XPO Logistics Annual Report 2016

FY2016 Annual Report · XPO Logistics

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2016 Annual Report

Notice of 2017 Annual Meeting

Proxy Statement

2016 Annual Report

XPO Logistics, Inc. (NYSE: XPO) is a top ten global logistics provider of cutting-edge supply chain solutions
to the most successful companies in the world. The company operates as a highly integrated network of
people, technology and physical assets in 34 countries, with over 87,000 employees and 1,425 locations.
XPO uses its network to help more than 50,000 customers manage their goods more effiff ciently throughout
their supply chains. The company has two reportrr ing segments: transportrr ation and logistics, and within these
segments, its business is well diversified by geographies, vertrr icals and types of servrr ice. XPO's corporate
headquartrr ers is in Greenwich, Conn., USA, and its European headquartrr ers is in LyLL on, France. www.xpo.com

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To Our Stockholders

In 2016, XPO Logistics delivered high growth and high returns as one of the largest transportation and logistics
companies in the world. We generated record results for full-year net income, cash flow from operations,
adjusted EBITDA1 and free cash flow1, while continuing to invest in growth.

There were two main drivers behind our performance. Our healthy diversification across regions, verticals and
services kept us resilient in a mixed global environment. At the same time, we realized numerous company-
specific profit improvements that were unrelated to macro conditions.

One of the most notable tailwinds was the ongoing growth of e-commerce. XPO has been well positioned in
e-commerce since 2013, when we entered the U.S. home delivery space as a last mile market leader. We
specialize in last mile logistics for appliances, large electronics and other heavy goods—categories that are
increasingly purchased online. We then expanded our role in the e-commerce supply chain by establishing XPO
as the second largest contract logistics provider worldwide, with the largest outsourced e-fulfillment platform in
Europe.

2016 was also a period of significant integration, following two major acquisitions a year earlier. Those
integrations are now largely complete. This has precipitated the transfer of knowledge across business units and
geographies in areas such as customer service, sales, safety, warehouse operations, cross-dock operations,
maintenance, training and human resources. Many of the best practices we’re adopting will be further enhanced
by our technological development.

Our cloud-based technology and the cross-fertilization of best practices are two critical differentiators for our
company. They leverage our scale, enhance our agility and unite us more strongly as an organization. In 2016,
we elevated service to customers by sharing data globally with our senior salespeople, brought our brokerage
software and last mile expertise to Europe, and instilled best-in-class practices across regions.

Also in 2016, we introduced proprietary pricing systems for our less-than-truckload operations and deployed
14,000 new handheld devices to improve dockworker and driver efficiency. In last mile, we rolled out software
that gives us new capabilities for complex installations while maintaining our leading consumer satisfaction
scores. Our proprietary Freight Optimizer and Rail Optimizer platforms are the industry’s most advanced
technology for truck brokerage and intermodal operations.

In logistics, our warehouses are becoming high-tech hubs with a combination of automated systems and robotics.
Our technology creates labor efficiencies, improves inventory accuracy, and helps customers speed their products
to market. For example, we use robots to automate the returns process for millions of telecommunication
products a year. Robots wipe the items clean while our systems run through automated processes for warranty
management, refurbishment, repair and resale. We can also customize products on the fly very close to
fulfillment.

All of our initiatives boil down to one simple concept: results matter. Our goal is to help customers operate more
efficiently and take out costs, while creating superior value for our investors. The clarity of this vision is a major
reason why our employees are so highly engaged, and why our customers entrust us with over 150,000 shipments
and five billion inventory units a day. In 2016, our more than 87,000 employees did an outstanding job of
showing the world what we can achieve together as a global team. Our people are heroes to our customers. They
inspire me every day with their drive and their pride in XPO.

1 Adjusted EBITDA and free cash flow are non-GAAP measures. Reconciliations to GAAP measures are provided in the attached financial

tables on the last page of this annual report.

For our investors, our strategic execution has significantly increased XPO’s stock price since present management
took over in late 2011, far outpacing the Dow Jones Industrial Average, the Dow Jones Transportation Average, the
S&P 500, and other relevant benchmarks. Our company is now even better positioned to create future shareholder
appreciation, with a strong global brand and value proposition.

