in the other categories. The Company generally doesn’t request such
services from the independent auditor.
Prior to the engagement, the Audit Committee preapproves these services by category of service. The fees are
budgeted and the Audit Committee requires the independent auditor and management to report actual fees
versus the budget periodically throughout the year by category of service. During the year, circumstances may
arise that make it necessary to engage the independent auditor for additional services not contemplated in the
original preapproval. In those instances, the Audit Committee requires specific preapproval before engaging the
independent auditor.
The Audit Committee may delegate preapproval authority to one or more of its members. The member(s) to whom
such authority is delegated must report, for informational purposes only, the preapproval decisions to the Audit
Committee at its next scheduled meeting.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
73
PROPOSAL FOUR
Stockholder Proposal Regarding
Reporting Political Contributions
In accordance with SEC rules, we have set forth below a stockholder proposal, along with the supporting
statement of the stockholder proponent, for which we and the Board accept no responsibility. The International
Brotherhood of Teamsters General Fund (the Fund), located at 25 Louisiana Avenue, N.W., Washington, D.C.
20001, is the proponent of the following stockholder proposal and has advised us that the Fund holds 190 shares
of the Company’s common stock which it has continuously held for at least one year and they intend to present
the following proposal for a vote at the 2019 Annual Meeting.
RESOLVED, that the shareholders of J.B. Hunt Transport Services, Inc. (“J.B. Hunt” or “Company”),
hereby request that the Company provide a report, updated semiannually, disclosing the Company’s:
1. Policies and procedures for making, with corporate funds or assets, contributions and expenditures
(direct or indirect) to— (a) participate or intervene in any campaign on behalf of (or in opposition
to) any candidate for public office, or (b) influence the general public, or any segment thereof, with
respect to an election or referendum.
2. Monetary and non-monetary contributions and expenditures (direct and indirect) used in the manner
described in section 1 above, including:
a. The identity of the recipient as well as the amount paid to each; and,
b. The title(s) of the person(s) in the Company responsible for decision-making.
The report shall be presented to the board of directors or relevant board committee and posted on
the Company’s website within 12 months from the date of the annual meeting. This proposal does not
encompass lobbying spending.
Supporting Statement
As long-term shareholders of J.B. Hunt, we support transparency and accountability in corporate electoral
spending. This includes any activity considered intervention in a political campaign under the Internal Revenue
Code, such as direct and indirect contributions to political candidates, parties, or organizations, and independent
expenditures or electioneering communications on behalf of federal, state, or local candidates.
Disclosure is in the best interest of the company and its shareholders. The Supreme Court recognized this in its
2010 Citizens United decision, which said, “[D]isclosure 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.”
Publicly available records show J.B. Hunt has contributed at least $25,000 in corporate funds since the 2010
election cycle. (CQMoneyLine: http://moneyline.cq.com; National Institute on Money in State Politics:
http://www.followthemoney.org).
However, relying on publicly available data does not provide a complete picture of the Company’s electoral
spending. For example, the Company’s payments to trade associations that may be used for election-related
activities are undisclosed and unknown. This proposal asks the Company to disclose all of its electoral spending,
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
PROPOSAL FOUR Stockholder Proposal Regarding Reporting Political Contributions
including payments to trade associations and other tax-exempt organizations, which may be used for electoral
purposes. This would bring our Company in line with a growing number of leading companies, including Norfolk
Southern, Union Pacific, and CSX, which present such information on their websites.
The Company’s Board and shareholders need comprehensive disclosure to fully evaluate the use of corporate
assets in elections. We urge your support for this critical governance reform.
Board of Directors Statement in Opposition to the Stockholder Proposal
The Board of Directors has carefully considered this stockholder proposal and concluded that it is unnecessary
and not in the best interest of the Company or its stockholders for the reasons described below. The Board of
Directors therefore unanimously recommends voting against this proposal.
The Company is in a highly regulated industry, and actions by elected officials can have a significant impact on
our industry and our business. The Company generally does not make direct political contributions. However,
the Board of Directors and management believe that 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. The Company may, from time to time, make focused lobbying expenditures or
contributions to third party organizations. The Company is also a member of several industry trade organizations.
While the Company’s limited involvement in the legislative, regulatory or electoral process serves an important
corporate purpose, the Company’s related expenses represent only a small fraction of our total annual expenses
(less than 0.004% in fiscal 2018). The Company conducts such activities only in compliance with all applicable
federal, state and local laws. For example, U.S. federal law currently prohibits companies from making corporate
contributions or providing anything of value to any political candidate, campaign committee or other organization in
connection with any federal election. The Company does not make such contributions. The Company is permitted
to make donations to political action committees (PACs), which are generally limited in their ability to advocate on
behalf of specific parties or candidates and are subject to disclosure requirements at the federal and state levels.
The Company has made and may in the future make contributions to such organizations. Details of any such
contributions over $200, including the recipient and amount, are generally made publicly available by the Federal
Election Commission.
The Company’s participation in trade associations and organizations serves various business purposes, most
importantly allowing management to stay current on industry standards and best practices, emerging trends and
other business or technical issues that may impact the Company. While these organizations may engage in political
or lobbying activities, the Company’s membership or participation in its trade associations and organizations is
not to advance political purposes and does not represent the Company’s agreement with all positions, views or
objectives of these associations and organizations. Because the Company’s involvement with trade associations
and third-party organizations is based on reasons unrelated to any political activities and because our involvement
and payments to such associations and organizations do not necessarily reflect the Company’s views on every
action a trade association or organization may take, the Board of Directors believes the proposed report would not
provide meaningful information to investors. Further, the Board of Directors believes that providing such 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 interests to the extent it
diverts management’s focus from the operation of our business.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
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PROPOSAL FOUR Stockholder Proposal Regarding Reporting Political Contributions
For the foregoing reasons, the Board of Directors believes this stockholder proposal is unnecessary and not in
the best interest of the Company or its stockholders. The Board of Directors therefore unanimously recommends
voting against this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE AGAINST PROPOSAL NUMBER FOUR
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING
ARE URGED TO VOTE BY TELEPHONE, MAIL OR INTERNET
IF YOU VOTE BY TELEPHONE OR THE INTERNET, DO NOT RETURN
YOUR PROXY CARD
By Order of the Board of Directors
JENNIFER R. BOATTINI
Corporate Secretary
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
77
Questions and Answers
about the Proxy Materials and
The Annual Meeting
When And Where Is The Annual Meeting?
Date:
Time:
Location: J.B. Hunt Transport Services, Inc.
Thursday, April 18, 2019
10 a.m. Central Daylight Time
Corporate Offices
Million Mile Auditorium
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
What Matters Will Be Voted Upon At The Annual Meeting?
At the Annual Meeting, you will be asked to:
• Consider and vote upon a proposal to elect nominees Douglas G. Duncan, Francesca M. Edwardson, Wayne
Garrison, Sharilyn S. Gasaway, Gary C. George, Bryan Hunt, Coleman H. Peterson, John N. Roberts, III,
James L. Robo, and Kirk Thompson as directors to hold office for a term of one year, expiring at the close of
the Annual Meeting of Stockholders in 2020.
• Consider and approve an advisory resolution regarding the Company’s compensation of its named executive
officers.
• Consider and vote upon a proposal to ratify the appointment of Ernst & Young LLP (E&Y) as the Company’s
independent registered public accounting firm for the 2019 calendar year.
• Consider and vote upon a stockholder proposal requesting the Company to prepare and disclose a report of
the Company’s political contributions policy and political contributions made by the Company.
•
Transact such other business as may properly come before the Annual Meeting or any adjournments thereof.
What Constitutes A Quorum?
The presence, either in person or by proxy, of the holders of at least a majority of our issued and outstanding
shares of common stock entitled to vote is required to constitute a quorum for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes, which are described in more detail below, are counted as
shares present at the Annual Meeting for purposes of determining whether a quorum exists.
Who Is Entitled To Vote?
Only stockholders of record of the Company’s common stock at the close of business on Tuesday, February 12, 2019,
which is the “record date,” are entitled to notice of, and to vote at, the Annual Meeting. Shares that may be voted
include shares that are held:
(1) directly by the stockholder of record, and
(2) beneficially through a broker, bank or other nominee.
Each share of our common stock will be entitled to one vote on all matters submitted for a vote at the Annual Meeting.
As of the record date, there were 108,738,788 shares of our common stock issued and outstanding and entitled
to be voted at the Annual Meeting.
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Questions and Answers about the Proxy Materials and The Annual Meeting
What Is The Difference Between Holding Shares As A “Registered Owner” And A “Beneficial Owner”?
Most of the Company’s stockholders hold their shares through a broker, bank or other nominee rather than directly
in their own name. As summarized below, there are some distinctions between registered shares and those owned
beneficially:
• Registered Owners – If your shares are registered directly in your name with our transfer agent,
Computershare Trust Company N.A., you are, with respect to those shares, the stockholder of record. As
the stockholder of record, you have the right to grant your voting proxy directly to the Company or to vote in
person at the Annual Meeting.
• Beneficial Owners – If your shares are held in a brokerage account, bank or by another nominee, you are, with
respect to those shares, the “beneficial owner” of shares held in “street name.” As the beneficial owner, you
have the right to direct your broker, bank or other nominee on how to vote or to vote in person at the Annual
Meeting. However, because you are not a stockholder of record, you may not vote these shares in person
at the Annual Meeting unless you obtain a “legal proxy” from your broker, bank or other nominee (who is the
stockholder of record) giving you the right to vote the shares.
What Stockholder Approval Is Necessary For Approval Of The Proposals?
• Election of Directors
Each director shall be elected by a vote of the majority of votes cast with respect to that director. This means
that a director must receive “for” votes from more than 50% of the number of shares voted with respect to that
director. However, if the number of nominees is greater than the number of directors to be elected, the directors
will be elected by the vote of a plurality of the shares represented in person or by proxy at any stockholder
meeting. For purposes of this vote, a failure to vote, a vote to abstain or withholding your vote (or direction to
your broker to do so) is not counted as a vote cast and, therefore, will have no effect on the outcome of this vote.
• Advisory vote on the resolution to approve the Company’s compensation of its named executive
officers
Approval of this resolution requires the affirmative vote of a majority of the votes cast at the Annual Meeting.
For purposes of this vote, a failure to vote, a vote to abstain or withholding your vote (or direction to your
broker to do so) is not counted as a vote cast and, therefore, will have no effect on the outcome of this vote.
While this vote is required by law, it will neither be binding on the Company or the Board, nor will it create
or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, the Company or
the Board. However, the Compensation Committee will take into account the outcome of the vote when
considering future executive compensation decisions.
• Ratification of the appointment of E&Y as the Company’s independent registered public
accounting firm
Ratification of the Audit Committee’s appointment of E&Y as the Company’s independent registered public
accounting firm requires the affirmative vote of a majority of the votes cast at the Annual Meeting. For
purposes of this vote, a failure to vote, a vote to abstain or withholding your vote (or direction to your broker
to do so) is not counted as a vote cast and, therefore, will have no effect on the outcome of this vote.
Stockholder ratification is not required for the appointment of the Company’s independent registered public
accounting firm. However, we are submitting the proposal to solicit the opinion of our stockholders.
• Vote on a stockholder proposal requesting the Company to prepare and disclose a report of the
Company’s political contributions policy and political contributions made by the Company
Approval of this resolution requires the affirmative vote of a majority of the votes cast at the Annual Meeting.
For purposes of this vote, a failure to vote, a vote to abstain or withholding your vote (or direction to your
broker to do so) is not counted as a vote cast and, therefore, will have no effect on the outcome of this vote.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
79
Questions and Answers about the Proxy Materials and The Annual Meeting
As of the record date, directors and executive officers of the Company beneficially owned an aggregate 3,946,200
shares of common stock representing 3.6% of our common stock issued and outstanding and, therefore, 3.6%
of the voting power entitled to vote at the Annual Meeting. The Company believes that its directors and executive
officers currently intend to vote their shares as follows:
• FOR the election of directors for one (1) year
• FOR the resolution approving the Company’s compensation of its named executive officers
• FOR ratification of the appointment of E&Y as the Company’s independent registered public accounting firm
for the 2019 calendar year
• AGAINST the stockholder proposal requesting the Company to prepare and disclose a report of the
Company’s political contributions policy and political contributions made by the Company
May I Vote My Shares In Person At The Annual Meeting?
If you are the registered owner of shares of the Company’s common stock on the record date, you have the right
to vote your shares in person at the Annual Meeting.
If you are the beneficial owner of shares of the Company’s common stock on the record date, you may vote these
shares in person at the Annual Meeting if you request and obtain a legal proxy from your broker, bank or other
nominee (the stockholder of record) giving you the right to vote the shares at the Annual Meeting, complete such
legal proxy and present it to the Company at the Annual Meeting.
Even if you plan to attend the Annual Meeting, we recommend that you submit your proxy card or voting
instructions so that your vote will be counted if you later decide not to attend the Annual Meeting.
How Can I Vote My Shares Without Attending The Annual Meeting?
If you are a registered owner, you may instruct the named proxy holders on how to vote your shares by completing,
signing, dating and returning the enclosed proxy card in the postage-paid envelope provided with this Proxy
Statement, or by using the Internet voting site or the toll-free telephone number listed on the proxy card. Specific
instructions for using the Internet and telephone voting systems are provided on the proxy card. The Internet and
telephone voting systems will be available until 11:59 p.m. Central Daylight Time on Wednesday, April 17, 2019
(the day before the Annual Meeting).
If you are the beneficial owner of shares held in “street name,” you should instruct your broker, bank or other
nominee on how to vote your shares. Your broker, bank or other nominee has enclosed with this Proxy Statement
a voting instruction card for you to use in directing your nominee on how to vote your shares. The instructions from
your nominee will indicate whether Internet or telephone voting is available and, if so, will provide details regarding
how to use those systems.
If My Shares Are Held In “Street Name,” Will My Broker, Bank Or Other Nominee Vote My Shares For Me?
If you hold shares in “street name” through a broker, bank or other nominee, your broker, bank or nominee may
not be permitted to exercise voting discretion with respect to some of the matters to be acted upon at the Annual
Meeting. Under current stock exchange rules, brokers who do not have instructions from their customers may
not use their discretion in voting their customers’ shares on certain specific matters that are not considered to
be “routine” matters, including the election of directors, executive compensation and other significant matters.
The proposals in this Proxy Statement regarding the election of directors, the advisory vote concerning executive
compensation, and the Company’s political contributions policy are not considered to be routine matters.
Therefore, without your specific instructions, your shares will not be voted on these matters and will
not be counted in determining the number of shares necessary for approval. Shares represented by such
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Questions and Answers about the Proxy Materials and The Annual Meeting
“broker non-votes,” however, will be counted in determining whether there is a quorum. You should follow the
directions provided by your nominee regarding instructions on how to vote your shares.
Ratification of the appointment of E&Y as the Company’s independent registered public accounting firm is considered
a routine matter and, therefore, if beneficial owners fail to give voting instructions, brokers, banks and other nominees
will have the discretionary authority to vote shares of our common stock with respect to this proposal.
What Is A Broker Non-Vote?
Generally, a “broker non-vote” occurs when a broker, bank or other nominee that holds shares in “street name” for
a customer is precluded from exercising voting discretion on a particular proposal because:
(1) the beneficial owner has not instructed the nominee on how to vote, and
(2) the nominee lacks discretionary voting power to vote such issues.
Under NASDAQ rules, a nominee does not have discretionary voting power with respect to the approval of
“nonroutine” matters absent specific voting instructions from the beneficial owners of such shares.
How Will My Proxy Be Voted?
Shares represented by a properly executed proxy (in paper form, by Internet or by telephone) that is received
in a timely manner, and not subsequently revoked, will be voted at the Annual Meeting or any adjournment or
postponement thereof in the manner directed on the proxy. Kirk Thompson and John N. Roberts, III are named as
proxies in the proxy form and have been designated by the Board as the directors’ proxies to represent you and
vote your shares at the Annual Meeting. All shares represented by a properly executed proxy on which no choice is
specified will be voted:
(1) FOR the election of the nominees for director named in this Proxy Statement,
(2) FOR the resolution approving the Company’s compensation of its named executive officers,
(3) FOR ratification of the appointment of E&Y as the Company’s independent registered public accounting firm for
the 2019 calendar year,
(4) AGAINST the stockholder proposal requesting the Company to prepare and disclose a report of the
Company’s political contributions policy and political contributions made by the Company, and
(5) in accordance with the proxy holders’ best judgment as to any other business that properly comes before the
Annual Meeting.
This Proxy Statement is considered to be voting instructions for the trustees of the J.B. Hunt Transport Services,
Inc. Employee Retirement Plan for our common stock allocated to individual accounts under this plan. If account
information is the same, participants in the plan (who are stockholders of record) will receive a single proxy
representing all of their shares. If a plan participant does not submit a proxy to us, the trustees of the plan in which
shares are allocated to his or her individual account will vote such shares in the same proportion as the total shares
in such plan for which directions have been received.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
81
Questions and Answers about the Proxy Materials and The Annual Meeting
May I Revoke My Proxy And Change My Vote?
Yes. You may revoke your proxy and change your vote at any time prior to the vote at the Annual Meeting.
If you are the registered owner, you may revoke your proxy and change your vote by:
(1) submitting a new proxy bearing a later date (which automatically revokes the earlier proxy),
(2) giving notice of your changed vote to us in writing mailed to the attention of Jennifer R. Boattini, Corporate
Secretary, at our executive offices, or
(3) attending the Annual Meeting and giving oral notice of your intention to vote in person.
You should be aware that simply attending the Annual Meeting will not in and of itself constitute a revocation of
your proxy.
Who Will Pay The Costs Of Soliciting Proxies?
Proxies will be solicited initially by mail. Further solicitation may be made in person or by telephone, electronic
mail or facsimile. The Company will bear the expense of preparing, printing and mailing this Proxy Statement and
accompanying materials to our stockholders. Upon request, the Company will reimburse brokers, banks and
other nominees for reasonable expenses incurred in forwarding copies of the proxy materials relating to the Annual
Meeting to the beneficial owners of our common stock.
In 2018, the Company retained Broadridge, an independent proxy solicitation firm, to assist in soliciting proxies
from stockholders. The Company paid Broadridge a fee of approximately $66,000 as compensation for its
services and was reimbursed for its out-of-pocket expenses. The fee amount was not contingent on the number
of stockholder votes cast in favor of any proposal, and Broadridge is prohibited from making any recommendation
to our stockholders to either accept or reject any proposal or otherwise express an opinion concerning a proposal.
Proxy solicitation fees in 2019 are expected to be comparable to those paid in 2018.
What Other Business Will Be Presented At The Annual Meeting?
As of the date of this Proxy Statement, the Board knows of no other business that may properly be, or is likely
to be, brought before the Annual Meeting. If any other matters should arise at the Annual Meeting, the persons
named as proxy holders, Kirk Thompson and John N. Roberts, III, will have the discretion to vote your shares
on any additional matters properly presented for a vote at the meeting. If, for any unforeseen reason, any of the
director nominees are not available to serve as a director, the named proxy holders will vote your proxy for such
other director candidate or candidates as may be nominated by the Board.
What Is The Deadline For Stockholder Proposals For The 2020 Annual Meeting?
In order for a stockholder proposal to be eligible to be included in the Company’s Proxy Statement and proxy card
for the 2020 Annual Meeting of Stockholders, the proposal:
(1) must be received by the Company at its executive offices, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas
72745, Attention: Corporate Secretary, on or before November 9, 2019, and
(2) must concern a matter that may be properly considered and acted upon at the Annual Meeting in accordance
with applicable laws, regulations and the Company’s Bylaws and policies, and must otherwise comply with
Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the Exchange Act).
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
Questions and Answers about the Proxy Materials and The Annual Meeting
In connection with our 2020 Annual Meeting of Stockholders, if we do not receive notice of a matter or proposal to
be considered by January 23, 2020, then the persons appointed by our Board of Directors to act as proxy holders
for such Annual Meeting (named in the form of proxy) will be allowed to use their discretionary voting authority with
respect to any such matter or proposal properly presented for a vote at such meeting.
Where Can I Find The Voting Results Of The Annual Meeting?
The Company will publish final voting results of the Annual Meeting on a Form 8-K within four days after the annual
stockholders meeting on April 18, 2019.
What Should I Do If I Receive More Than One Set Of Voting Materials?
You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and
multiple proxies or voting instruction cards. For example, if you hold your shares in more than one brokerage
account, you may receive a separate voting instruction card for each brokerage account. If you are a registered
owner and your shares are registered in more than one name, you will receive more than one proxy card. Please
vote each proxy and instruction card that you receive.
What Is Householding?
In an effort to reduce printing costs and postage fees, the Company has adopted a practice approved by the
Securities and Exchange Commission (the SEC) called “householding.” Under this practice, certain stockholders who
have the same address and last name will receive only one copy of this Proxy Statement and the Company’s Annual
Report, unless one or more of these stockholders notifies the Company that he or she wishes to continue receiving
individual copies. Stockholders who participate in householding will continue to receive separate proxy cards.
If you share an address with another stockholder and received only one copy of this Proxy Statement and the
Company’s Annual Report and would like to request a separate copy of these materials, or if you do not wish to
participate in householding in the future, please:
(1) mail such request to J.B. Hunt Transport Services, Inc., Attention: Corporate Secretary, 615 J.B. Hunt
Corporate Drive, Lowell, Arkansas 72745, or
(2) call the Corporate Secretary toll-free at 800-643-3622.
Similarly, you may also contact the Company if you received multiple copies of the Company’s proxy materials and
would prefer to receive a single copy in the future.
J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
83
Questions and Answers about the Proxy Materials and The Annual Meeting
What Do I Need To Do Now?
First, read this Proxy Statement carefully. Then, if you are a registered owner, you should, as soon as possible, submit
your proxy by executing and returning the proxy card or by voting electronically via the Internet or by telephone. If you
are the beneficial owner of shares held in “street name,” then you should follow the voting instructions of your broker,
bank or other nominee. Your shares will be voted in accordance with the directions you specify. If you submit an
executed proxy card to the Company, but fail to specify voting directions, your shares will be voted:
(1) FOR the election of the nominees for director named in this Proxy Statement,
(2) FOR the resolution approving the Company’s compensation of its named executive officers,
(3) FOR ratification of the appointment of E&Y as the Company’s independent registered public accounting firm for
the 2019 calendar year, and
(4) AGAINST the stockholder proposal requesting the Company to prepare and disclose a report of the
Company’s political contributions policy and political contributions made by the Company
Who Can Help Answer My Questions?
If you have questions concerning a proposal or the Annual Meeting, if you would like additional copies of this Proxy
Statement, or if you need directions to or special assistance at the Annual Meeting, please call the Corporate
Secretary toll-free at 800-643-3622. In addition, information regarding the Annual Meeting is available via the
Internet at our website, jbhunt.com.
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J.B. HUNT TRANSPORT SERVICES, INC. Proxy Statement
J . B . H U N T T R A N S P O R T S E R V I C E S , I N C .
ANNUAL REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2018
Commission file number
0-11757
J.B. HUNT TRANSPORT SERVICES, INC.
(Exact name of registrant as specified in its charter)
Arkansas
(State or other jurisdiction of incorporation or organization)
71-0335111
(I.R.S. Employer Identification No.)
615 J.B. Hunt Corporate Drive
Lowell, Arkansas
(Address of principal executive offices)
72745-0130
(ZIP Code)
Registrant’s telephone number, including area code: 479-820-0000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 Par Value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes __X__ No _____
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes _____ No __X__
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes __X__ No _____
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes __X__ No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is
not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer __X__ Accelerated filer _____ Non-accelerated filer _____ Smaller reporting company
_____ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes _____ No __X__
The aggregate market value of 86,721,074 shares of the registrant’s $0.01 par value common stock held by non-affiliates as of
June 30, 2018, was $10.5 billion (based upon $121.55 per share).
As of February 12, 2019, the number of outstanding shares of the registrant’s common stock was 108,710,825.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Notice and Proxy Statement for the Annual Meeting of Stockholders, to be held April 18, 2019, are
incorporated by reference in Part III of this Form 10-K.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
85
FORWARD-LOOKING STATEMENTS
This report, including documents which are incorporated by reference and other documents which we file
periodically with the Securities and Exchange Commission (SEC), contains statements that may be considered to
be “forward-looking statements.” Such statements relate to our predictions concerning future events or operations
and are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements are inherently uncertain, subject to
risks, and should be viewed with caution. These statements are based on our belief or interpretation of information
currently available. Stockholders and prospective investors are cautioned that actual results and future events
may differ materially from these forward-looking statements as a result of many factors. Some of the factors and
events that are not within our control and that could have a material impact on future operating results include:
general economic and business conditions, competition and competitive rate fluctuations, cost and availability
of diesel fuel, ability to attract and retain qualified drivers and delivery personnel, a loss of one or more major
customers, interference with or termination of our relationships with certain railroads, rail service delays, insurance
costs and availability, claims expense, retention of key employees, terrorist attacks or actions, acts of war, adverse
weather conditions, disruption or failure of information systems, new or different environmental or other laws and
regulations, operational disruption or adverse effects of business acquisitions, increased costs for new revenue
equipment or decreases in the value of used equipment, and the ability of revenue equipment manufacturers to
perform in accordance with agreements for guaranteed equipment trade-in values.
You should understand that many important factors, in addition to those listed above, could impact us financially. Our
operating results may fluctuate as a result of these and other risk factors or events as described in our filings with the
SEC. Some important factors that could cause our actual results to differ from estimates or projections contained in
the forward-looking statements are described under “Risk Factors” in Item 1A. We assume no obligation to update
any forward-looking statement to the extent we become aware that it will not be achieved for any reason.
PART I
ITEM 1. BUSINESS
OVERVIEW
We are one of the largest surface transportation, delivery, and logistics companies in North America. J.B. Hunt
Transport Services, Inc. is a publicly held holding company that, together with our wholly owned subsidiaries,
provides safe and reliable transportation and delivery services to a diverse group of customers and consumers
throughout the continental United States, Canada, and Mexico. Unless otherwise indicated by the context,
“we,” “us,” “our,” the “Company”, and “JBHT” refer to J.B. Hunt Transport Services, Inc. and its consolidated
subsidiaries. We were incorporated in Arkansas on August 10, 1961, and have been a publicly held company
since our initial public offering in 1983. Our service offerings include transportation of full-truckload containerized
freight, which we directly transport utilizing our company-controlled revenue equipment and company drivers or
independent contractors. We have arrangements with most of the major North American rail carriers to transport
freight in containers or trailers. We also provide customized freight movement, revenue equipment, labor, systems,
and delivery services that are tailored to meet individual customers’ requirements and typically involve long-term
contracts. These arrangements are generally referred to as dedicated services and may include multiple pickups
and drops, local and home deliveries, freight handling, specialized equipment, and freight network design. Our
local and home delivery services typically are provided through a network of cross-dock service centers throughout
the continental United States. Utilizing a network of thousands of reliable third-party carriers, we also provide
comprehensive transportation and logistics services. In addition to full-load, dry-van operations, these unrelated
outside carriers also provide flatbed, refrigerated, less-than-truckload (LTL), and other specialized equipment,
drivers, and services. Our customers’ business activities are extremely diverse, and our customer base includes a
large number of Fortune 500 companies.
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J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
We believe our ability to offer multiple services, utilizing our four business segments and a full complement of
logistics services through third parties, represents a competitive advantage. These segments include Intermodal
(JBI), Dedicated Contract Services® (DCS), Integrated Capacity Solutions (ICS), and Truckload (JBT). Our business
is somewhat seasonal, with slightly higher freight volumes typically experienced during August through early
November. Our DCS segment is subject to somewhat less seasonal variation than our other segments.
Additional general information about us is available at jbhunt.com. We make a number of reports and other
information available free of charge on our website, including our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable
after such material is electronically filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934. Our website also contains corporate governance guidelines, our code of ethics,
our whistleblower policy, Board committee charters, and other corporate policies. The information on our website
is not, and shall not be deemed to be, a part of this annual report on Form 10-K or incorporated into any other
filings we make with the SEC.
OUR MISSION AND STRATEGY
We forge long-term partnerships with key customers that include supply-chain management as an integral part of
their strategies. Working in concert, we strive to drive out excess cost, add value and function as an extension of
their enterprises. Our strategy is based on utilizing an integrated, multimodal approach to provide capacity-oriented
solutions centered on delivering customer value and industry-leading service. We believe our unique operating
strategy can add value to customers and increase our profits and returns to stockholders.
We continually analyze where we believe additional capital should be invested and management’s resources
should be focused to provide added benefits to our customers. These actions should, in turn, yield increasing
returns to our stockholders.
Increasingly, our customers are seeking energy-efficient transportation solutions to reduce both cost and
greenhouse-gas emissions. Our intermodal service addresses both demands. Further, we are customizing
dedicated solutions aimed at minimizing transportation-related carbon emissions. Efforts to improve fleet fuel
efficiency are ongoing, and we are an Environmental Protection Agency (EPA) SmartWaySM Transport Partner.
As always, we continue to ingrain safety into our corporate culture and strive to conduct all of our operations as
safely as possible.
OPERATING SEGMENTS
Segment information is also included in Note 13 to our Consolidated Financial Statements.
JBI Segment
The transportation service offerings of our JBI segment utilize arrangements with most major North American
rail carriers to provide intermodal freight solutions for our customers throughout the continental United States,
Canada, and Mexico. Our JBI segment began operations in 1989, forming a unique partnership with what is now
the BNSF Railway Company (BNSF); this was a watershed event in the industry and the first agreement that linked
major rail and truckload carriers in a joint service environment. JBI draws on the intermodal services of rail carriers
for the underlying linehaul movement of its equipment between rail ramps. The origin and destination pickup and
delivery services (drayage) are handled by our company-owned tractors for the majority of our intermodal loads,
while third-party dray carriers are used where economical. By performing our own drayage services, we are able to
provide a cost-competitive, seamless coordination of the combined rail and dray movements for our customers.
JBI operates 88,739 pieces of company-owned trailing equipment systemwide. The fleet primarily consists of 53-
foot, high-cube containers and is designed to take advantage of intermodal double-stack economics and superior
ride quality. We own and maintain our own chassis fleet, consisting of 81,442 units. The containers and chassis
are uniquely designed so that they may only be paired together, which we feel creates an operational competitive
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
87
advantage. JBI also manages a fleet of 5,017 company-owned tractors, 633 independent contractor trucks, and
6,208 company drivers. At December 31, 2018, the total JBI employee count was 7,081. Revenue for the JBI
segment in 2018 was $4.72 billion.
DCS Segment
DCS focuses on private fleet conversion and creation in replenishment, specialized equipment, and final-mile
delivery services. We specialize in the design, development, and execution of supply-chain solutions that support
a variety of transportation networks. Our final-mile delivery services are supported with a network of approximately
102 cross-dock and other delivery system network locations nationwide, with 98% of the continental U.S.
population living within 150 miles of a network location. Contracts with our customers are long-term, ranging from
three to 10 years, with the average being approximately five years. Pricing of our contracts typically involves cost-
plus arrangements, with our fixed costs being recovered regardless of equipment utilization, but is customized
based on invested capital and duration.
At December 31, 2018, this segment operated 9,652 company-owned trucks, 412 customer-owned trucks,
and 51 independent contractor trucks. DCS also operates 20,344 owned pieces of trailing equipment and 6,366
customer-owned trailers. The DCS segment employed 13,747 people, including 11,331 drivers, at December 31,
2018. DCS revenue for 2018 was $2.16 billion.
ICS Segment
ICS provides traditional freight brokerage and transportation logistics solutions to customers through relationships
with thousands of third-party carriers and integration with our owned equipment. By leveraging the J.B.
Hunt brand, systems, and network, we provide a broader service offering to customers by providing flatbed,
refrigerated, expedited, and LTL, as well as a variety of dry-van and intermodal solutions. ICS provides single-
source logistics management for customers desiring to outsource their transportation functions and utilize our
proven supply-chain technology and design expertise to improve efficiency. ICS operates 44 remote sales offices
or branches, as well as on-site logistics personnel working in direct contact with customers.
At December 31, 2018, the ICS segment employed 1,142 people, with a carrier base of approximately 73,100.
ICS revenue for 2018 was $1.33 billion.
JBT Segment
The service offering in this segment is full-load, dry-van freight, utilizing tractors operating over roads and
highways. We typically pick up freight at the dock or specified location of the shipper and transport the load
directly to the location of the consignee. We use our company-owned tractors and employee drivers or
independent contractors who agree to transport freight in our trailers.
At December 31, 2018, the JBT segment operated 1,139 company-owned tractors and employed 1,440 people,
1,200 of whom were drivers. At December 31, 2018, we had 973 independent contractors operating in the JBT
segment. JBT revenue for 2018 was $417 million.
Marketing and Operations
We transport, or arrange for the transportation of, a wide range of freight, including general merchandise, specialty
consumer items, appliances, forest and paper products, food and beverages, building materials, soaps and
cosmetics, automotive parts, agricultural products, electronics, and chemicals. Our customers’ business activities
are extremely diverse, and our customer base includes a large number of Fortune 500 companies. We provide a
broad range of transportation services to shippers seeking to use a variety of transportation options to optimize
their supply-chain logistics needs.
We generally market all of our service offerings through a nationwide sales and marketing network. We use a
specific sales force in DCS due to the length, complexity, and specialization of the sales cycle. In accordance with
our typical arrangements, we bill the customer for all services, and we, in turn, pay all third parties for their portion
of transportation services provided.
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J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
People
We believe that one of the factors differentiating us from our competitors is our service-oriented people. As
of December 31, 2018, we had 27,621 employees, which consisted of 18,739 company drivers, 7,589 office
personnel, and 1,293 maintenance technicians. We also had arrangements with approximately 1,657 independent
contractors to transport freight in our trailing equipment. None of our employees are represented by unions or
covered by collective bargaining agreements.
Revenue Equipment
Our JBI segment utilizes uniquely designed high-cube containers and chassis, which can only be paired with each
other and can be separated to allow the containers to be double-stacked on rail cars. The composition of our
DCS trailing fleet varies with specific customer requirements and may include dry-vans, flatbeds, temperature-
controlled, curtain-side vans, straight trucks, and dump trailers. We primarily utilize third-party carriers’ tractor and
trailing equipment for our ICS segment. Our JBT segment operates primarily 53-foot dry-van trailers.
As of December 31, 2018, our company-owned tractor and truck fleet consisted of 15,808 units. In addition, we
had 1,657 independent contractors who operate their own tractors but transport freight in our trailing equipment.
We operate with standardized tractors in as many fleets as possible, particularly in our JBI and JBT fleets. Due to
our customers’ preferences and the actual business application, our DCS fleet is extremely diversified. We believe
operating with relatively newer revenue equipment provides better customer service, attracts quality drivers, and
lowers maintenance expense. At December 31, 2018, the average age of our combined tractor fleet was 2.3
years, while our containers averaged 6.4 years of age and our trailers averaged 6.3 years. We perform routine
servicing and preventive maintenance on our equipment at our regional terminal facilities.
Competition and the Industry
The freight transportation markets in which we operate are frequently referred to as highly fragmented and
competitive. Our JBI segment competes with other intermodal marketing companies; other full-load carriers that
utilize railroads for a portion of the transportation service; and, to a certain extent, some railroads directly. The
diversified nature of the services provided by our DCS segment attracts competition from customers’ private
fleets, other private fleet outsourcing companies, equipment leasing companies, local and regional delivery service
providers, and some truckload carriers. Our ICS segment utilizes the fragmented nature of the truck industry and
competes with other non-asset-based logistics companies and freight brokers, as well as full-load carriers. The
full-load freight competition of our JBT segment includes thousands of carriers, many of which are very small.
While we compete with a number of smaller carriers on a regional basis, only a limited number of companies
represent competition in all markets across the country.
We compete with other transportation service companies primarily in terms of price, on-time pickup and delivery
service, availability and type of equipment capacity, and availability of carriers for logistics services.
Regulation
Our operations as a for-hire motor carrier are subject to regulation by the U.S. Department of Transportation
(DOT) and the Federal Motor Carrier Safety Administration (FMCSA), and certain business is also subject to
state rules and regulations. The DOT periodically conducts reviews and audits to ensure our compliance with
federal safety requirements, and we report certain accident and other information to the DOT. Our operations into
and out of Canada and Mexico are subject to regulation by those countries. We are also subject to a variety of
requirements of national, state, and local governments, including the U.S. Environmental Protection Agency and
the Occupational Safety and Health Administration.
We continue to monitor the actions of the FMCSA and other regulatory agencies, and evaluate all proposed rules
to determine their impact on our operations.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
89
ITEM 1A. RISK FACTORS
In addition to the forward-looking statements outlined previously in this Form 10-K and other comments regarding
risks and uncertainties, the following risk factors should be carefully considered when evaluating our business. Our
business, financial condition or financial results could be materially and adversely affected by any of these risks.
Our business is dependent upon a number of factors that may have a material adverse effect on the results of
our operations, many of which are beyond our control. In addition to general U.S. economic trends, and to a
lesser extent global economic trends, these factors include interference with or termination of our relationships
with certain railroads; rail service delays; disruptions to U.S. port-of-call activity; significant increases or rapid
fluctuations in fuel prices, fuel taxes, interest rates, insurance premiums, self-insurance levels, excess capacity
in the intermodal or trucking industries, or license and registration fees; terrorist attacks or actions; acts of war;
adverse weather conditions; disruption or failure of information technology systems; increased costs for new
revenue equipment or decreases in the value of used equipment; increased tariffs assessed on or disruptions in
the procurement of imported revenue equipment; volatile financial credit markets; operational disruption or adverse
effects of business acquisitions; and difficulty in attracting and retaining qualified drivers, independent contractors,
and third-party carriers.
We are also affected by recessionary economic cycles and downturns in customers’ business cycles, particularly
in market segments and industries where we have a significant concentration of customers. Economic conditions
represent a greater potential for loss, and we may be required to increase our reserve for bad debt losses. In
addition, our results of operations may be affected by seasonal factors. Customers tend to reduce shipments after
the winter holiday season, and our operating expenses tend to be higher in the winter months, primarily due to
colder weather, which causes higher fuel consumption from increased idle time and higher maintenance costs.
We depend on third parties in the operation of our business.
Our JBI business segment utilizes railroads in the performance of its transportation services. The majority of these
services are provided pursuant to contractual relationships with the railroads. While we have agreements with a
number of Class I railroads, the majority of our business travels on the BNSF and the Norfolk Southern railways.
A material change in the relationship with, the ability to utilize one or more of these railroads or the overall service
levels provided by these railroads could have a material adverse effect on our business and operating results. In
addition, a portion of the freight we deliver is imported to the United States through ports of call that are subject
to labor union contracts. Work stoppages or other disruptions at any of these ports could have a material adverse
effect on our business.