Financial Highlights

For the full year 2016, XPO reported revenue of $14.6 billion, net income attributable to common shareholders
of $63 million, adjusted EBITDA of $1.25 billion, cash flow from operations of $625 million, and free cash flow
of $211 million.

The strongest organic growth came from our last mile unit in North America and our global contract logistics
operations, both of which benefitted from e-commerce. In our North American less-than-truckload unit, higher
yield and lower SG&A drove a 440 basis point improvement in operating margin versus 20152, as we
transformed the operations during integration.

Our focus remains on further enhancing customer service while realizing the many profit improvement
opportunities embedded in our business. This year, we’ll get the full 12-month benefit of the numerous
efficiencies we implemented throughout 2016 in procurement, real estate, back office operations and workplace
technologies. We have more savings to realize in each of these areas, along with cross-dock and warehouse
automation, labor productivity and the global adoption of best practices.

In August 2016, we completed an opportunistic refinancing of $2.6 billion of debt. In October, we divested our
asset-based truckload operation in North America, using the proceeds to pay down $550 million of debt. In
March 2017, we refinanced our $1.5 billion existing term loan agreement at more favorable terms. We estimate
that these actions together reduced our cash interest expense by more than $75 million annually.

Our leverage is comfortably within our long-term target of three to four times net debt over adjusted EBITDA.
Approximately 89% of our debt matures in 2021 or later, and all of our debt is covenant-light. We expect that
free cash flow in 2017 will provide additional opportunities to reduce debt, should we choose to do so.

Outlook

Our 2016 performance is a springboard for robust returns. Going forward, we expect a 17% year-over-year
increase in adjusted EBITDA in 2017, and another 17% in 2018, with cash generation growing at a significantly
faster pace than EBITDA each year. Our financial targets are:

•

For 2017, full-year adjusted EBITDA of at least $1.350 billion.

For 2018, full-year adjusted EBITDA of at least $1.575 billion.

For 2017—2018, cumulative free cash flow of approximately $900 million, including at least
$350 million of free cash flow generated in 2017.

Last year, we became a Fortune 500 company for the first time and were named the fastest-growing company on
the list. Forbes ranked us #17 among innovative growth companies and #263 among America’s best employers.
We appreciate these accolades as recognition that our growth strategy is working: we’re leveraging our network
of people, technology and assets to simultaneously create value for all our stakeholders.

Here’s what I find most exciting about XPO: As large as we are, we hold just a 1.5% share of a $1 trillion
addressable market. We’re standing on the threshold of this massive opportunity with internal initiatives
underway around the world to serve our customers even better, continuously improve our performance, lower our
procurement costs, expand our global sales efforts, and compensate and motivate our people.

Our service range is managed by industry veterans in each line of business, led by an executive team and board
whose interests align with our investors. We have a high-caliber sales organization cooperating on a $3.25 billion

2 Year-over-year comparison is based on 2015 acquisition pro forma for the full year.

pipeline of active bids. Our cutting-edge technology differentiates our brand, and our value proposition resonates
with customers, particularly large companies that operate in fast-growing sectors. Over 60% of Fortune 100
companies use our services, an indication of how quickly we’ve earned trust in a few short years.

Along the way, we’ve met or exceeded every financial target we issued. Now we’re on track to accelerate
EBITDA and free cash flow in 2017, and again in 2018, while helping our customers achieve greater success—
once again delivering the results that matter.

April 17, 2017

Bradley S. Jacobs
Chairman and Chief Executive Officer

XPO LOGISTICS, INC.

Five American Lane
Greenwich, Connecticut 06831

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 10, 2017

To the Stockholders of XPO Logistics, Inc.:

Notice is hereby given that the annual meeting of stockholders of XPO Logistics, Inc. will be held on

Wednesday, May 10, 2017 at 10:00 a.m. Eastern Daylight Time at Five Greenwich Office Park, Greenwich,
Connecticut 06831, for the following purposes as more fully described in the proxy statement:

• To elect seven (7) members of our Board of Directors for a term to expire at the 2018 annual meeting

of stockholders or until their successors are duly elected and qualified;

• To ratify the appointment of KPMG LLP as our independent registered public accounting firm for

fiscal year 2017;

• To conduct an advisory vote to approve the executive compensation of our named executive officers as

disclosed in this proxy statement;

• To consider and act upon a stockholder proposal, if properly presented at the annual meeting; and

• To consider and transact such other business as may properly come before the annual meeting or any

adjournments or postponements thereof.