In January 2017, we exercised our right to utilize the arbitration process to review the division of revenue collected
beginning May 1, 2016, as well as to clarify other issues, under our Joint Service Agreement with BNSF. BNSF
requested the same, and the arbitration process is on-going. On October 5, 2018, we received the arbitrators’
Interim Award. The details of the Interim Award are confidential and require the parties to submit additional
information requested by the arbitrators to decide certain unresolved matters. For the determined components
of the Interim Award, we recorded an $18.3 million pre-tax charge in the third quarter 2018, related to certain
charges claimed by BNSF for specific services requested for customers from April 2014 through May 2018. On
December 7, 2018 the arbitrators’ issued their Clarified Interim Award of October 5, 2018 resulting from some of
the parties’ additional submissions to the Panel regarding certain issues related to determining the revenue division
between the parties. On January 11, 2019, the Panel issued its Second Interim Award ordering that $89.4 million
is due from the Company to BNSF resulting from the adjusted revenue divisions relating to the 2016 period at
issue ($52.1 million) and for calendar year 2017 ($37.3 million). The parties have been instructed to make further
submissions on the revenue divisions for calendar year 2018 and going forward, as well as other confidential
issues raised during the arbitration process so that the panel can issue an appropriate interim and/or final award
regarding all issues raised during the proceeding. We recorded pretax charges for contingent liabilities in the fourth
quarter 2018 of $89.4 million claimed by the BNSF for the period May 1, 2016 through December 31, 2017 and
$44.6 million for the period January 1, 2018 through December 31, 2018, for a total of $134 million.
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J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
The other financial implications from the Interim Award and the Clarified Interim Award will not be fully determined
until the arbitrators issue additional award(s) following their review of each party’s requested additional
submissions. At this time, we are unable to reasonably predict the final outcome of the arbitration, and, as such,
no further gain or loss contingency can be determined or recorded. If decided adversely, this matter could result
in a liability material to our financial condition or results of operations. BNSF provides a significant amount of rail
transportation services to our JBI business segment. Normal commercial business activity between the parties,
including load tendering, load tracing, billing and payments, is expected to continue on a timely basis.
We also utilize independent contractors and third-party carriers to complete our services. These third parties are
subject to similar regulation requirements, which may have a more significant impact on their operations, causing
them to exit the transportation industry. Aside from when these third parties may use our trailing equipment to fulfill
loads, we do not own the revenue equipment or control the drivers delivering these loads. The inability to obtain
reliable third-party carriers and independent contractors could have a material adverse effect on our operating
results and business growth.
Rapid changes in fuel costs could impact our periodic financial results.
Fuel costs can be very volatile. We have a fuel surcharge revenue program in place with the majority of our
customers, which has historically enabled us to recover the majority of higher fuel costs. Most of these programs
automatically adjust weekly depending on the cost of fuel. However, there can be timing differences between
a change in our fuel cost and the timing of the fuel surcharges billed to our customers. In addition, we incur
additional costs when fuel price increases cannot be fully recovered due to our engines being idled during cold or
warm weather and empty or out-of-route miles that cannot be billed to customers. Rapid increases in fuel costs or
shortages of fuel could have a material adverse effect on our operations or future profitability. As of December 31,
2018, we had no derivative financial instruments to reduce our exposure to fuel-price fluctuations.
Insurance and claims expenses could significantly reduce our earnings.
Our future insurance and claims expenses might exceed historical levels, which could reduce our earnings. If the
number or severity of claims for which we are self-insured increases, our operating results could be adversely
affected. We have policies in place for 2019 with substantially the same terms as our 2018 policies for personal
injury, property damage, workers’ compensation, and cargo loss or damage, with the exception of decreasing our
self-insured portion of workers’ compensation claims to zero for nearly all states. We purchase insurance coverage
for the amounts above which we are self-insured. If these expenses increase and we are unable to offset the
increase with higher freight rates, our earnings could be materially and adversely affected.
We derive a significant portion of our revenue from a few major customers, the loss of one or more of
which could have a material adverse effect on our business.
For the calendar year ended December 31, 2018, our top 10 customers, based on revenue, accounted for
approximately 30% of our revenue. Our JBI, ICS, and JBT segments typically do not have long-term contracts
with their customers. While our DCS segment business may involve long-term written contracts, those contracts
may contain cancellation clauses, and there is no assurance that our current customers will continue to utilize our
services or continue at the same levels. A reduction in or termination of our services by one or more of our major
customers could have a material adverse effect on our business and operating results.
We operate in a regulated industry, and increased direct and indirect costs of compliance with, or liability
for violation of, existing or future regulations could have a material adverse effect on our business.
The DOT, FMCSA, and various state agencies exercise broad powers over our business, generally governing matters
including authorization to engage in motor carrier service, equipment operation, safety, and financial reporting. We
are audited periodically by the DOT to ensure that we are in compliance with various safety, hours-of-service, and
other rules and regulations. If we were found to be out of compliance, the DOT could restrict or otherwise impact
our operations. Our failure to comply with any applicable laws, rules or regulations to which we are subject, whether
actual or alleged, could expose us to fines, penalties or potential litigation liabilities, including costs, settlements and
judgments. Further, these agencies could institute new laws, rules or regulations or issue interpretation changes to
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
91
existing regulations at any time. Compliance with new laws, rules or regulations could substantially impair labor and
equipment productivity, increase our costs or impact our ability to offer certain services.
Difficulty in attracting and retaining drivers and delivery personnel could affect our profitability and
ability to grow.
If we are unable to attract and retain the necessary quality and number of employees, we could be required to
significantly increase our employee compensation package, let revenue equipment sit idle, dispose of the equipment
altogether, or rely more on higher-cost third-party carriers, which could adversely affect our growth and profitability.
In addition, our growth could be limited by an inability to attract third-party carriers upon whom we rely to provide
transportation services.
A determination that independent contractors are employees could expose us to various liabilities and
additional costs.
Tax and other regulatory authorities often seek to assert that independent contractors in the transportation service
industry are employees rather than independent contractors. There can be no assurance that interpretations that
support the independent contractor status will not change or that various authorities will not successfully assert a
position that re-classifies independent contractors to be employees. If our independent contractors are determined
to be our employees, that determination could materially increase our exposure under a variety of federal and
state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, as well as our
potential liability for employee benefits. In addition, such changes may be applied retroactively, and if so, we may
be required to pay additional amounts to compensate for prior periods. Any of the above increased costs would
adversely affect our business and operating results.
We may be subject to litigation claims that could result in significant expenditures.
We by the nature of our operations are exposed to the potential for a variety of litigation, including personal injury
claims, vehicular collisions and accidents, alleged violations of federal and state labor and employment laws, such
as class action lawsuits alleging wage and hour violations and improper pay, commercial and contract disputes,
cargo loss and property damage claims. While we purchase insurance coverage at levels we deem adequate, future
litigation may exceed our insurance coverage or may not be covered by insurance. We accrue a provision for a
litigation matter according to applicable accounting standards based on the ongoing assessment of the strengths
and weaknesses of the litigation, its likelihood of success, and an evaluation of the possible range of loss. Our inability
to defend ourselves against a significant litigation claim, could have a material adverse effect on our financial results.
We rely significantly on our information technology systems, a disruption, failure or security breach of
which could have a material adverse effect on our business.
We rely on information technology throughout all areas of our business to initiate, track, and complete customer
orders; process financial and nonfinancial data; compile results of operations for internal and external reporting;
and achieve operating efficiencies and growth. Our information technology systems may be susceptible to
various interruptions, including equipment or network failures, failed upgrades or replacement of software, user
error, power outages, natural disasters, cyber-attacks, terrorist attacks, computer viruses, hackers, or other
security breaches. We have mitigated our exposure to these risks through the establishment and maintenance
of technology security programs and disaster recovery plans, but these mitigating activities may not be sufficient.
A significant disruption, failure or security breach in our information technology systems could have a material
adverse effect on our business, which could include operational disruptions, loss of confidential information,
external reporting delays or errors, legal claims, or damage to our business reputation.
We operate in a competitive and highly fragmented industry. Numerous factors could impair our ability
to maintain our current profitability and to compete with other carriers and private fleets.
We compete with many other transportation service providers of varying sizes and, to a lesser extent, with LTL
carriers and railroads, some of which have more equipment and greater capital resources than we do. Additionally,
some of our competitors periodically reduce their freight rates to gain business, especially during times of reduced
growth rates in the economy, which may limit our ability to maintain or increase freight rates or to maintain our
profit margins.
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J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
In an effort to reduce the number of carriers it uses, a customer often selects so-called “core carriers” as approved
transportation service providers, and in some instances, we may not be selected. Many customers periodically
accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in
the loss of some business to competitors. Also, certain customers that operate private fleets to transport their own
freight could decide to expand their operations, thereby reducing their need for our services.
Extreme or unusual weather conditions can disrupt our operations, impact freight volumes, and
increase our costs, all of which could have a material adverse effect on our business results.
Certain weather conditions such as ice and snow can disrupt our operations. Increases in the cost of our
operations, such as towing and other maintenance activities, frequently occur during the winter months. Natural
disasters such as hurricanes and flooding can also impact freight volumes and increase our costs.
Our operations are subject to various environmental laws and regulations, the violation of which could
result in substantial fines or penalties.
We are subject to various environmental laws and regulations dealing with the handling of hazardous materials,
underground fuel storage tanks, and discharge and retention of storm water. We operate in industrial areas, where
truck terminals and other industrial activities are located and where groundwater or other forms of environmental
contamination have occurred. Our operations involve the risks of fuel spillage or seepage, environmental damage,
and hazardous waste disposal, among others. We also maintain bulk fuel storage and fuel islands at several of
our facilities. If a spill or other accident involving hazardous substances occurs, or if we are found to be in violation
of applicable laws or regulations, it could have a material adverse effect on our business and operating results.
If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or
penalties and to civil and criminal liability.
Acquisitions or business combinations may disrupt or have a material adverse effect on our operations
or earnings.
We could have difficulty integrating acquired companies’ assets, personnel and operations with our own.
Regardless of whether we are successful in making an acquisition or completing a business combination, the
negotiations could disrupt our ongoing business, distract our management and employees, and increase our
operating costs. Acquisitions and business combinations are accompanied by a number of inherent risks,
including, without limitation, the difficulty of integrating acquired companies and operations; potential disruption of
our ongoing businesses and distraction of our management or the management of acquired companies; difficulties
in maintaining controls, procedures and policies; potential impairment of relationships with employees and partners
as a result of any integration of new management personnel; potential inability to manage an increased number of
locations and employees; failure to realize expected efficiencies, synergies and cost savings; or the effect of any
government regulations which relate to the businesses acquired.
Our business could be materially impacted if and to the extent that we are unable to succeed in addressing any
of these risks or other problems encountered in connection with an acquisition or business combination, many of
which cannot be presently identified.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
93
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We own our corporate headquarters in Lowell, Arkansas. In addition, we own or lease a number of buildings
in Lowell that we utilize for administrative support, customer service, freight dispatch, data processing and
warehousing, and data backup and disaster recovery. We also own or lease 43 other significant facilities across
the United States where we perform maintenance on our equipment, provide bulk fuel, and employ personnel to
support operations. These facilities vary in size from 2 to 39 acres. Each of our business segments utilizes these
facilities. In addition, we have 98 leased facilities in our DCS cross-dock and other delivery system networks, with
the remaining four locations outsourced, and 44 leased or owned remote sales offices or branches in our ICS
segment. We also own or lease multiple small facilities, offices, and parking yards throughout the country that
support our customers’ business needs.
A summary of our principal facilities in locations throughout the U.S. follows:
Type
Maintenance and support facilities
Cross-dock and delivery system facilities
Corporate headquarters, Lowell, Arkansas
Offices and data center, Lowell, Arkansas
Branch sales offices
Other facilities, offices, and parking yards
ITEM 3. LEGAL PROCEEDINGS
Acreage
Maintenance Shop/
Cross-dock Facility
(square feet)
Office Space
(square feet)
443
24
88
8
—
343
1,020,000
2,308,000
—
—
—
211,000
190,000
124,000
407,000
60,000
92,000
129,000
We are a defendant in certain alleged class-action lawsuits in which the plaintiffs are current and former
California-based drivers who allege claims for unpaid wages, failure to provide meal and rest periods, and other
items. In the lead class-action, we reached an agreement and recorded a reserve in September 2018 to resolve
all pending claims for a class settlement payment of $15 million, subject to Court approval. The Court granted
preliminary settlement approval in November 2018. Notice of the settlement has been mailed to all settlement
class members and the deadline for objections to the settlement passed without any objections filed. We expect
the Court’s order granting final approval to be issued in April 2019. The overlapping claims in the other alleged
class-action lawsuits remain stayed pending final approval of the settlement in the lead class-action case.
In January 2017, we exercised our right to utilize the arbitration process to review the division of revenue collected
beginning May 1, 2016, as well as to clarify other issues, under our Joint Service Agreement with BNSF. BNSF
requested the same, and the arbitration process is on-going. On October 5, 2018, we received the arbitrators’ Interim
Award. The details of the Interim Award are confidential and require the parties to submit additional information
requested by the arbitrators to decide certain unresolved matters. For the determined components of the Interim
Award, we recorded an $18.3 million pre-tax charge in the third quarter 2018, related to certain charges claimed by
BNSF for specific services requested for customers from April 2014 through May 2018. On December 7, 2018 the
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J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
arbitrators’ issued their Clarified Interim Award of October 5, 2018 resulting from some of the parties’ additional
submissions to the Panel regarding certain issues related to determining the revenue division between the parties.
On January 11, 2019, the Panel issued its Second Interim Award ordering that $89.4 million is due from the
Company to BNSF resulting from the adjusted revenue divisions relating to the 2016 period at issue ($52.1 million)
and for calendar year 2017 ($37.3 million). The parties have been instructed to make further submissions on the
revenue divisions for calendar year 2018 and going forward, as well as other confidential issues raised during
the arbitration process so that the panel can issue an appropriate interim and/or final award regarding all issues
raised during the proceeding. We recorded pretax charges for contingent liabilities in the fourth quarter 2018 of
$89.4 million claimed by the BNSF for the period May 1, 2016 through December 31, 2017 and $44.6 million for
the period January 1, 2018 through December 31, 2018, for a total of $134 million.
The other financial implications from the Interim Award and the Clarified Interim Award will not be fully determined
until the arbitrators issue additional award(s) following their review of each party’s requested additional
submissions. At this time, we are unable to reasonably predict the final outcome of the arbitration, and, as such,
no further gain or loss contingency can be determined or recorded. If decided adversely, this matter could result
in a liability material to our financial condition or results of operations. BNSF provides a significant amount of rail
transportation services to our JBI business segment. Normal commercial business activity between the parties,
including load tendering, load tracing, billing and payments, is expected to continue on a timely basis.
We are involved in certain other claims and pending litigation arising from the normal conduct of business. Based
on present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution
of these claims and pending litigation will not have a material adverse effect on our financial condition, results of
operations or liquidity.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
95
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the NASDAQ Global Select Market (NASDAQ) under the symbol “JBHT.” At
December 31, 2018, we were authorized to issue up to 1 billion shares of our common stock, and 167.1 million
shares were issued. We had 108.7 million and 109.8 million shares outstanding as of December 31, 2018 and
2017, respectively. On February 12, 2019, we had 1,133 stockholders of record, of our common stock.
Dividend Policy
Our dividend policy is subject to review and revision by the Board of Directors, and payments are dependent
upon our financial condition, liquidity, earnings, capital requirements, and any other factors the Board of Directors
may deem relevant. On January 23, 2019, we announced an increase in our quarterly cash dividend from $0.24
to $0.26 per share, which will be paid February 22, 2019, to stockholders of record on February 8, 2019. We
currently intend to continue paying cash dividends on a quarterly basis. However, no assurance can be given that
future dividends will be paid.
Purchases of Equity Securities
The following table summarizes purchases of our common stock during the three months ended December 31,
2018:
Average
Price
Paid Per
Common
Share
Purchased
Total Number
of Shares
Purchased
as Part of a
Publicly
Announced
Plan (1)
Maximum Dollar
Amount of
Shares That
May Yet Be
Purchased
Under the Plan
(in millions) (1)
Number of
Common
Shares
Purchased
Period
October 1 through October 31, 2018
November 1 through November 30, 2018
— $
—
—
—
$
—
—
December 1 through December 31, 2018
493,905
101.86
493,905
Total
493,905
$
101.86
493,905
$
421
421
371
371
(1) On April 20, 2017, our Board of Directors authorized the purchase of up to $500 million of our common stock.
96
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
Stock Performance Graph
The following graph compares the cumulative 5-year total return of stockholders of our common stock with the
cumulative total returns of the S&P 500 index and two customized peer groups. The peer group labeled “Peer
Group 2017” consists of 13 companies: C.H. Robinson Worldwide Inc., CSX Corp, Expeditors International Of
Washington Inc., Hub Group Inc., Kansas City Southern, Norfolk Southern Corp, Old Dominion Freight Line Inc.,
Republic Services Inc., Ryder System Inc., Schneider National Inc., Stericycle Inc., Waste Management Inc.
and XPO Logistics Inc. The peer group labeled “Peer Group 2018” consists of 14 companies: C.H. Robinson
Worldwide Inc., CSX Corp, Expeditors International Of Washington Inc., Hub Group Inc., Kansas City Southern,
Knight-Swift Transportation Holdings Inc., Norfolk Southern Corp, Old Dominion Freight Line Inc., Republic
Services Inc., Ryder System Inc., Schneider National Inc., Stericycle Inc., Waste Management Inc. and XPO
Logistics Inc. The graph assumes the value of the investment in our common stock, in the index, and in each of
the peer groups (including reinvestment of dividends) was $100 on December 31, 2013, and tracks it through
December 31, 2018. The stock price performance included in this graph is not necessarily indicative of future
stock price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among J.B. Hunt Transport Services, Inc., the S&P 500 Index, Peer Group 2017 and Peer Group 2018
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
12/13
12/14
12/15
12/16
12/17
12/18
J.B. Hunt Transport Services, Inc.
S&P 500
Peer Group 2017
Peer Group 2018
Years Ended December 31,
2013
2014
2015
2016
2017
2018
J.B. Hunt Transport Services, Inc.
$
100.00 $
110.12 $
96.88 $
129.61 $
155.01 $
126.48
S&P 500
Peer Group 2017
Peer Group 2018
100.00
113.69
115.26
129.05
157.22
150.33
100.00
120.17
102.00
130.72
176.06
177.76
100.00
120.90
102.35
131.32
176.84
175.96
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
97
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with the Consolidated Financial Statements and
notes thereto, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other
financial data included elsewhere in this annual report.