Only stockholders of record of our common stock, par value $0.001 per share, and our Series A Convertible
Perpetual Preferred Stock, par value $0.001 per share, as of the close of business on March 24, 2017, the “Record
Date,” are entitled to receive notice of, and to vote at, the annual meeting or any adjournment or postponement of
the annual meeting.

Please note that if you plan to attend the annual meeting in person, you will need to register in advance and

receive an admission ticket in order to be admitted. Please follow the instructions on pages 4 - 9 of the proxy
statement.

Your vote is important. Whether or not you plan to attend the annual meeting in person, it is
important that your shares be represented. We ask that you vote your shares as soon as possible.

By Order of the Board of Directors,

Bradley S. Jacobs
Chairman and Chief Executive Officer

Greenwich, Connecticut
April 17, 2017

Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Stockholders to Be Held on May 10, 2017

This Proxy Statement and our Annual Report on Form 10-K for the Year Ended December 31, 2016
are available at www.edocumentview.com/XPO.

Table of Contents

PROXY STATEMENT SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary of Director Qualifications and Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Role of the Board and Board Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Risk Oversight
Committees of the Board and Committee Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance Guidelines and Codes of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exclusive Forum Bylaw Amendment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Selection Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Human Capital Management
Stockholder Communication with the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Proposals for Next Year’s Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . .
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employment Agreements with Named Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EQUITY COMPENSATION PLAN INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . .
AUDIT-RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of the Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy Regarding Pre-Approval of Services Provided by the Outside Auditors . . . . . . . . . . . . . . . . . . . .
Services Provided by the Outside Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSALS TO BE PRESENTED AT THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL 1: ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017 . . . . . . . . . . . . . . . . . . .
PROPOSAL 3: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION . . . . . . . . . . . . .
PROPOSAL 4: STOCKHOLDER PROPOSAL REGARDING AN ANNUAL SUSTAINABILITY

REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AVAILABILITY OF ANNUAL REPORT AND PROXY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Stockholders to Be Held on May 10, 2017

This Proxy Statement and our Annual Report on Form 10-K for the Year Ended December 31, 2016
are available at www.edocumentview.com/XPO.

PROXY STATEMENT SUMMARY

This proxy statement sets forth information relating to the solicitation of proxies by the Board of Directors of
XPO Logistics, Inc. in connection with our company’s 2017 annual meeting of stockholders. This summary
highlights information contained elsewhere in this proxy statement. This summary does not contain all of the
information that you should consider, and you should read the entire proxy statement carefully before voting.

2017 Annual Meeting of Stockholders

Date and Time: May 10, 2017 at 10:00 a.m. Eastern Daylight Time

Place: Five Greenwich Office Park, Greenwich, Connecticut 06831

Record Date: You can vote if you were a stockholder of record of our company as of the close of business on
March 24, 2017.

Admission: You will need an admission ticket to enter the annual meeting. You may request an admission ticket
by providing the name under which you hold shares of record or, if your shares are held in the name of a bank,
broker or other holder of record, the evidence of your beneficial ownership of the shares, the number of
admission tickets you are requesting and your contact information.

You can submit your request by sending an e-mail to annualmeeting@xpo.com OR by calling us toll-free at
(855) 976-6951.

Voting Matters and Board Recommendations

The Board is not aware of any matter that will be presented for a vote at the 2017 annual meeting of

stockholders other than those shown below.