(Dollars in millions, except per share amounts)
Earnings data for the years ended
December 31,
Operating revenues
Operating income
Net earnings
Basic earnings per share
Diluted earnings per share
Cash dividends per share
Operating expenses as a percentage of
operating revenues:
2018
2017
2016
2015
2014
$
8,615
$
7,190
$
6,555
$
6,188
$
6,165
681
490
4.48
4.43
0.96
624
686
6.24
6.18
0.92
721
432
3.84
3.81
0.88
716
427
3.69
3.66
0.84
632
375
3.20
3.16
0.80
Rents and purchased transportation
51.5%
50.8%
49.7%
48.4%
50.0%
Salaries, wages and employee benefits
22.4
22.4
22.4
22.5
20.9
Fuel and fuel taxes
Depreciation and amortization
Operating supplies and expenses
General and administrative expenses,
net of asset dispositions
Insurance and claims
Operating taxes and licenses
Communication and utilities
5.3
5.1
3.5
1.8
1.5
0.6
0.4
4.8
5.3
3.6
1.8
1.7
0.6
0.3
Total operating expenses
92.1
91.3
8.7
0.4
8.3
(1.2)
9.5%
Operating income
Net interest expense
Earnings before income taxes
Income taxes
Net earnings
Balance sheet data as of December 31,
Working capital ratio
Total assets (millions)
Stockholders’ equity (millions)
Current portion of long-term debt (millions)
Total debt (millions)
Total debt to equity
$
$
$
$
7.9
0.5
7.4
1.7
5.7%
2018
1.11
5,092
2,101
251
1,149
0.55
$
$
$
$
4.3
5.5
3.6
1.3
1.2
0.7
0.3
89.0
11.0
0.4
10.6
4.0
5.1
5.5
3.6
1.1
1.2
0.7
0.3
88.4
11.6
0.4
11.2
4.3
7.4
4.8
3.5
0.8
1.3
0.7
0.4
89.8
10.2
0.4
9.8
3.7
6.6%
6.9%
6.1%
2017
1.45
2016
1.65
2015
1.61
4,465
1,839
$
$
3,951
1,414
$
$
3,630
1,300
$
$
— $
— $
— $
1,086
$
986
$
998
$
0.59
0.70
0.77
2014
1.11
3,374
1,205
250
929
0.77
Total debt as a percentage of total capital
35%
37%
41%
43%
44%
98
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of our results of operations and financial condition should be read in conjunction with our
financial statements and related notes in Item 8. This discussion contains forward-looking statements. Please see
“Forward-looking Statements” and “Risk Factors” for a discussion of items, uncertainties, assumptions and risks
associated with these statements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our financial statements in accordance with U.S. generally accepted accounting principles
requires us to make estimates and assumptions that impact the amounts reported in our Consolidated Financial
Statements and accompanying notes. Therefore, the reported amounts of assets, liabilities, revenues, expenses
and associated disclosures of contingent liabilities are affected by these estimates. We evaluate these estimates
on an ongoing basis, utilizing historical experience, consultation with third parties and other methods considered
reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates.
Any effects on our business, financial position or results of operations resulting from revisions to these estimates
are recognized in the accounting period in which the facts that give rise to the revision become known. We
consider our critical accounting policies and estimates to be those that require us to make more significant
judgments and estimates when we prepare our financial statements and include the following:
Workers’ Compensation and Accident Costs
We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular collisions,
accidents, and cargo damage. Certain insurance arrangements include a level of self-insurance (deductible)
coverage applicable to each claim. We have umbrella policies to limit our exposure to catastrophic claim costs.
We are substantially self-insured for loss of and damage to our owned and leased revenue equipment.
The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates,
and claim type. We have policies in place for 2019 with substantially the same terms as our 2018 policies for
personal injury, property damage, workers’ compensation, and cargo loss or damage, with the exception of
decreasing our self-insured portion of workers’ compensation claims to zero for nearly all states.
Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on
our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as
well as legal, economic, and regulatory factors. Our safety and claims personnel work directly with representatives
from the insurance companies to continually update the estimated cost of each claim. The ultimate cost of a
claim develops over time as additional information regarding the nature, timing, and extent of damages claimed
becomes available. Accordingly, we use an actuarial method to develop current claim information to derive an
estimate of our ultimate claim liability. This process involves the use of loss-development factors based on our
historical claims experience and includes a contractual premium adjustment factor, if applicable. In doing so, the
recorded liability considers future claims growth and provides a reserve for incurred-but-not-reported claims. We
do not discount our estimated losses. At December 31, 2018, we had an accrual of approximately $260 million for
estimated claims. In addition, we record receivables for amounts expected to be reimbursed for payments made
in excess of self-insurance levels on covered claims. At December 31, 2018, we have recorded $261 million of
expected reimbursement for covered excess claims, other insurance deposits, and prepaid insurance premiums.
Revenue Equipment
We operate a significant number of tractors, trucks, containers, chassis, and trailers in connection with our
business. This equipment may be purchased or acquired under lease agreements. In addition, we may rent
revenue equipment from various third parties under short-term rental arrangements. Purchased revenue equipment
is depreciated on the straight-line method over the estimated useful life to an estimated salvage or trade-in value.
We periodically review the useful lives and salvage values of our revenue equipment and evaluate our long-lived
assets for impairment. We have not identified any impairment to our assets at December 31, 2018.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
99
We have agreements with our primary tractor suppliers for residual or trade-in values for certain new equipment.
We have utilized these trade-in values, as well as other operational information such as anticipated annual miles, in
accounting for depreciation expense. If our suppliers were unable to perform under the terms of our agreements
for trade-in values, it could have a material adverse effect on our financial results.
Revenue Recognition
We record revenues on the gross basis at amounts charged to our customers because we control and are
primarily responsible for the fulfillment of promised services. Accordingly, we serve as a principal in the transaction.
We invoice our customers, and we maintain discretion over pricing. Additionally, we are responsible for selection of
third-party transportation providers to the extent used to satisfy customer freight requirements.
We recognize revenue from customer contracts based on relative transit time in each reporting period and as other
performance obligations are provided, with related expenses recognized as incurred. Accordingly, a portion of the
total revenue that will be billed to the customer is recognized in each reporting period based on the percentage of
the freight pickup and delivery performance obligation that has been completed at the end of the reporting period.
Our trade accounts receivable includes amounts due from customers that have been reduced by an allowance
for uncollectible accounts and revenue adjustments. The allowance for uncollectible accounts and revenue
adjustments is based on historical experience, as well as any known trends or uncertainties related to customer
billing and account collectability. The adequacy of our allowance is reviewed quarterly.
Income Taxes
We account for income taxes under the liability method. Our deferred tax assets and liabilities represent items
that will result in a tax deduction or taxable income in future years for which we have already recorded the related
tax expense or benefit in our statement of earnings. Deferred tax accounts arise as a result of timing differences
between when items are recognized in our Consolidated Financial Statements and when they are recognized in
our tax returns. We assess the likelihood that deferred tax assets will be recovered from future taxable income or
the reversal of temporary timing differences. To the extent we believe recovery does not meet the more-likely-than-
not threshold, a valuation allowance is established. To the extent we establish a valuation allowance, we include an
expense as part of our income tax provision.
The Tax Cuts and Jobs Act (the Act) was enacted in December 2017. Beginning in 2018, the Act reduced the
U.S. federal corporate tax rate from 35% to 21%. At December 31, 2017, we made a reasonable estimate of the
effects on our existing deferred tax assets and liabilities based on the rates at which they were expected to reverse
in the future, which was generally 21%. The provisional amount recorded resulting from the remeasurement of our
deferred tax balance was $309.2 million, which was included as a component of 2017 income tax from continuing
operations. During 2018, we finalized our calculations for our 2017 federal income tax return, which was filed
based on the law prior to the Act, resulting in no significant change to the initial measurement of these balances.
Remaining aspects of the Act were not relevant to our operations.
Significant judgment is required in determining and assessing the impact of complex tax laws and certain tax-
related contingencies on our provision for income taxes. As part of our calculation of the provision for income
taxes, we assess whether the benefits of our tax positions are at least more likely than not to be sustained upon
audit based on the technical merits of the tax position. For tax positions that are not more likely than not to be
sustained upon audit, we accrue the largest amount of the benefit that is not more likely than not to be sustained
in our Consolidated Financial Statements. Such accruals require us to make estimates and judgments, whereby
actual results could vary materially from these estimates. Further, a number of years may elapse before a particular
matter for which we have established an accrual is audited and resolved. See Note 7, Income Taxes, in our
Consolidated Financial Statements for a discussion of our current tax contingencies.
100
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
RESULTS OF OPERATIONS
The following table sets forth items in our Consolidated Statements of Earnings as a percentage of operating
revenues and the percentage increase or decrease of those items compared with the prior year.
Percentage of Operating
Revenues
Percentage Change
Between Years
2018
2017
2016
2018 vs.
2017
2017 vs.
2016
100.0%
100.0%
100.0%
19.8%
9.7%
Operating revenues
Operating expenses:
Rents and purchased transportation
Salaries, wages and employee benefits
Fuel and fuel taxes
Depreciation and amortization
Operating supplies and expenses
General and administrative expenses,
net of asset dispositions
Insurance and claims
Operating taxes and licenses
Communication and utilities
51.5
22.4
5.3
5.1
3.5
1.8
1.5
0.6
0.4
50.8
22.4
4.8
5.3
3.6
1.8
1.7
0.6
0.3
Total operating expenses
92.1
91.3
Operating income
Net interest expense
Earnings before income taxes
Income taxes
Net earnings
7.9
0.5
7.4
1.7
5.7%
8.7
0.4
8.3
(1.2)
9.5%
49.7
22.4
4.3
5.5
3.6
1.3
1.2
0.7
0.3
89.0
11.0
0.4
10.6
4.0
21.5
19.8
32.1
13.7
18.0
29.7
4.7
14.0
28.9
20.8
9.2
40.8
7.7
12.1
9.5
22.6
6.1
10.3
44.6
57.6
(2.5)
20.1
12.5
(13.5)
13.2
(14.5)
266.1
(134.5)
6.6%
(28.7%)
58.8%
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
101
2018 Compared With 2017
Consolidated Operating Revenues
Our total consolidated operating revenues increased 19.8% to $8.61 billion in 2018, compared to $7.19 billion in
2017, primarily due to overall increased load volume and higher revenue per load in all four of our segments. Fuel
surcharge revenues increased 40.2% to $1.1 billion in 2018, compared to $754 million in 2017. If fuel surcharge
revenues were excluded from both years, our 2018 revenue increased 17.4% over 2017.
Consolidated Operating Expenses
Our 2018 consolidated operating expenses increased 20.8% from 2017, while year-over-year revenue increased
19.8%, resulting in a 2018 operating ratio of 92.1% compared to 91.3% in 2017. Rents and purchased
transportation costs increased 21.5% in 2018, primarily due to increased rail and truck purchased transportation
rates and the increase in load volume, which increased services provided by third-party rail and truck carriers within
JBI and ICS segments. In addition, our JBI segment incurred charges of $152.3 million to rail purchase transportation
expense related to the ongoing arbitration with BNSF. Salaries, wages and employee benefit costs increased 19.8%
in 2018 from 2017. This increase was primarily related to increases in driver pay and office personnel compensation
due to an increase in the number of employees and a tighter supply of qualified drivers.
Fuel and fuel taxes expense increased 32.1% in 2018 compared with 2017, due primarily to an increase in road
miles and increases in the price of fuel during 2018. We have fuel surcharge programs in place with the majority of
our customers. These programs typically involve a specified computation based on the change in national, regional,
or local fuel prices. While these programs may address fuel cost changes as frequently as weekly, most also reflect
a specified miles-per-gallon factor and require a certain minimum change in fuel costs to trigger a change in fuel
surcharge revenue. As a result, some of these programs have a time lag between when fuel costs change and when
this change is reflected in revenues. Due to these programs, this lag negatively impacts operating income in times of
rapidly increasing fuel costs and positively impacts operating income when fuel costs decrease rapidly.
It is not meaningful to compare the amount of fuel surcharge revenue or the change in fuel surcharge revenue
between reporting periods to fuel and fuel taxes expense, or the change of fuel expense between periods, as a
significant portion of fuel cost is included in our payments to railroads, dray carriers and other third parties. These
payments are classified as purchased transportation expense.
Depreciation and amortization expense increased 13.7% in 2018, primarily due to additions to our JBI segment
tractor, container and chassis fleets to support additional business demand and equipment purchased related to
new DCS long-term customer contracts.
Operating supplies and expenses increased 18.0%, driven primarily by higher equipment maintenance and tire
expenses, due to increased equipment counts, higher travel costs, increased toll costs, and higher building
maintenance expenses. General and administrative expenses increased 29.7% from 2017, primarily due to
increased building and computer rentals, higher professional fees, higher advertising costs, higher bad debt
expense driven by a customer bankruptcy, and increased net losses from asset sales and disposals, partially
offset by the 2017 inclusion of a $20.2 million reserve of a cash advance for the purchases of new trailing
equipment from a manufacturer that did not meet delivery. Additionally, net losses from sale or disposal of assets
were $12.1 million in 2018, compared to net losses of $7.4 million in 2017. Insurance and claims expense
increased 4.7% in 2018, primarily due to higher incident volume.
Net interest expense for 2018 increased by 40.8% compared with 2017, due to an increase in average debt levels,
higher effective interest rates on our debt, and expenses incurred to refinance our revolving line of credit compared
to 2017.
Our effective income tax rate was 23.6% in 2018 and (15.29%) in 2017. The increase in 2018 was primarily due to
a $309.2 million decrease in income tax expense in 2017 resulting from adjustments to our deferred tax balances
at December 31, 2017, for the change in future tax rates prescribed by the Tax Cuts and Jobs Act.
102
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
Segments
We operated four business segments during calendar year 2018. The operation of each of these businesses
is described in our Notes to Consolidated Financial Statements. The following tables summarize financial and
operating data by segment:
JBI
DCS
ICS
JBT
Total segment revenues
Intersegment eliminations
Total
JBI
DCS
ICS
JBT
Total
$
Operating Revenue by Segment
Years Ended December 31, (in millions)
2018
4,717
2,163
1,335
417
8,632
(17)
$
2017
4,084
1,719
1,025
378
7,206
(16)
$
2016
3,796
1,533
852
388
6,569
(14)
$
8,615
$
7,190
$
6,555
Operating Income by Segment
Years Ended December 31, (in millions)
2018
2017
2016
$
$
401
193
50
37
681
$
$
407
171
23
23
624
$
$
450
205
36
30
721
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
103
JBI
Loads
Average length of haul (miles)
Revenue per load
Average tractors during the period(1)
Tractors (end of period)
Company-owned
Independent contractor
Total tractors
Net change in trailing equipment during the period
Trailing equipment (end of period)
Average effective trailing equipment usage
DCS
Loads
Average length of haul (miles)
Revenue per truck per week(2)
Average trucks during the period(3)
Trucks (end of period)
Company-owned
Independent contractor
Customer-owned (DCS-operated)
Total trucks
Trailing equipment (end of period)
Average effective trailing equipment usage
ICS
Loads
Revenue per load
Gross profit margin
Employee count (end of period)
Approximate number of third-party carriers (end of period)
JBT
Loads
Average length of haul (miles)
Loaded miles (000)
Total miles (000)
Average nonpaid empty miles per load
Revenue per tractor per week(2)
Average tractors during the period(1)
Tractors (end of period)
Company-owned
Independent contractor
Total tractors
Trailing equipment (end of period)
Average effective trailing equipment usage
Operating Data by Segment
Years Ended December 31,
2018
2017
2016
$
$
2,049,014
1,999,807
1,916,303
1,648
2,302
5,551
5,017
633
5,650
6,262
94,902
88,739
$
1,681
2,042
5,362
4,776
764
5,540
4,016
88,610
82,969
$
1,657
1,981
5,222
4,581
695
5,276
5,637
84,594
77,179
2,981,344
2,575,245
2,401,332
177
4,534
9,264
9,652
51
412
10,115
26,710
26,806
$
178
4,226
7,946
8,124
59
544
8,727
25,811
24,550
$
177
4,077
7,307
6,976
15
410
7,401
22,688
22,827
1,234,632
$
1,081
$
15.4%
1,142
73,100
992,834
1,032
13.3%
954
56,700
852,179
999
$
14.3%
824
50,900
$
355,038
427
151,322
181,718
85.5
4,148
1,990
1,139
973
2,112
6,800
6,513
$
370,591
435
160,932
192,433
85.1
3,556
2,098
1,291
741
2,032
7,120
7,066
$
385,298
455
175,038
207,998
85.6
3,458
2,191
1,376
752
2,128
7,642
6,956
(1) Includes company-owned and independent contractor tractors
(2) Using weighted workdays
(3) Includes company-owned, independent contractor, and customer-owned trucks
104
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
JBI Segment
JBI segment revenue increased 15% to $4.72 billion in 2018, from $4.08 billion in 2017. This increase in revenue was
primarily a result of a 2% increase in load volume and a 13% increase in revenue per load, which is the combination
of changes in freight mix, customer rates, and fuel surcharge revenue. Eastern network loads grew at 10% and
transcontinental loads decreased 2% compared to 2017. Average length of haul decreased 2% in 2018 when
compared to 2017. Revenue per load excluding fuel surcharges increased approximately 10% compared to 2017.
Operating income of the JBI segment decreased to $401 million in 2018, from $407 million in 2017. Benefits from
volume growth and increased revenue per load were offset by increases in rail purchased transportation costs,
which included $152.3 million of additional expense related to the ongoing arbitration with BNSF. Benefits where
further offset by higher driver wage and retention costs, higher driver recruiting expenses, higher outsourced
dray costs, increased costs for onboarding and integration of container tracking technologies, higher equipment
ownership costs, and costs of reduced efficiency and disruptions within the rail network. In addition, 2017 included
a $20.2 million expense for the reserve of a cash advance for the purchases of new trailing equipment from a
manufacturer that did not meet delivery.
DCS Segment
DCS segment revenue increased 26% to $2.16 billion in 2018, from $1.72 billion in 2017. Productivity, defined as
revenue per truck per week, increased 7% when compared to 2017. Productivity excluding fuel surcharge revenue
increased 5% from 2017. The increase in productivity was primarily a result of better integration of assets between
customer accounts, customer rate increases, and increased customer supply chain fluidity during 2018 compared
to 2017. In addition, the growth in DCS revenue includes an increase of $113 million in Final Mile Services (FMS)
revenue, approximately $66 million of which was derived from the 2017 acquisition of Special Logistics Dedicated
(SLD). DCS ended 2018 with a net additional 1,388 revenue-producing trucks when compared to 2017.
Operating income of our DCS segment increased to $193 million in 2018, from $171 million in 2017. Increased
revenue and improved asset integration was offset by higher costs from the expanded FMS network, increased
driver wages and recruiting costs, higher non-driver salaries, wages and benefits, increased maintenance costs on
equipment scheduled to be traded in the current year, higher overall insurance and claims costs, implementation
costs for new customer contracts and approximately $4.4 million in additional non-cash amortization expense
compared to 2017.
ICS Segment
ICS segment revenue increased 30% to $1.33 billion in 2018, from $1.02 billion in 2017. Overall volumes increased
24%. Revenue per load increased 5% primarily due to increased contractual and spot rates. Contractual business
was approximately 70% of the total load volume and 48% of the total revenue in the 2018, compared to 70% of
the total load volume and 53% of the total revenue in 2017.
Operating income increased to $50 million in 2018, from $23 million in 2017. Gross profit margin improved
to 15.4% in the current year compared to 13.3% in 2017 primarily due to improved contractual margins and
increased spot market activity. This increase in gross profit margin was partially offset by higher personnel
costs, higher technology development costs, and increase bad debt expense due to a customer bankruptcy.
Approximately $558 million of ICS revenue for 2018 was executed through the marketplace for JBHunt360. ICS’s
carrier base increased 29%, and the employee count increased 20% when compared to 2017.
JBT Segment
JBT segment revenue increased 10% to $417 million in 2018, from $378 million in 2017. Excluding fuel
surcharges, revenue for 2018 increased 9% compared to 2017, primarily from a 16% increase in rates per loaded
mile, partially offset by an 4% decrease in load count.
JBT segment had operating income of $37 million in 2018 compared with $23 million in 2017. The increase in
operating income was driven primarily by higher rates per loaded mile and lower equipment ownership costs,
partially offset by increased driver wage and retention costs, higher driver and independent contractor recruiting
expenses, and higher independent contractor costs per mile.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
105
2017 Compared With 2016
Consolidated Operating Revenues
Our total consolidated operating revenues increased 9.7% to $7.19 billion in 2017, compared to $6.56 billion
in 2016, primarily due to overall increased load volume and higher revenue per load in our JBI, DCS, and ICS
segments. Fuel surcharge revenues increased 37.5% to $754 million in 2017, compared to $548 million in 2016. If
fuel surcharge revenues were excluded from both years, our 2017 revenue increased 7.1% over 2016.
Consolidated Operating Expenses
Our 2017 consolidated operating expenses increased 12.5% from 2016, while year-over-year revenue
increased 9.7%, resulting in a 2017 operating ratio of 91.3% compared to 89.0% in 2016. Rents and purchased
transportation costs increased 12.1% in 2017, primarily due to increased rail and truck purchased transportation
rates and the increase in load volume, which increased services provided by third-party rail and truck carriers
within JBI and ICS segments. Salaries, wages and employee benefit costs increase 9.5% in 2017 from 2016. This
increase was primarily related to increases in driver pay and office personnel compensation due to an increase in
the number of employees and a tighter supply of qualified drivers. In addition, 2016 included a $15.2 million benefit
recorded to reflect a change in our employee paid time off policy.
Fuel and fuel taxes expense increased 22.6% in 2017 compared with 2016, due primarily to increases in the price
of fuel during 2017. Depreciation and amortization expense increased 6.1% in 2017, primarily due to additions
to our JBI segment tractor, container and chassis fleets to support additional business demand and equipment
purchased related to new DCS long-term customer contracts.
Operating supplies and expenses increased 10.3%, driven primarily by increased mileage activity and tire expense.
General and administrative expenses increased 44.6% from 2016, primarily due to a $20.2 million reserve of
a cash advance for the purchases of new trailing equipment from a manufacturer that did not meet delivery,
increased building rental expense, higher professional fee expenses, higher computer software subscription costs,
and increased net losses from asset sales and disposals in 2017. Net losses from sale or disposal of assets were
$7.4 million in 2017, compared to net losses of $5.5 million in 2016. Insurance and claims expense increased
57.6% in 2017, primarily due to higher incident volume and accident severity and an $18.6 million increase in
reserves for certain claims not covered by insurance.
Net interest expense for 2017 increased by 13.2% compared with 2016, due to an increase in average debt levels
and higher effective interest rates on our debt during 2017.
Our effective income tax rate was (15.29)% in 2017 and 37.90% in 2016. The decrease in 2017 was primarily due
to a $309.2 million decrease in income tax expense resulting from adjustments to our deferred tax balances at
December 31, 2017, for the change in future tax rates prescribed by the Tax Cuts and Jobs Act.
JBI Segment
JBI segment revenue increased 7.6% to $4.08 billion in 2017, from $3.80 billion in 2016. This increase in revenue
was primarily a result of an 4.4% increase in load volume and a 3.1% increase in revenue per load, which is
the combination of changes in freight mix, customer rates, and fuel surcharge revenue. Load volume in our
transcontinental loads grew 7.2% while our eastern network was relatively flat compared to 2016. Average length
of haul increased 1.4% in 2017 when compared to 2016. Revenue per load excluding fuel surcharge was flat in
2017 when compared to 2016.
Operating income of the JBI segment decreased to $407 million in 2017, from $450 million in 2016. Benefits from
volume growth and increased revenue per load were offset by increases in rail purchased transportation costs, rail
inefficiencies, higher driver wages and recruiting costs, higher equipment ownership costs, increased insurance
and claims costs, which included an $8.5 million increase in reserves for certain insurance and claims, and the
$20.2 million expense for the reserve of a cash advance for the purchases of new trailing equipment from a
manufacturer that did not meet delivery. In addition, 2016 included a $5.7 million, one-time benefit from the change
in paid time off policy.
106
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
DCS Segment
DCS segment revenue increased 12.1% to $1.72 billion in 2017, from $1.53 billion in 2016. Productivity, defined
as revenue per truck per week, increased 3.7% when compared to 2016. Revenue, excluding fuel surcharges,
increased 10.0% in 2017 compared to 2016, and productivity excluding fuel surcharge revenue increased 1.6% from
2016. The increase in revenue in 2017 was primarily a result of better integration of assets among customer accounts
and customer rate increases, partially offset by lower productivity under new customer contracts, compared to 2016.
DCS ended 2017 with a net additional 1,326 revenue-producing trucks when compared to 2016.
Operating income of our DCS segment decreased to $171 million in 2017, from $205 million in 2016. The increase
in revenue and improved asset utilization were offset by higher driver wages and recruiting costs, increased
insurance and claims cost, which included a $7.6 million increase in reserves for certain insurance and claims,
increased start up expenditures for new customer contracts, higher equipment ownership costs, and the addition
of acquisition costs and intangible asset amortization associated with the purchase of SLD when compared to
2016. In addition, 2016 included a $7.3 million, one-time benefit from the change in paid time off policy.
ICS Segment
ICS segment revenue increased 20.3% to $1.02 billion in 2017, from $852 million in 2016. Overall volumes
increased 16.5%. Revenue per load increased 3.3% primarily due to freight mix changes driven by customer
demand. Contractual business was approximately 70% of the total load volume and 53% of the total revenue in
the 2017, compared to 74% of the total load volume and 64% of the total revenue in 2016.
Operating income decreased to $23 million in 2017, from $36 million in 2016, primarily due to lower gross profit
margins, increased insurance and claims cost, which included a $1.8 million increase in reserves for certain
insurance and claims, increased number of branches less than two years old, and higher technology development
costs. ICS gross profit margin decreased to 13.3% for 2017 from 14.3% for 2016. ICS’s carrier base increased
11.4%, and the employee count increased 15.8% when compared to 2016. In addition, 2016 included a $1.0
million, one-time benefit from the change in paid time off policy.
JBT Segment
JBT segment revenue decreased 2.4% to $378 million in 2017, from $388 million in 2016, primarily from a 3.8%
decrease in load count partially offset by a 1.4% increase in revenue per load. Excluding fuel surcharges, revenue
for 2017 decreased 4.5% compared to 2016, primarily due to the reduction in load volume and a 4.4% decrease
in length of haul.
JBT segment had operating income of $23 million in 2017 compared with $30 million in 2016. The decrease
in operating income was driven primarily by lower revenue, increased driver wages and recruiting costs, higher
independent contractor cost per mile, increased insurance and claims cost, which included an $0.7 million
increase in reserves for certain insurance and claims, and increased tractor maintenance costs compared to 2016.
In addition, 2016 included a $1.2 million, one-time benefit from the change in paid time off policy.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaled $1.09 billion in 2018, compared to $855 million in 2017. This
increase was primarily due to the increase in pre-tax earnings and the reduction in the U.S. federal corporate tax
rate as a result of the Tax Cuts and Jobs Act, in 2018.
Net cash used in investing activities totaled $887 million in 2018, compared with $651 million in 2017. The
increase resulted primarily from an increase in equipment purchases, net of proceeds from the sale of equipment,
in 2018, partially offset by the 2017 purchase of SLD.
Net cash used in financing activities was $208 million in 2018, compared with $196 million in 2017. This increase
resulted primarily from lower proceeds from long-term debt issuances, net of long-term debt repayments, partially
offset by a decrease in treasury stock purchased in 2018.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
107
Our dividend policy is subject to review and revision by the Board of Directors, and payments are dependent upon
our financial condition, liquidity, earnings, capital requirements, and other factors the Board of Directors may deem
relevant. We paid a $0.22 per share quarterly dividend in 2016, a $0.23 per share quarterly dividend in 2017, and
a $0.24 per share quarterly dividend in 2018. On January 23, 2019, we announced an increase in our quarterly
cash dividend from $0.24 to $0.26 per share, which will be paid February 22, 2019, to stockholders of record
on February 8, 2019. We currently intend to continue paying cash dividends on a quarterly basis. However, no
assurance can be given that future dividends will be paid.
Liquidity
Our need for capital has typically resulted from the acquisition of containers, chassis, trucks, tractors, and trailers
required to support our growth and the replacement of older equipment. We are frequently able to accelerate or
postpone a portion of equipment replacements depending on market conditions. We obtain capital through cash
generated from operations, revolving lines of credit, and long-term debt issuances. We have also periodically
utilized capital and operating leases for revenue equipment.
In September 2018, we replaced our $500 million senior revolving credit facility dated September 2015 with a new
credit facility authorizing us to borrow up to $750 million under a senior revolving line of credit, which is supported
by a credit agreement with a group of banks and expires September 2023. This senior credit facility allows us
to request an increase in the total commitment by up to $250 million and to request a one-year extension of the
maturity date. The applicable interest rate under this agreement is based on the Prime Rate, the Federal Funds
Rate, or LIBOR, depending upon the specific type of borrowing, plus an applicable margin based on our credit
rating and other fees. At December 31, 2018, we had $309 million outstanding at an average interest rate of
3.47% under this agreement.
Our senior notes consist of three separate issuances. The first and second issuances are $250 million of 2.40%
senior notes due March 2019 and $250 million of 3.85% senior notes due March 2024, respectively, both of which
were issued in March 2014. Interest payments under both notes are due semiannually in March and September
of each year. The third issuance is $350 million of 3.30% senior notes due August 2022, issued in August 2015.
Interest payments under this note are due semiannually in February and August of each year. We may redeem for
cash some or all of these notes based on a redemption price set forth in the note indenture. We currently have
interest rate swap agreements which effectively convert our $250 million of 2.40% fixed-rate senior notes due
March 2019 and our $350 million of 3.30% fixed-rate senior notes due August 2022 to variable rates, resulting in
interest rates of 3.63% and 3.97%, respectively, at December 31, 2018. The applicable interest rates under these
swap agreements are based on LIBOR plus an established margin. For our senior notes maturing in 2019, it is
our intent to pay the entire outstanding balances in full, on or before the maturity dates, using our existing senior
revolving line of credit or other sources of long-term financing. In addition, we have a shelf registration filed with the
SEC and may draw upon it as warranted.
Our financing arrangements require us to maintain certain covenants and financial ratios. We were in compliance
with all covenants and financial ratios at December 31, 2018.
As previously mentioned above, the Tax Cuts and Jobs Act was enacted in December 2017. Beginning in 2018, the
Act reduced the U.S. federal corporate tax rate from 35% to 21%, which had a positive effect on our overall liquidity.
We believe our liquid assets, cash generated from operations, and various financing arrangements will provide
sufficient funds for our operating and capital requirements for the foreseeable future.
We are currently committed to spend approximately $381.6 million, net of proceeds from sales or trade-ins, during
2019 and 2020, which is primarily related to the acquisition of containers, chassis, and tractors.
Off-Balance Sheet Arrangements
In addition to our net purchase commitments of $381.6 million, our only other off-balance sheet arrangements
are related to operating leases. As of December 31, 2018, we had approximately $117.8 million of obligations,
primarily related to facility leases.
108
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
Contractual Obligations and Commitments
The following table summarizes our expected obligations and commitments (in millions) as of December 31, 2018:
Total
2019
2020-2021
2022-2023
2024 and
thereafter
Operating leases
$
117.8
$
34.9
$
50.6
$
21.9
$
10.4
Long-term debt obligations
Interest payments on debt (1)
Commitments to acquire revenue
equipment and facilities
1,159.0
154.3
381.6
250.0
36.1
381.6
—
68.5
—
659.0
47.3
—
250.0
2.4
—
Total
$ 1,812.70
$
702.6
$
119.1
$
728.2
$
262.8
(1) Interest payments on debt are based on the debt balance and applicable rate at December 31, 2018.
We had standby letters of credit outstanding of approximately $1.3 million at December 31, 2018, that expire at
various dates in 2019, which are related to certain operating agreements and our self-insured retention levels for
casualty and workers’ compensation claims. We plan to renew these letters of credit in accordance with our third-
party agreements. The table above excludes $56.8 million of liabilities related to uncertain tax positions, including
interest and penalties, as we are unable to reasonably estimate the ultimate timing of settlement. See Note 7,
Income Taxes, in the Notes to Consolidated Financial Statements for further discussion.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk can be quantified by measuring the financial impact of a near-term adverse increase in short-
term interest rates on variable-rate debt outstanding. Our total long-term debt consists of both fixed and variable
interest rate facilities. Our senior notes have fixed interest rates ranging from 2.40% to 3.85%. These fixed-rate
facilities reduce the impact of changes to market interest rates on future interest expense. Our senior revolving
line of credit has variable interest rates, which are based on the Prime Rate, the Federal Funds Rate, or LIBOR,
depending upon the specific type of borrowing, plus any applicable margins. We currently have interest rate swap
agreements which effectively convert our $250 million of 2.40% fixed-rate senior notes due March 2019 and our
$350 million of 3.30% fixed-rate senior notes due August 2022 to variable rates. The applicable interest rates
under these swap agreements are based on LIBOR plus an established margin. Our earnings would be affected
by changes in these short-term variable interest rates. At our current level of borrowing, a one-percentage-point
increase in our applicable rate would reduce annual pretax earnings by $9.1 million.
Although we conduct business in foreign countries, international operations are not material to our consolidated
financial position, results of operations, or cash flows. Additionally, foreign currency transaction gains and losses
were not material to our results of operations for the year ended December 31, 2018. Accordingly, we are not
currently subject to material foreign currency exchange rate risks from the effects that exchange rate movements
of foreign currencies would have on our future costs or on future cash flows we would receive from our foreign
investment. To date, we have not entered into any foreign currency forward exchange contracts or other derivative
financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
109
The price and availability of diesel fuel are subject to fluctuations due to changes in the level of global oil
production, seasonality, weather, and other market factors. Historically, we have been able to recover a majority
of fuel-price increases from our customers in the form of fuel surcharges. We cannot predict the extent to which
volatile fluctuations in fuel prices will continue in the future or the extent to which fuel surcharges could be collected
to offset fuel-price increases. As of December 31, 2018, we had no derivative financial instruments to reduce our
exposure to fuel-price fluctuations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our Consolidated Financial Statements, Notes to Consolidated Financial Statements, and reports thereon of our
independent registered public accounting firm as specified by this Item are presented following Item 15 of this
report and include:
• Reports of Independent Registered Public Accounting Firm
• Consolidated Balance Sheets as of December 31, 2018 and 2017
• Consolidated Statements of Earnings for years ended December 31, 2018, 2017, and 2016
• Consolidated Statements of Stockholders’ Equity for years ended December 31, 2018, 2017, and 2016
• Consolidated Statements of Cash Flows for years ended December 31, 2018, 2017, and 2016
• Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain controls and procedures designed to ensure that the information we are required to disclose in the
reports we file with the SEC is recorded, processed, summarized and reported, within the time periods specified
in the SEC rules, and that such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision
and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of December 31, 2018.
The certifications of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the
Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report.
110
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting as
defined in Rules 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting
is designed to provide reasonable assurance to our management and Board of Directors regarding the preparation
and fair presentation of published financial statements.
Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018.
In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Based on
our assessment, we believe that as of December 31, 2018, our internal control over financial reporting is effective
based on those criteria.
The effectiveness of internal control over financial reporting as of December 31, 2018, has been audited by Ernst
& Young LLP, an independent registered public accounting firm that also audited our Consolidated Financial
Statements. Ernst & Young LLP’s report on internal control over financial reporting is included herein (following Item
15).
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the fourth quarter ended December
31, 2018, that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION
None.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
111
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required for Item 10 is hereby incorporated by reference from the Notice and Proxy Statement for
the Annual Meeting of Stockholders to be held April 18, 2019.
ITEM 11. EXECUTIVE COMPENSATION
The information required for Item 11 is hereby incorporated by reference from the Notice and Proxy Statement for
the Annual Meeting of Stockholders to be held April 18, 2019.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Except as set forth below, the information required for Item 12 is hereby incorporated by reference from the Notice
and Proxy Statement for the Annual Meeting of Stockholders to be held April 18, 2019.
Securities Authorized For Issuance Under Equity Compensation Plans
The following table summarizes, as of December 31, 2018, information about compensation plans under which
equity securities of the Company are authorized for issuance.
Number of Securities
To Be Issued
Upon Exercise of
Outstanding Options,
Warrants, and Rights
Weighted-average
Exercise Price of
Outstanding Options,
Warrants, and Rights
Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in Column (A))
(A)
(B)
(C)
1,606,347
$ —(2)
6,260,958
Plan Category(1)
Equity compensation
plans approved by
security holders
(1) We have no equity compensation plans that are not approved by security holders.
(2) Currently, only restricted share units remain outstanding under our equity compensation plan. Upon vesting, restricted share units are
settled with shares of our common stock on a one-for-one basis and, accordingly, do not include an exercise price.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required for Item 13 is hereby incorporated by reference from the Notice and Proxy Statement for
the Annual Meeting of Stockholders to be held April 18, 2019.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required for Item 14 is hereby incorporated by reference from the Notice and Proxy Statement for
the Annual Meeting of Stockholders to be held April 18, 2019.
112
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(A) Financial Statements, Financial Statement Schedules and Exhibits:
(1) Financial Statements
The financial statements included in Item 8 above are filed as part of this annual report.
(2) Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts (in millions)
Allowance for Doubtful Accounts,
Revenue Adjustments and Other
for the Years Ended:
Balance at
Beginning
of Year
Charged to
Expense/
Against
Revenue
Write-Offs,
Net of
Recoveries
Balance
at End of
Year
December 31, 2016
December 31, 2017
December 31, 2018
9.9
13.4
24.0
19.5
29.3
35.7
(16.0)
(18.7)
(23.9)
13.4
24.0
35.8
All other schedules have been omitted either because they are not applicable or because the required
information is included in our Consolidated Financial Statements or the notes thereto.
(3) Exhibits
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
113
Exhibit
Number
Description
3.1
3.2
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
21.1
23.1
31.1
31.2
32.1
99.1
Amended and Restated Articles of Incorporation of J.B. Hunt Transport Services, Inc. dated May
19, 1988 (incorporated by reference from Exhibit 3.1 of the Company’s quarterly report on Form
10-Q for the period ended March 31, 2005, filed April 29, 2005)
Amended and Restated Bylaws of J.B. Hunt Transport Services, Inc. dated April 23, 2015
(incorporated by reference from Exhibit 3.1 of the Company’s current report on Form 8-K, filed
April 27, 2015)
Amended and Restated Employee Retirement Plan (incorporated by reference from Exhibit 99 of the
Company’s registration statement on Form S-8 (File No. 033-57127), filed December 30, 1994)
Third Amended and Restated Management Incentive Plan (incorporated by reference from
Appendix A of the Company’s definitive proxy statement on Schedule 14A, filed March 9, 2017)
Summary of Compensation Arrangements with Named Executive Officers for 2018 (incorporated by
reference from Exhibit 99.1 of the Company’s current report on Form 8-K, filed January 25, 2018)
Summary of Compensation Arrangements with Named Executive Officers for 2019 (incorporated by
reference from Exhibit 99.1 of the Company’s current report on Form 8-K, filed January 25, 2019)
Indenture (incorporated by reference from Exhibit 4.1 of the Company’s registration statement on
Form S-3ASR (File No. 333-169365), filed September 14, 2010)
Second Supplemental Indenture (incorporated by reference from Exhibit 4.2 of the Company’s
current report on Form 8-K, filed March 6, 2014)
Third Supplemental Indenture (incorporated by reference from Exhibit 4.4 of the Company’s current
report on Form 8-K, filed March 6, 2014)
Fourth Supplemental Indenture (incorporated by reference from Exhibit 4.3 of the Company’s
current report on Form 8-K, filed August 6, 2015)
Credit Agreement and related documents (incorporated by reference from Exhibit 10.1 of the
Company’s current report on Form 8-K, filed September 28, 2018)
Subsidiaries of J.B. Hunt Transport Services, Inc.
Consent of Ernst & Young LLP
Rule 13a-14(a)/15d-14(a) Certification
Rule 13a-14(a)/15d-14(a) Certification
Section 1350 Certification
Equity Interests Purchase Agreement dated July 20, 2017 (incorporated by reference from Exhibit
99.1 of the Company’s current report on Form 8-K, filed July 25, 2017)
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
114
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, in the City of
Lowell, Arkansas, on the 22nd day of February 2019.
J.B. HUNT TRANSPORT SERVICES, INC.
(Registrant)
By:
/s/ John N. Roberts, III
John N. Roberts, III
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on the 22nd day of February 2019, on behalf of the registrant and in the capacities indicated.
/s/ John N. Roberts, III
John N. Roberts, III
/s/ David G. Mee
David G. Mee
President and Chief Executive Officer,
Member of the Board of Directors
(Principal Executive Officer)
Executive Vice President, Finance and
Administration, Chief Financial Officer
(Principal Financial Officer)
/s/ John Kuhlow
John Kuhlow
Senior Vice President Finance, Controller,
Chief Accounting Officer
/s/ Kirk Thompson
Chairman of the Board of Directors
Kirk Thompson
/s/ James L. Robo
James L. Robo
Member of the Board of Directors
(Lead Director)
/s/ Douglas G. Duncan
Member of the Board of Directors
Douglas G. Duncan
/s/ Francesca M. Edwardson
Francesca M. Edwardson
Member of the Board of Directors
/s/ Wayne Garrison
Member of the Board of Directors
Wayne Garrison
/s/ Sharilyn S. Gasaway
Member of the Board of Directors
Sharilyn S. Gasaway
/s/ Gary C. George
Member of the Board of Directors
Gary C. George
/s/ J. Bryan Hunt, Jr.
Member of the Board of Directors
J. Bryan Hunt, Jr.
/s/ Coleman H. Peterson
Coleman H. Peterson
Member of the Board of Directors
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
115
INDEX TO CONSOLIDATED FINANCIAL INFORMATION
Management’s Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
Consolidated Balance Sheets as of December 31, 2018 and 2017
Consolidated Statements of Earnings for years ended December 31, 2018, 2017, and 2016
Consolidated Statements of Stockholders’ Equity for years ended December 31, 2018, 2017, and 2016
Consolidated Statements of Cash Flows for years ended December 31, 2018, 2017, and 2016
Notes to Consolidated Financial Statements
PAGE
117
118
119
120
121
122
123
124
116
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
We are responsible for the preparation, integrity, and fair presentation of our Consolidated Financial Statements
and related information appearing in this report. We take these responsibilities very seriously and are committed to
maintaining controls and procedures that are designed to ensure that we collect the information we are required to
disclose in our reports to the SEC and to process, summarize, and disclose this information within the time periods
specified by the SEC.
Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this report,
conducted by our management and with the participation of our Chief Executive Officer and Chief Financial Officer,
we believe our controls and procedures are effective to ensure that we are able to collect, process, and disclose the
information we are required to disclose in our reports filed with the SEC within the required time periods.
We are responsible for establishing and maintaining effective internal control over financial reporting as defined in
Rules 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed
to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair
presentation of published financial statements. Because of its inherent limitation, internal control over financial
reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement preparation and presentation. We assessed
the effectiveness of our internal control over financial reporting as of December 31, 2018. In making this assessment,
we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control – Integrated Framework (2013 Framework). Based on our assessment, we believe that as of
December 31, 2018, our internal control over financial reporting is effective based on those criteria.
The effectiveness of internal control over financial reporting as of December 31, 2018, has been audited by Ernst
& Young LLP, an independent registered public accounting firm that also audited our Consolidated Financial
Statements. Ernst & Young LLP’s report on internal control over financial reporting is included herein.
/s/ John N. Roberts, III
/s/ David G. Mee
John N. Roberts, III
President and Chief Executive Officer
(Principal Executive Officer)
David G. Mee
Executive Vice President, Finance and
Administration, Chief Financial Officer
(Principal Financial Officer)
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
117
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of J.B. Hunt Transport Services, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of J.B. Hunt Transport Services, Inc. (the
Company) as of December 31, 2018 and 2017, the related consolidated statements of earnings, stockholders’
equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes
and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018,
based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2019, expressed
an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2005.
Rogers, Arkansas
February 22, 2019
118
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of J.B. Hunt Transport Services, Inc.
Opinion on Internal Control over Financial Reporting
We have audited J.B. Hunt Transport Services, Inc.’s internal control over financial reporting as of December
31, 2018, based on criteria established in Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, J.B.
Hunt Transport Services, Inc. (the Company) maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2018, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets as of December 31, 2018 and 2017, the related
consolidated statements of earnings, stockholders’ equity and cash flows for each of the three years in the period
ended December 31, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a)
(collectively referred to as the “financial statements”) of the Company and our report dated February 22, 2019,
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Rogers, Arkansas
February 22, 2019
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
119
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2018 and 2017
(in thousands, except share data)
Assets
Current assets:
Cash and cash equivalents
Trade accounts receivable, net
Other receivables, net
Inventories
Prepaid expenses
Total current assets
Property and equipment, at cost:
Revenue and service equipment
Land
Structures and improvements
Furniture and office equipment
Total property and equipment
Less accumulated depreciation
Net property and equipment
Goodwill
Other intangible assets, net
Other assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt
Trade accounts payable
Claims accruals
Accrued payroll
Other accrued expenses
Total current liabilities
Long-term debt
Other long-term liabilities
Deferred income taxes
Total liabilities
Commitments and contingencies (Note 10)
Stockholders’ equity:
$
$
$
2018
2017
$
7,600
1,051,698
274,511
21,977
147,195
1,502,981
4,716,860
49,486
238,202
324,695
5,329,243
1,884,132
3,445,111
40,087
65,070
38,398
14,612
920,767
283,499
20,688
99,162
1,338,728
4,158,878
47,231
202,730
261,625
4,670,464
1,687,133
2,983,331
39,764
73,691
29,835
5,091,647
$
4,465,349
$
250,706
709,736
275,139
80,922
35,845
1,352,348
898,398
96,056
643,461
2,990,263
—
598,594
251,980
42,382
28,888
921,844
1,085,649
76,661
541,870
2,626,024
Preferred stock, $100 par value. 10 million shares authorized;
none outstanding
—
—
Common stock, $.01 par value. 1 billion shares authorized;
(167,099,432 shares issued at December 31, 2018 and 2017, of which
108,710,825 shares and 109,753,008 shares were outstanding at December
31, 2018 and 2017, respectively)
Additional paid-in capital
Retained earnings
Treasury stock, at cost (58,388,607 shares at December 31, 2018, and
57,346,424 shares at December 31, 2017)
Total stockholders’ equity
Total liabilities and stockholders’ equity
See Notes to Consolidated Financial Statements.
1,671
340,457
4,188,435
1,671
310,811
3,803,844
(2,429,179)
(2,277,001)
2,101,384
$
5,091,647
$
1,839,325
4,465,349
120
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Years Ended December 31, 2018, 2017 and 2016
(in thousands, except per share amounts)
Operating revenues, excluding fuel surcharge revenues
$
7,557,648
$
6,435,858
$
6,007,347
2018
2017
2016
Fuel surcharge revenues
Total operating revenues
Operating expenses:
1,057,226
753,710
548,112
8,614,874
7,189,568
6,555,459
Rents and purchased transportation
4,434,540
3,650,806
3,255,692
Salaries, wages and employee benefits
1,926,213
1,608,378
1,469,187
Fuel and fuel taxes
459,011
347,573
283,437
Depreciation and amortization
435,893
383,518
361,510
Operating supplies and expenses
303,529
257,239
233,223
General and administrative expenses, net of asset
dispositions
Insurance and claims
Operating taxes and licenses
Communication and utilities
163,270
125,878
87,053
129,406
123,579
51,080
30,911
44,825
23,983
78,410
45,954
19,973
Total operating expenses
7,933,853
6,565,779
5,834,439
Operating income
Interest income
Interest expense
681,021
623,789
721,020
224
235
71
40,427
28,785
25,294
Earnings before income taxes
640,818
595,239
695,797
Income taxes
Net earnings
Weighted average basic shares outstanding
Basic earnings per share
Weighted average diluted shares outstanding
Diluted earnings per share
Dividends declared per common share
See Notes to Consolidated Financial Statements.
151,233
(91,024)
263,707
489,585
$
686,263
$
432,090
109,375
109,987
112,474
4.48
$
6.24
$
3.84
110,428
111,049
113,361
4.43
0.96
$
$
6.18
0.92
$
$
3.81
0.88
$
$
$
$
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
121
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years Ended December 31, 2018, 2017 and 2016
(in thousands, except per share amounts)
Balances at December 31, 2015
$
1,671 $
268,728 $
2,885,843 $
(1,855,890) $
1,300,352
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Stockholders’
Equity
Comprehensive income:
Net earnings
Cash dividend declared and paid
($0.88 per share)
Tax benefit of stock options exercised
and restricted shares issued
Purchase of treasury shares
Share-based compensation
—
—
—
—
—
Stock option exercises and restricted
share issuances, net of stock
repurchased for payroll taxes
—
(23,310 )
—
—
432,090
(98,990)
7,044
—
40,625
—
—
—
432,090
(98,990)
7,044
(249,760)
(249,760)
—
40,625
6,010
(17,300)
—
—
—
—
Balances at December 31, 2016
$
1,671 $
293,087 $
3,218,943 $
(2,099,640) $
1,414,061
Comprehensive income:
Net earnings
Cash dividend declared and paid
($0.92 per share)
Purchase of treasury shares
Share-based compensation
Restricted share issuances, net of
stock repurchased for payroll taxes
—
—
—
—
—
—
—
—
38,291
(20,567)
686,263
(101,362)
—
—
686,263
(101,362)
—
—
—
(179,813)
(179,813)
—
38,291
2,452
(18,115)
Balances at December 31, 2017
$
1,671 $
310,811 $
3,803,844 $
(2,277,001) $
1,839,325
Comprehensive income:
Net earnings
Cash dividend declared and paid
($0.96 per share)
Purchase of treasury shares
Share-based compensation
Restricted share issuances, net of
stock repurchased for payroll taxes
—
—
—
—
—
—
—
—
47,369
(17,723)
489,585
(104,994)
—
—
489,585
(104,994)
—
—
—
(150,338)
(150,338)
—
47,369
(1,840)
(19,563)
Balances at December 31, 2018
$
1,671 $
340,457 $
4,188,435 $
(2,429,179) $
2,101,384
See Notes to Consolidated Financial Statements.
122
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2018, 2017 and 2016
(in thousands)
Net cash provided by operating activities
1,087,841
855,153
Cash flows from operating activities:
Net earnings
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization
Share-based compensation
Loss on sale of revenue equipment and other
Advance deposit impairment
Deferred income taxes
Changes in operating assets and liabilities:
Trade accounts receivable
Income taxes receivable or payable
Other current assets
Trade accounts payable
Claims accruals
Accrued payroll and other accrued expenses
Cash flows from investing activities:
Additions to property and equipment
Proceeds from sale of equipment
Business acquisition
Change in other assets
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from revolving lines of credit and other
Payments on revolving lines of credit and other
Purchase of treasury stock
Stock option exercises and other
Stock repurchased for payroll taxes
Tax benefit of stock options exercised and restricted shares
issued
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
Income taxes
Noncash investing activities
Accruals for equipment received
See Notes to Consolidated Financial Statements.
$
$
$
$
2018
2017
2016
$
489,585
$
686,263
$
432,090
435,893
47,369
12,107
—
383,518
38,291
7,370
20,240
101,591
(248,764)
(130,931)
(41,071)
(6,133)
98,037
21,580
59,814
(166,111)
(45,542)
69,462
85,237
25,021
168
(995,650)
110,165
—
(1,288)
(886,773)
3,204,715
(3,137,900)
(150,338)
967
(20,530)
(526,928)
16,413
(136,879)
(3,888)
(651,282)
2,716,155
(2,612,501)
(179,813)
1,100
(19,215)
—
—
(104,994)
(208,080)
(7,012)
14,612
(101,362)
(195,636)
8,235
6,377
7,600
$
14,612
$
361,510
40,625
5,490
—
50,414
(120,994)
60,956
(37,101)
60,818
5,524
(5,189)
854,143
(638,430)
153,174
—
(132)
(485,388)
1,715,427
(1,724,365)
(249,760)
1,341
(18,641)
7,044
(98,990)
(367,944)
811
5,566
6,377
39,901
83,822
49,390
$
$
$
28,785
190,783
53,026
$
$
$
24,800
143,634
13,522
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
123
Notes to Consolidated Financial Statements
1. Business
J.B. Hunt Transport Services, Inc. is one of the largest surface transportation and delivery service companies in
North America. We operate four distinct, but complementary, business segments and provide a wide range of
general and specifically tailored freight and logistics services to our customers. We generate revenues from the
actual movement of freight from shippers to consignees, customized labor and delivery services, and serving
as a logistics provider by offering or arranging for others to provide the transportation service. Unless otherwise
indicated by the context, “we,” “us,” “our” and “JBHT” refer to J.B. Hunt Transport Services, Inc. and its
consolidated subsidiaries.
2. Summary of Significant Accounting Policies
Basis of Consolidation
Our Consolidated Financial Statements include all of our wholly owned subsidiaries. Intercompany balances and
transactions have been eliminated in consolidation. J.B. Hunt Transport Services, Inc. is a parent-level holding
company with no significant assets or operations. J.B. Hunt Transport, Inc. is a wholly owned subsidiary of J.B.
Hunt Transport Services, Inc. and is the primary operating subsidiary. All other subsidiaries of J.B. Hunt Transport
Services, Inc. are minor.
Use of Estimates
The Consolidated Financial Statements contained in this report have been prepared in conformity with accounting
principles generally accepted in the United States of America. The preparation of these statements requires us to
make estimates and assumptions that directly affect the amounts reported in such statements and accompanying
notes. We evaluate these estimates on an ongoing basis utilizing historical experience, consulting with experts and
using other methods we consider reasonable in the particular circumstances. Nevertheless, our actual results may
differ significantly from our estimates.
We believe certain accounting policies and estimates are of more significance in our financial statement preparation
process than others. We believe the most critical accounting policies and estimates include the economic useful
lives and salvage values of our assets, provisions for uncollectible accounts receivable, estimates of exposures
under our insurance and claims policies, and estimates for taxes. To the extent that actual, final outcomes are
different from our estimates, or that additional facts and circumstances cause us to revise our estimates, our
earnings during that accounting period will be affected.
Cash and Cash Equivalents
Cash in excess of current operating requirements is invested in short-term, highly liquid investments. We consider
all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
Accounts Receivable and Allowance
Our trade accounts receivable includes accounts receivable reduced by an allowance for uncollectible accounts
and revenue adjustments. Receivables are recorded at amounts billed to customers when loads are delivered
or services are performed. The allowance for uncollectible accounts and revenue adjustments is based on
historical experience, as well as any known trends or uncertainties related to customer billing and account
collectability. The adequacy of our allowance is reviewed quarterly. Balances are charged against the allowance
when it is determined the receivable will not be recovered. The allowance for uncollectible accounts and revenue
adjustments for our trade accounts receivable was $23.6 million and $15.4 million at December 31, 2018 and
2017, respectively. The allowance for uncollectible accounts for our other receivables was $12.2 million and $8.6
million at December 31, 2018 and 2017, respectively.
Inventory
Our inventories consist primarily of revenue equipment parts, tires, supplies, and fuel, and are valued using the
lower of average cost or market.
124
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
Investments in Marketable Equity Securities
Our investments consist of marketable equity securities stated at fair value and are designated as either trading
securities or available-for-sale securities at the time of purchase based upon the intended holding period. Changes
in the fair value of our trading securities are recognized currently in “general and administrative expenses, net of
asset dispositions” in our Consolidated Statements of Earnings. Changes in the fair value of our available-for-sale
securities are recognized in “accumulated other comprehensive income” on our Consolidated Balance Sheets,
unless we determine that an unrealized loss is other-than-temporary. If we determine that an unrealized loss is
other-than-temporary, we recognize the loss in earnings. Cost basis is determined using average cost.
At December 31, 2018 and 2017, we had no available-for-sale securities. See Note 8, Employee Benefit Plans, for
a discussion of our trading securities.
Property and Equipment
Depreciation of property and equipment is calculated on the straight-line method over the estimated useful lives of
4 to 10 years for tractors, 7 to 20 years for trailing equipment, 10 to 40 years for structures and improvements, and
3 to 10 years for furniture and office equipment. Salvage values are typically 10% to 30% of original cost for tractors
and trailing equipment and reflect any agreements with tractor suppliers for residual or trade-in values for certain
new equipment. We capitalize tires placed in service on new revenue equipment as a part of the equipment cost.
Replacement tires and costs for recapping tires are expensed at the time the tires are placed in service. Gains and
losses on the sale or other disposition of equipment are recognized at the time of the disposition and are classified in
general and administrative expenses, net of asset dispositions in the Consolidated Statements of Earnings.
We continually evaluate the carrying value of our assets for events or changes in circumstances that indicate the
carrying value may not be recoverable. Recoverability of assets to be held and used is measured by comparing
the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less cost to sell.
Revenue Recognition
We record revenues on the gross basis at amounts charged to our customers because we control and are
primarily responsible for the fulfillment of promised services. Accordingly, we serve as a principal in the transaction.
We invoice our customers, and we maintain discretion over pricing. Additionally, we are responsible for selection of
third-party transportation providers to the extent used to satisfy customer freight requirements.
Our revenue is earned through the service offerings of our four reportable business segments. See Note 13,
Business Segments, for revenue reported by segment. All revenue transactions between reporting segments are
eliminated in consolidation.
Intermodal (JBI) - JBI segment includes freight that is transported by rail over at least some portion of the
movement and also includes certain repositioning truck freight moved by JBI equipment or third-party carriers,
when such highway movement is intended to direct JBI equipment back toward intermodal operations. JBI
performs these services primarily through contractual rate quotes with customers that are held static for a period
of time, usually one year.
Dedicated Contract Services® (DCS) - DCS segment business includes company-owned and customer-owned,
DCS-operated revenue equipment and employee drivers assigned to a specific customer, traffic lane, or service.
DCS operations usually include formal, written longer-term customer contracts that govern services performed and
applicable rates.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
125
Integrated Capacity Solutions (ICS) - ICS provides non-asset and asset-light transportation solutions to
customers through relationships with third-party carriers and integration with company-owned equipment. ICS
services include flatbed, refrigerated, and less-than-truckload (LTL), as well as a variety of dry-van and intermodal
solutions. ICS performs these services through customer contractual rate quotes as well as spot quotes that are
one-time rate quotes issued for a single transaction or group of transactions.
Truckload (JBT) - JBT business includes full-load, dry-van freight that is typically transported utilizing company-
owned or company-controlled revenue equipment. This freight is typically transported over roads and highways
and does not move by rail. JBT utilizes both contractual rate quotes and spot rate quotes with customers.
We recognize revenue from customer contracts based on relative transit time in each reporting period and as other
performance obligations are provided, with related expenses recognized as incurred. Accordingly, a portion of the
total revenue that will be billed to the customer is recognized in each reporting period based on the percentage of
the freight pickup and delivery performance obligation that has been completed at the end of the reporting period.
Derivative Instruments
We periodically utilize derivative instruments to manage exposure to changes in interest rates. At inception of
a derivative contract, we document relationships between derivative instruments and hedged items, as well as
our risk-management objective and strategy for undertaking various derivative transactions, and assess hedge
effectiveness. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a
highly effective hedge, we discontinue hedge accounting prospectively.
Income Taxes
Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment
date. We record valuation allowances for deferred tax assets to the extent we believe these assets are not more
likely than not to be realized through the reversal of existing taxable temporary differences, projected future taxable
income, or tax-planning strategies. We record a liability for unrecognized tax benefits when the benefits of tax
positions taken on a tax return are not more likely than not to be sustained upon audit. Interest and penalties
related to uncertain tax positions are classified as interest expense in the Consolidated Statements of Earnings.
Earnings Per Share
We compute basic earnings per share by dividing net earnings available to common stockholders by the actual
weighted average number of common shares outstanding for the reporting period. Diluted earnings per share
reflect the potential dilution that could occur if holders of unvested restricted and performance share units or
options exercised or converted their holdings into common stock. Outstanding unvested restricted share units and
stock options represent the dilutive effects on weighted average shares. A reconciliation of the number of shares
used in computing basic and diluted earnings per share is shown below (in thousands):
Years ended December 31,
2018
2017
2016
Weighted average shares outstanding – basic
109,375
109,987
112,474
Effect of common stock equivalents
1,053
1,062
887
Weighted average shares outstanding – diluted
110,428
111,049
113,361
126
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
Concentrations of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, include trade receivables.
For each of the years ended December 31, 2018, 2017, and 2016, our top 10 customers, based on revenue,
accounted for approximately 30%, 29%, and 29% of our total revenue. Our top 10 customers, based on revenue,
accounted for approximately 32% and 31% of our total trade accounts receivable at December 31, 2018 and
2017, respectively. We had no individual customers with revenues greater than 10% of total revenues.
Share-based Compensation
We have a share-based compensation plan covering certain employees, including officers and directors. We
account for share-based compensation utilizing the fair value recognition provisions of current accounting
standards for share-based payments. We currently utilize restricted share units and performance share units and
in the past have also utilized nonstatutory stock options. Issuances of our stock upon restricted share unit and
performance share unit vesting or share option exercise are made from treasury stock. Our restricted share unit
and performance share unit awards may include both graded-vesting and cliff-vesting awards and therefore vest in
increments during the requisite service period or at the end of the requisite service period, as appropriate for each
type of vesting. We recognize compensation expense on a straight-line basis over the requisite service periods
within each award. The benefit for the forfeiture of an award is recorded in the period in which it occurs.
Claims Accruals
We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular collisions,
accidents, and cargo damage. We are substantially self-insured for loss of and damage to our owned and leased
revenue equipment. Certain insurance arrangements include a level of self-insurance (deductible) coverage
applicable to each claim. We have umbrella policies to limit our exposure to catastrophic claim costs.
The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates,
and claim type. For 2016 through 2018, we were self-insured for $500,000 per occurrence for personal injury
and property damage and self-insured for $100,000 per workers’ compensation claim. We have policies in place
for 2019 with substantially the same terms as our 2018 policies for personal injury, property damage, workers’
compensation, and cargo loss or damage, with the exception of decreasing our self-insured portion of workers’
compensation claims to zero for nearly all states.
Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on
our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as
well as legal, economic, and regulatory factors. Our safety and claims personnel work directly with representatives
from the insurance companies to continually update the estimated cost of each claim. The ultimate cost of a
claim develops over time as additional information regarding the nature, timing, and extent of damages claimed
becomes available. Accordingly, we use an actuarial method to develop current claim information to derive an
estimate of our ultimate claim liability. This process involves the use of loss-development factors based on our
historical claims experience and includes a contractual premium adjustment factor, if applicable. In doing so, the
recorded liability considers future claims growth and provides an allowance for incurred-but-not-reported claims.
We do not discount our estimated losses. At December 31, 2018 and 2017, we had an accrual of approximately
$260 million and $238 million, respectively, for estimated claims. In addition, we record receivables for amounts
expected to be reimbursed for payments made in excess of self-insurance levels on covered claims. At December
31, 2018 and 2017, we have recorded $261 million and $256 million, respectively, of expected reimbursement for
covered excess claims, other insurance deposits, and prepaid insurance premiums. Of these total asset balances,
$158 million and $193 million have been included in other receivables in our Consolidated Balance Sheets at
December 31, 2018 and 2017, respectively.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
127
Goodwill and Other Intangible Assets
Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired
in a business combination. Goodwill and intangible assets with indefinite lives are not amortized. Goodwill is
reviewed, using a market based approach, for potential impairment as of October 1st on an annual basis or,
more frequently, if circumstances indicate a potential impairment is present. Intangible assets with finite lives are
amortized on the straight-line method over the estimated useful lives of 5 to 10 years.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
2016-02, Leases, which requires lessees to recognize a right-of-use asset and a lease liability for most leases on
the balance sheet as well as other qualitative and quantitative disclosures. ASU 2016-02 is to be applied using
a modified retrospective method and is effective for us on January 1, 2019. In July 2018, the FASB issued ASU
2018-11, Leases, which provides an optional transition method allowing entities to recognize a cumulative-effect
adjustment to the opening balance of stockholders’ equity in the period of adoption, with no restatement of
comparative prior periods required. We will adopt the standard using this optional transition method.
The FASB has provided certain practical expedients in applying the standard. Of the allowed practical expedients
within the standard applicable to our operations, we will elect the package of practical expedients, which among
other things, allows us to carry forward the historical lease classification upon adoption of the standard. We will not
elect the hindsight practical expedient when determining the lease term for existing leases. In addition, we will not
separate nonlease components from lease components by class of underlying assets where appropriate and we
will not apply the recognition requirements of the standard to short-term leases, as allowed by the standard.
Upon adoption of the standard we will record offsetting lease assets and lease liabilities on our Consolidated Balance
Sheet in the amount of $102.4 million, as of January 1, 2019. We do not expect the adoption of the standard to have
a material impact on our earnings or debt covenant compliance and no impact on our cash flows.
In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software, which
aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service
contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use
software. The new standard is effective for us on January 1, 2020, but early adoption is permitted. ASU 2018-
15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of
adoption. The adoption of the new guidance is not expected to have a material impact on our financial statements.
Accounting Pronouncements Adopted in 2018
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes
virtually all existing revenue recognition guidance. The new standard requires an entity to recognize revenue
when it transfers promised goods or services to customers in an amount that reflects the consideration the entity
expects to receive in exchange for those goods or services. This update also requires additional disclosure about
the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including
significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a
contract. We adopted ASU 2014-09 in the first quarter 2018, using the modified retrospective transition approach,
which did not have a material impact on how we recognize revenue or to our financial statements or disclosures.
128
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
3. Financing Arrangements
Outstanding borrowings, net of unamortized discount, unamortized debt issuance cost, and fair value swap, under
our current financing arrangements consist of the following (in millions):
Senior revolving line of credit
Senior notes
Less current portion of long-term debt
Total long-term debt
December 31,
2018
2017
$ 307.1
$ 241.4
842.0
(250.7)
844.2
—
$ 898.4
$ 1,085.6
Aggregate maturities of long-term debt subsequent to December 31, 2018, are as follows: $250.7 million in 2019,
$342.5 million in 2022, $307.1 in 2023, and $248.8 million thereafter.
Senior Revolving Line of Credit
In September 2018, we replaced our $500 million senior revolving credit facility dated September 2015 with a new
credit facility authorizing us to borrow up to $750 million under a senior revolving line of credit, which is supported
by a credit agreement with a group of banks. This new senior credit facility has a five year term expiring September
2023, and allows us to request an increase in the total commitment by up to $250 million and to request a one
year extension of the maturity date. The applicable interest rate under this agreement is based on the Prime Rate,
the Federal Funds Rate, or LIBOR, depending upon the specific type of borrowing, plus an applicable margin and
other fees. At December 31, 2018, we had $309.0 million outstanding at an average interest rate of 3.47% under
this agreement.
Senior Notes
Our senior notes consist of three separate issuances. The first and second issuances are $250 million of 2.40%
senior notes due March 2019 and $250 million of 3.85% senior notes due March 2024, respectively, both of which
were issued in March 2014. Interest payments under both notes are due semiannually in March and September
of each year. The third issuance is $350 million of 3.30% senior notes due August 2022, issued in August 2015.
Interest payments under this note are due semiannually in February and August of each year, beginning February
2016. All three senior notes were issued by J.B. Hunt Transport Services, Inc., a parent-level holding company
with no significant assets or operations. The notes are guaranteed on a full and unconditional basis by a wholly
owned subsidiary. All other subsidiaries of the parent are minor. We registered these offerings and the sale of the
notes under the Securities Act of 1933, pursuant to a shelf registration statement filed in February 2014. All notes
are unsecured obligations and rank equally with our existing and future senior unsecured debt. We may redeem for
cash some or all of the notes based on a redemption price set forth in the note indenture. See Note 4, Derivative
Financial Instruments, for terms of interest rate swaps entered into on the $250 million of 2.40% senior notes due
March 2019 and the $350 million of 3.30% senior notes due August 2022.
Our financing arrangements require us to maintain certain covenants and financial ratios. We were in compliance
with all covenants and financial ratios at December 31, 2018. For our senior notes maturing in 2019, it is our intent
to pay the entire outstanding balances in full, on or before the maturity dates, using our existing senior revolving
line of credit or other sources of long-term financing. In addition, we have a shelf registration filed with the SEC and
may draw upon it as warranted.
4. Derivative Financial Instruments
We periodically utilize derivative instruments for hedging and non-trading purposes to manage exposure to
changes in interest rates and to maintain an appropriate mix of fixed and variable-rate debt. At inception of a
derivative contract, we document relationships between derivative instruments and hedged items, as well as
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
129
our risk-management objective and strategy for undertaking various derivative transactions, and assess hedge
effectiveness. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a
highly effective hedge, we discontinue hedge accounting prospectively.
We entered into receive fixed-rate and pay variable-rate interest rate swap agreements simultaneously with the
issuance of our $250 million of 2.40% senior notes due March 2019 and $350 million of 3.30% senior notes due
August 2022, to effectively convert this fixed-rate debt to variable-rate. The notional amounts of these interest
rate swap agreements equal those of the corresponding fixed-rate debt. The applicable interest rates under these
agreements is based on LIBOR plus an established margin, resulting in an interest rate of 3.63% for our $250 million
of 2.40% senior notes and 3.97% for our $350 million of 3.30% senior notes at December 31, 2018. The swaps
expire when the corresponding senior notes are due. The fair values of these swaps are recorded in other assets
and other long-term liabilities in our Consolidated Balance Sheet at December 31, 2018. See Note 9, Fair Value
Measurements, for disclosure of fair value. These derivatives meet the required criteria to be designated as fair value
hedges and as the specific terms and notional amounts of these derivative instruments match those of the fixed-rate
debt being hedged, these derivative instruments are assumed to perfectly hedge the related debt against changes
in fair value due to changes in the benchmark interest rate. Accordingly, any change in the fair value of these interest
rate swaps recorded in earnings is offset by a corresponding change in the fair value of the related debt.
5. Capital Stock
We have one class of preferred stock and one class of common stock. We had no outstanding shares of preferred
stock at December 31, 2018 or 2017. Holders of shares of common stock are entitled to receive dividends when
and if declared by the Board of Directors and are entitled to one vote per share on all matters submitted to a vote
of the stockholders. On January 23, 2019, we announced an increase in our quarterly cash dividend from $0.24
to $0.26 per share, which will be paid February 22, 2019, to stockholders of record on February 8, 2019. At
December 31, 2018, we had 1.6 million shares of common stock to be issued upon the vesting of equity awards
and 6.3 million shares reserved for future issuance pursuant to share-based payment plans. During calendar year
2018, we purchased approximately 1.3 million shares, or $150.3 million, of our common stock in accordance with
plans authorized by our Board. At December 31, 2018, we had $371 million available under an authorized plan to
purchase our common stock.
6. Share-based Compensation
We maintain a Management Incentive Plan (the “Plan”) that provides various share-based financial methods to
compensate our key employees with shares of our common stock or common stock equivalents. Under the Plan,
as amended, we have, from time to time, utilized restricted share units, performance share units, restricted shares,
and nonstatutory stock options to compensate our employees and directors. We currently are utilizing restricted
and performance share units.
Our restricted share units have various vesting schedules generally ranging from 3 to 10 years when awarded.
These restricted share units do not contain rights to vote or receive dividends until the vesting date. Unvested
restricted share units are forfeited if the employee terminates for any reason other than death, disability, or special
circumstances as determined by the Compensation Committee. Restricted share units are valued based on the fair
value of the award on the grant date, adjusted for dividend estimates based on grant date dividend rates.
Our performance share units vest based on the passage of time (generally 3 to 10 years) and achievement of
performance criteria. Performance share units do not contain rights to vote or receive dividends until the vesting date.
Unvested performance share units are forfeited if the employee terminates for any reason other than death, disability,
or special circumstances as determined by the Compensation Committee. Performance shares are valued based on
the fair value of the award on the grant date, adjusted for dividend estimates based on grant date dividend rates.
In the past, nonstatutory stock options have been granted to key employees for the purchase of our common
stock for 100% of the fair market value of the common stock at the grant date as awarded by the Compensation
Committee. These options generally vested over a 10-year period and were forfeited immediately if the employee
terminated for any reason other than death, disability or retirement after age 55. We did not grant any stock
options during the years ended December 31, 2018, 2017, and 2016.
130
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
An employee is allowed to surrender shares of common stock received upon vesting to satisfy tax withholding
obligations incident to the vesting of restricted share units and performance share units.
We account for our restricted share units, performance share units, and stock options in accordance with current
accounting standards for share-based payments. These standards require that the cost of all share-based
payments to employees, including grants of employee stock options, be recognized in our Consolidated Financial
Statements based on the grant date fair value of those awards. This cost is recognized over the period for which
an employee is required to provide service in exchange for the award, subject to the attainment of performance
metrics established for performance share units. Share-based compensation expense is recorded in salaries,
wages, and employee benefits in our Consolidated Statements of Earnings, along with other compensation
expenses to employees. The following table summarizes the components of our share-based compensation
program expense (in thousands):
Years ended December 31,
2018
2017
2016
Restricted share units
Pretax compensation expense
$
32,797
$
28,679
$
29,938
Tax benefit
7,740
(4,385 )
11,347
Restricted share units, net of tax
$
25,057
$
33,064
$
18,591
Performance share units
Pretax compensation expense
$
14,572
$
9,612
$ 10,687
Tax benefit
3,439
(1,470 )
4,050
Performance share awards, net of tax
$ 11,133
$ 11,082
$
6,637
A summary of our restricted share units, performance share units, and nonstatutory stock options is as follows:
Restricted Share Units
Number of Shares
Weighted Average Grant Date Fair Value
Unvested at December 31, 2015
Granted
Vested
Forfeited
Unvested at December 31, 2016
Granted
Vested
Forfeited
Unvested at December 31, 2017
Granted
Vested
Forfeited
Unvested at December 31, 2018
1,516,750
540,746
(520,619)
(34,221)
1,502,656
158,319
(380,702)
(37,745)
1,242,528
370,669
(337,512)
(29,850)
1,245,835
$ 63.96
75.03
54.78
69.14
$ 71.16
90.06
67.29
75.13
$ 74.71
119.82
79.02
83.69
$ 86.80
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
131
Performance Share Units
Number of Shares
Weighted Average Grant Date Fair Value
Unvested at December 31, 2015
Granted
Vested
Forfeited
Unvested at December 31, 2016
Granted
Vested
Forfeited
Unvested at December 31, 2017
Granted
Vested
Forfeited
Unvested at December 31, 2018
490,673
142,114
(148,733)
—
484,054
—
(155,867)
—
328,187
150,763
(118,438)
—
360,512
$ 67.04
74.71
62.84
—
$ 70.58
—
68.27
—
$ 71.68
122.57
69.29
—
$ 93.74
At December 31, 2018, we had $59.1 million and $13.7 million of total unrecognized compensation expense
related to restricted share units and performance share units, respectively, that is expected to be recognized on
a straight-line basis over the remaining weighted average vesting period of approximately 3.6 years for restricted
share units and 2.6 years for performance share units.
The aggregate intrinsic value of restricted and performance share units vested and options exercised during
the years ended December 31, 2018, 2017, and 2016, was $55.1 million, $49.3 million, and $56.7 million,
respectively. The aggregate intrinsic value of unvested restricted and performance share units was $149.5 million
at December 31, 2018. The total fair value of shares vested for restricted share, performance share, and stock
option awards during the years ended December 31, 2018, 2017, and 2016, was $35.0 million, $36.4 million, and
$38.1 million, respectively.
7. Income Taxes
Income tax expense attributable to earnings before income taxes consists of (in thousands):
Current:
Federal
State and local
Deferred:
Federal
State and local
Years ended December 31,
2018
2017
2016
$
22,904
$
134,284
$
191,422
26,738
49,642
23,456
157,740
97,670
(261,592)
3,921
101,591
12,828
(248,764)
21,871
213,293
45,846
4,568
50,414
Total tax expense/(benefit)
$
151,233
$
(91,024)
$
263,707
132
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
Income tax expense attributable to earnings before income taxes differed from the amounts computed using the
statutory federal income tax rate of 21% as follows (in thousands):
Years ended December 31,
2018
2017
2016
Income tax at federal statutory rate
$
134,572
$
208,334
$
243,529
State tax, net of federal effect
Federal tax reform
Benefit of stock compensation
199/R&D credit
Nondeductible meals and entertainment
Change in effective state tax rate, net of federal benefit
Other, net
Total tax expense
24,627
(3,219)
(4,919)
1,000
1,071
(1,469)
(430)
18,334
(309,223)
(4,907)
(7,056)
1,374
3,403
(1,283)
19,165
—
—
—
1,419
(1,055)
649
$
151,233
$
(91,024)
$
263,707
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
133
The Tax Cuts and Jobs Act (the Act) was enacted in December 2017. Beginning in 2018, the Act reduced the
U.S. federal corporate tax rate from 35% to 21%. At December 31, 2017, we had not completed our accounting
for the tax effects of enactment of the Act. However, we made a reasonable estimate of the effects on our existing
deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future, which
was generally 21%. The provisional amount recorded resulting from the remeasurement of our deferred tax
balance was $309.2 million, which was included as a component of 2017 income tax from continuing operations.
During 2018, we finalized our calculations for our 2017 federal income tax return, which was filed based on the law
prior to the Act, resulting in no significant change to the initial measurement of these balances. Remaining aspects
of the Act were not relevant to our operations.
Income taxes receivable was $102.4 million and $61.3 million at December 31, 2018 and 2017, respectively.
These amounts have been included in other receivables in our Consolidated Balance Sheets. The tax effects of
temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at
December 31, 2018 and 2017, are presented below (in thousands):
Deferred tax assets:
Insurance accruals
Allowance for doubtful accounts
Compensation accrual
Deferred compensation accrual
Federal benefit of state uncertain tax positions
State NOL carry-forward
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets, net of valuation allowance
Deferred tax liabilities:
December 31,
2018
2017
$ 34,889
$ 27,700
7,649
10,461
20,396
10,364
6,041
4,626
94,426
(6,041)
88,385
6,605
3,661
17,620
8,681
4,944
3,134
72,345
(4,944)
67,401
Plant and equipment, principally due to differences in depreciation
696,913
566,396
Prepaid permits and insurance, principally due to expensing for
income tax purposes
Other
Total gross deferred tax liabilities
Net deferred tax liability
33,594
1,339
731,846
28,089
14,786
609,271
$ 643,461
$ 541,870
134
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
Guidance on accounting for uncertainty in income taxes prescribes recognition and measurement criteria and
requires that we assess whether the benefits of our tax positions taken are more likely than not of being sustained
under tax audits. We have made adjustments to the balance of unrecognized tax benefits, a component of other
long-term liabilities on our Consolidated Balance Sheets, as follows (in millions):
Beginning balance
Additions based on tax positions related to the current year
Additions/(reductions) based on tax positions taken in prior years
Reductions due to settlements
Reductions due to lapse of applicable statute of limitations
December 31,
2018
2017
2016
$ 45.3
$ 35.4
$ 32.0
13.9
(2.4)
—
(4.6)
11.6
5.4
(2.4)
(4.7 )
10.3
(3.2)
(0.4)
(3.3 )
Ending balance
$ 52.2
$ 45.3
$ 35.4
At December 31, 2018 and 2017, we had a total of $52.2 million and $45.3 million, respectively, in gross
unrecognized tax benefits. Of these amounts, $43.1 million and $37.5 million represent the amount of
unrecognized tax benefits that, if recognized, would impact our effective tax rate in 2018 and 2017, respectively.
Interest and penalties related to income taxes are classified as interest expense in our Consolidated Statements of
Earnings. The amount of accrued interest and penalties recognized during the years ended December 31, 2018,
2017, and 2016, was $2.4 million, $2.1 million, and $1.9 million, respectively. Future changes to unrecognized
tax benefits will be recognized as income tax expense and interest expense, as appropriate. The total amount of
accrued interest and penalties for such unrecognized tax benefits at December 31, 2018 and 2017, was $4.6
million and $3.6 million, respectively.
Tax years 2015 and forward remain subject to examination by federal tax jurisdictions, while tax years 2008 and
forward remain open for state jurisdictions.
8. Employee Benefit Plans
We maintain a defined contribution employee retirement plan, which includes a 401(k) option, under which all
employees are eligible to participate. We match a specified percentage of employee contributions, subject to
certain limitations. For the years ended December 31, 2018, 2017, and 2016, our matching contributions to the
plan were $19.7 million, $16.7 million, and $15.6 million, respectively.
We have a nonqualified deferred compensation plan that allows eligible employees to defer a portion of their
compensation. The compensation deferred under this plan is credited with earnings or losses on investments
elected by plan participants. Each participant is fully vested in all deferred compensation and earnings; however,
these amounts are subject to general creditor claims until actually distributed to the employee. A participant may
elect to receive deferred amounts in one payment or in quarterly installments payable over a period of 2 to 25
years upon reaching age 55, having 15 years of service, or becoming disabled. Our total liability under this plan
was $15.7 million as of December 31, 2018, and $16.4 million as of December 31, 2017. These amounts are
included in other long-term liabilities in our Consolidated Balance Sheets. Participant withholdings are held by a
trustee and invested in equity securities as directed by participants. These investments are classified as trading
securities and recorded at fair value. Realized and unrealized gains and losses are recognized currently in earnings.
The investments are included in other assets in our Consolidated Balance Sheets and totaled $15.7 million as of
December 31, 2018, and $16.4 million as of December 31, 2017.
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
135
9. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Our assets and liabilities measured at fair value are based on valuation techniques which consider prices and
other relevant information generated by market transactions involving identical or comparable assets and liabilities.
These valuation methods are based on either quoted market prices (Level 1) or inputs, other than quoted prices
in active markets, that are observable either directly or indirectly (Level 2). The following are assets and liabilities
measured at fair value on a recurring basis (in millions):
Asset/(Liability) Balance
December 31,
2018
2017
Input Level
Trading investments
Interest rate swaps
$ 15.7
$ 16.4
$ (4.8)
$ (1.4)
Senior notes, net of unamortized discount and debt
issuance costs
$ (591.3)
$ (595.6)
1
2
2
The fair value of trading investments has been measured using the market approach (Level 1) and reflect quoted
market prices. The fair values of interest rate swaps and corresponding senior notes have been measured using
the income approach (Level 2), which include relevant interest rate curve inputs. Trading investments are classified
in other assets in our Consolidated Balance Sheets. Depending on their period end fair value, interest rate swaps
are classified in other assets or other long-term liabilities in our Consolidated Balance Sheets. The senior notes are
classified in long-term debt in our Consolidated Balance Sheets.
Financial Instruments
The carrying amount of our senior revolving line of credit and remaining senior notes not measured at fair value on a
recurring basis was $555.9 million and $490.0 million at December 31, 2018 and 2017, respectively. The estimated
fair value of these liabilities using the income approach (Level 2), based on their net present value, discounted at our
current borrowing rate, was $564.9 million and $506.3 million at December 31, 2018 and 2017, respectively.
In 2017, we remeasured an advance deposit previously made for the purchase of new trailing equipment from a
carrying amount of $20.2 million to a fair value of zero, due the manufacturer not being able to meet delivery. The
resulting charge was included in general and administrative expenses, net of asset dispositions in our Consolidated
Statements of Earnings. The carrying amounts of all other instruments at December 31, 2018 and 2017,
approximate their fair value due to the short maturity of these instruments.
10. Commitments and Contingencies
As of December 31, 2018, we had approximately $117.8 million of obligations remaining under operating
lease arrangements related primarily to terminal and support facilities. Future minimum lease payments under
noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31,
2018, are approximately $117.8 million, with payment streams as follows (in millions): 2019 - $34.9; 2020 - $29.9;
2021 - $20.7; 2022 - $13.7; and thereafter - $18.6.
Total rent expense was $98.7 million in 2018, $64.3 million in 2017, and $44.1 million in 2016. At December 31,
2018, we had outstanding commitments of approximately $381.6 million, net of proceeds from sales or trade-ins
during 2019 and 2020, which is primarily related to the acquisition of containers, chassis, and tractors.
During 2018, we issued financial standby letters of credit as a guaranty of our performance under certain operating
agreements and self-insurance arrangements. If we default on our commitments under the agreements or other
arrangements, we are required to perform under these guaranties. The undiscounted maximum amount of our
obligation to make future payments in the event of defaults is approximately $1.3 million as of December 31, 2018.
136
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
We are a defendant in certain alleged class-action lawsuits in which the plaintiffs are current and former
California-based drivers who allege claims for unpaid wages, failure to provide meal and rest periods, and other
items. In the lead class-action, we reached an agreement and recorded a reserve in September 2018 to resolve
all pending claims for a class settlement payment of $15 million, subject to Court approval. The Court granted
preliminary settlement approval in November 2018. Notice of the settlement has been mailed to all settlement
class members and the deadline for objections to the settlement passed without any objections filed. We expect
the Court’s order granting final approval to be issued in April 2019. The overlapping claims in the other alleged
class-action lawsuits remain stayed pending final approval of the settlement in the lead class-action case.
In January 2017, we exercised our right to utilize the arbitration process to review the division of revenue collected
beginning May 1, 2016, as well as to clarify other issues, under our Joint Service Agreement with BNSF Railway
Company (BNSF). BNSF requested the same, and the arbitration process is on-going. On October 5, 2018, we
received the arbitrators’ Interim Award. The details of the Interim Award are confidential and require the parties to
submit additional information requested by the arbitrators to decide certain unresolved matters. For the determined
components of the Interim Award, we recorded an $18.3 million pre-tax charge in the third quarter 2018, related to
certain charges claimed by BNSF for specific services requested for customers from April 2014 through May 2018.
On December 7, 2018 the arbitrators’ issued their Clarified Interim Award of October 5, 2018 resulting from some
of the parties’ additional submissions to the Panel regarding certain issues related to determining the revenue
division between the parties. On January 11, 2019, the Panel issued its Second Interim Award ordering that
$89.4 million is due from the Company to BNSF resulting from the adjusted revenue divisions relating to the
2016 period at issue ($52.1 million) and for calendar year 2017 ($37.3 million). The parties have been instructed
to make further submissions on the revenue divisions for calendar year 2018 and going forward, as well as
other confidential issues raised during the arbitration process so that the panel can issue an appropriate interim
and/or final award regarding all issues raised during the proceeding. We recorded pretax charges for contingent
liabilities in the fourth quarter 2018 of $89.4 million claimed by the BNSF for the period May 1, 2016 through
December 31, 2017 and $44.6 million for the period January 1, 2018 through December 31, 2018, for a total
of $134 million.
The other financial implications from the Interim Award and the Clarified Interim Award will not be fully determined
until the arbitrators issue additional award(s) following their review of each party’s requested additional
submissions. At this time, we are unable to reasonably predict the final outcome of the arbitration, and, as such,
no further gain or loss contingency can be determined or recorded. If decided adversely, this matter could result
in a liability material to our financial condition or results of operations. BNSF provides a significant amount of rail
transportation services to our JBI business segment. Normal commercial business activity between the parties,
including load tendering, load tracing, billing and payments, is expected to continue on a timely basis.
We are involved in certain other claims and pending litigation arising from the normal conduct of business. Based
on present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution
of these claims and pending litigation will not have a material adverse effect on our financial condition, results of
operations or liquidity.
11. Acquisitions
On January 7, 2019, we entered into an agreement to acquire substantially all of the assets and assume certain
specified liabilities of the affiliated entities of Cory 1st Choice Home Delivery (Cory), subject to customary closing
conditions. The closing of the transaction was effective on February 15, 2019. The purchase price was $100 million.
Upon closing of this acquisition, we acquired customer contracts, net working capital and assumed various facility
leases. We used our existing revolving credit facility to finance this transaction. The final calculation of net working
capital and the purchase price allocation are currently in process. The Cory acquisition was accounted for as a
business combination and will operate within our Dedicated Contract Services® business segment.
In July 2017, we entered into an agreement to acquire Special Logistics Dedicated, LLC (SLD), and its affiliated
entities, subject to customary closing conditions. The purchase price was $136.0 million with no assumption of
debt. The closing of the transaction was effective on July 31, 2017. Total consideration paid in cash under the
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
137
SLD agreement was $137.6 million and consisted of the agreed upon purchase price adjusted for an estimated
working capital adjustment and cash acquired. In addition, we incurred approximately $3.1 million in transaction
costs which are recorded in general and administrative expenses, net of asset dispositions in our Consolidated
Statements of Earnings. The SLD acquisition was accounted for as a business combination. Assets acquired
and liabilities assumed were recorded in our Consolidated Balance Sheet at their estimated fair values, as of
the closing date, using cost, market data and valuation techniques that reflect management’s judgment and
estimates. As a result of the acquisition, we recorded approximately $76 million of finite-lived intangible assets and
approximately $40 million of goodwill. Goodwill consists of acquiring and retaining the SLD existing network and
expected synergies from the combination of operations. The results of the acquired operations after the respective
acquisition date have been included in our Consolidated Statements of Earnings.
12. Goodwill and Other Intangible Assets
As discussed in Note 11, Acquisitions, in 2017, we recorded goodwill of approximately $40 million and additional
finite-lived intangible assets of approximately $76 million in connection with the SLD acquisition. All goodwill was
assigned to our Dedicated Contract Services® business segment. No impairment losses have been recorded
for goodwill as of December 31, 2018. Prior to the SLD acquisition, our only intangible asset consisted of our
purchased LDC network access within our Dedicated Contract Services® segment. Identifiable intangible assets
consist of the following (in millions):
December 31,
2018
2017
Finite-lived intangibles:
Non-competition agreements
$ 0.2
$ 0.2
Customer relationships
LDC Network
Total finite-lived intangibles
Less accumulated amortization
75.3
10.5
86.0
(20.9)
75.3
10.5
86.0
(12.3)
Total identifiable intangible assets, net
$ 65.1
$ 73.7
Weighted
Average
Amortization
Period
5
10
10
Our finite-lived intangible assets have no assigned residual values.
During the years ending December 31, 2018, 2017, and 2016, intangible asset amortization expense was
$8.6 million, $4.2 million and $1.0 million, respectively. Estimated amortization expense for our finite-lived
intangible assets is expected to be approximately $7.8 million for 2019 and $7.6 million for 2020 through 2023.
Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset
acquisitions, impairment or accelerated amortization of intangible assets, and other events.
138
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
13. Segment Information
We have four reportable business segments – Intermodal (JBI), Dedicated Contract Services® (DCS), Integrated
Capacity Solutions (ICS), and Truckload (JBT) – which are based primarily on the services each segment provides.
The JBI segment includes freight that is transported by rail over at least some portion of the movement and also
includes certain repositioning truck freight moved by JBI equipment or third-party carriers, when such highway
movement is intended to direct JBI equipment back toward intermodal operations. DCS segment business
includes company-owned and customer-owned, DCS-operated revenue equipment and employee drivers
assigned to a specific customer, traffic lane, or service. DCS operations usually include formal, written longer-
term agreements or contracts that govern services performed and applicable rates. ICS provides non-asset and
asset-light transportation solutions to customers through relationships with third-party carriers and integration with
JBHT-owned equipment. ICS services include flatbed, refrigerated, and LTL, as well as a variety of dry-van and
intermodal solutions. JBT business includes full-load, dry-van freight that is typically transported utilizing company-
owned or company-controlled revenue equipment. This freight is typically transported over roads and highways
and does not move by rail. All transactions between reporting segments are eliminated in consolidation.
Our customers are geographically dispersed across the United States. A summary of certain segment information
as of December 31 is presented below (in millions):
JBI
DCS
ICS
JBT
Other (includes corporate)
Total
JBI
DCS
ICS
JBT
Total segment revenues
Intersegment eliminations
Total
Assets
(Excludes intercompany accounts)
December 31,
$
2018
2,221
1,595
212
307
757
$
2017
2,108
1,182
204
283
688
$
5,092
$
4,465
Revenues
Years ended December 31,
$
$
2018
4,717
2,163
1,335
417
8,632
(17)
2017
4,084
1,719
1,025
378
7,206
(16)
2016
$
3,796
1,533
852
388
6,569
(14)
$
8,615
$
7,190
$
6,555
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
139
JBI
DCS
ICS
JBT
Total
JBI
DCS
JBT
Other
Total
Operating Income
Years ended December 31,
2018
2017
2016
$
$
401
193
50
37
$
407
171
23
23
$
681
$
624
$
450
205
36
30
721
Depreciation and Amortization Expense
Years ended December 31,
$
2018
173
200
38
25
2017
163
158
41
22
$
436
$
384
$
2016
160
143
41
18
362
$
$
140
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
14. Quarterly Financial Information (Unaudited)
As further discussed in Note 10, Commitments and Contingencies, our fourth quarter 2018 operating income,
net earnings and earnings per share included the impact of pretax charges for contingent liabilities. As further
discussed in Note 7, Income Taxes, our fourth quarter 2017, net earnings and earnings per share included the
effect of a $309.2 million provisional amount recorded as a component of income tax expense from continuing
operations resulting from the remeasurement of our deferred tax balance due to the enactment of the Tax Cuts
and Jobs Act. Operating results by quarter for the years ended December 31, 2018 and 2017 are as follows (in
thousands, except per share data):
2018:
Operating revenues
Operating income
Net earnings
Basic earnings per share
Diluted earnings per share
2017:
Operating revenues
Operating income
Net earnings
Basic earnings per share
Diluted earnings per share
Quarter
First
Second
Third
Fourth
$
$
$
$
$
$
$
$
$
$
1,948,245
168,781
118,142
1.08
1.07
1,629,158
149,389
102,702
0.93
0.92
$
$
$
$
$
$
$
$
$
$
2,139,027
214,812
151,652
1.39
1.37
1,726,915
163,615
97,869
0.89
0.88
$
$
$
$
$
$
$
$
$
$
2,209,760
174,688
131,110
1.20
1.19
1,843,334
164,972
100,385
0.92
0.91
$
$
$
$
$
$
$
$
$
$
2,317,842
122,740
88,681
0.81
0.81
1,990,160
145,814
385,308
3.51
3.48
J.B. HUNT TRANSPORT SERVICES, INC. Annual Report
141
24%
16%
14%
10%
2018 PERCENT OF REVENUE BY INDUSTRY
Specialty Retailers
Food
General Merchandise
Forest & Paper Products
Electronics
Transportation
Motor Vehicles & Parts
Beverages
Other
Building Materials
6%
5%
5%
4%
4%
4%
Chemicals
3%
Soaps, Cosmetics
Metals
2%
2%
Pharmaceuticals
1%
142
J.B. HUNT TRANSPORT SERVICES, INC. Revenue By Industry
BOARD OF DIRECTORS
STOCKHOLDER INFORMATION
Kirk Thompson
Chairman of the Board
Douglas G. Duncan
FedEx Freight Corporation (retired)
Francesca M. Edwards
American Red Cross of Greater Chicago (retired)
Wayne Garrison
J.B. Hunt Transport Services, Inc. (retired)
Sharilyn S. Gasaway
Alltel Corp. (retired)
Gary C. George
George’s Inc.
Bryan Hunt, Jr.
Hunt Automotive Group
Coleman H. Peterson
Hollis Enterprises, LLC
Corporate Address
J.B. Hunt Transport Services, Inc.
615 J.B. Hunt Corporate Drive
Lowell, AR 72745
479-820-0000
Internet Address
jbhunt.com
Auditors
Ernst & Young LLP
Rogers, Arkansas
Counsel
Mitchell, Williams, Selig, Gates & Woodyard PLLC
Little Rock, Arkansas
Stock Exchange Listing
J.B. Hunt Transport Services, Inc.
Class A Common Stock is listed on
NASDAQ National Market System
John N. Roberts, III
President and Chief Executive Officer
Stock Symbol
JBHT
James L. Robo
NextEra Energy, Inc.
OFFICERS
Kirk Thompson
Chairman of the Board, Director
John N. Roberts, III
President and Chief Executive Officer, Director
David G. Mee
Executive Vice President, Finance and Administration,
Chief Financial Officer
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Stock Transfer Agent and Registrar
Computershare Trust Company, N.A.
211 Quality Circle, Suite 210
College Station, TX 77845
877-498-8861 for Stockholder Inquiries
computershare.com/investor
Annual Meeting
The Annual Meeting of Stockholders will be held
at 10:00 a.m. CDT, on Thursday April 18, 2019 at
the corporate headquarters of J.B. Hunt Transport
Services, Inc., Lowell, Arkansas, located on Interstate
49 at Lowell Exit 78.
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Craig Harper
Executive Vice President
Terrence D. Matthew
Executive Vice President and President, Intermodal
Nicholas Hobbs
Executive Vice President and President,
Dedicated Contract Services
Stuart Scott
Executive Vice President and Chief Information Officer
Shelley Simpson
Executive Vice President, Chief Commercial Officer,
and President, Highway Services
P.O. Box 130 • Lowell, Arkansas 72745 • jbhunt.com