Proposal 1: Election of Directors
To elect seven (7) members of our Board of Directors for a term to expire at the 2018 annual
meeting of stockholders or until their successors are duly elected and qualified

Proposal 2: Ratification of Appointment of Independent Public Accounting Firm
To ratify the appointment of KPMG LLP as our independent registered public accounting firm
for fiscal year 2017

Board Vote
Recommendation

Page Reference
(for more detail)

FOR each Director
Nominee

10-23, 57

FOR

54-56, 58

Proposal 3: Advisory Vote to Approve Executive Compensation
To conduct an advisory vote to approve the executive compensation of our named executive
officers (the “NEOs”) as disclosed in this proxy statement

FOR

29-51, 59

Proposal 4: Stockholder Proposal Regarding an Annual Sustainability Report
To issue an annual sustainability report regarding environmental, social and governance related
issues affecting the company

AGAINST

60-63

How to Cast Your Vote (page 7 and proxy card)

If you are a registered stockholder (i.e., you hold your shares in your own name), you can vote by proxy in

three convenient ways:

• By telephone: Call toll-free 1-800-652-VOTE (8683) and follow the instructions.

• By internet: Go to www.envisionreports.com/XPO and follow the instructions.

• By mail: Complete, sign, date and return your proxy card in the provided envelope.

Telephone and internet voting facilities for stockholders of record will be available 24 hours a day and

will close at 1:00 a.m. Eastern Daylight Time on May 10, 2017.

If you are the beneficial owner of shares, please follow the voting instructions provided by your

broker, trustee or other nominee.

Board of Director Nominees (pages 10-23, 57)

The following table provides summary information about each director nominee. Each director is elected
annually by a majority of the votes cast. The average age of our director nominees is 61 years and the average
tenure is 4.4 years.

Occupation

Independent AC CC NCGC AcqC

Committee
Memberships

Name

Bradley S. Jacobs

Director
Since

2011

Age

Gena L. Ashe

2016

Louis DeJoy

2015

Michael G. Jesselson

2011

Chairman and CEO,
XPO Logistics, Inc.

Executive Vice President, Chief Legal Officer and
Corporate Secretary (retired), BrightView
Landscapes, LLC

Chief Executive Officer, Supply Chain (retired),
XPO Logistics, Inc.

Lead Independent Director, XPO Logistics, Inc.
President and Chief Executive Officer,
Jesselson Capital Corporation

Adrian P. Kingshott

2011

Jason D. Papastavrou*

2011

Chief Executive Officer,
AdSon LLC

Founder and Chief Investment Officer,
ARIS Capital Management, LLC

Oren G. Shaffer*

2011 Vice Chairman and Chief Financial Officer

(retired), Qwest Communications International,
Inc.

✓

✓ C

✓ ✓

✓

C = Committee Chair

✓ = Committee Member

* = Audit Committee Financial Expert

AC = Audit Committee

CC = Compensation Committee NCGC = Nominating and Corporate Governance Committee

AcqC = Acquisition Committee

Governance and Compensation Highlights

Board Independence

Board Leadership

Board Refreshment

Committee Chair Rotations

Five of our seven current directors are independent; the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee consist entirely of independent directors.

In 2016, our Board added a robust lead independent director position to its leadership structure to
complement the roles of our independent committees and independent committee chairs in providing
effective Board oversight. These independent structures work in conjunction with the dual roles served by
our Chairman and Chief Executive Officer. The Board believes that the Board and company’s leadership
structure functions well for our company and is in the best interests of our stockholders based on the
current strategy and ownership structure.

Our Board is committed to practices that create an effective mix of useful expertise and fresh perspectives,
including the thoughtful refreshment of the Board when appropriate. In 2015, the Board initiated a process
to seek out highly qualified director candidates who bring relevant experience to the Board and reflect our
company’s growing scale and diversity. This resulted in the addition of two new directors, one in 2015
and one in 2016. We regularly review our Board practices and composition.

As part of its annual review of Board committee composition and committee chair assignments, in March
2016, the Board reconstituted the committees and rotated committee chairs in order to enhance the
effective functioning of the committees and bring fresh perspectives to committee processes.

Annual Director Elections

All directors are elected annually for one-year terms until their successors are elected and qualified.

Majority Voting for
Director Elections

Our bylaws provide for a majority voting standard in uncontested elections, and further require that a
director who fails to receive a majority vote must tender his or her resignation to the Board.

Board Evaluations

Our Board evaluates committee and director performance and practices regularly.

Risk Oversight and
Financial Reporting

Clawback Policy

Lock-up Restrictions

Our Board seeks to provide robust oversight of current and potential risks facing our company and its
business and demonstrate strong financial reporting practices.

Our Named Executive Officers (“NEOs”) and other policy-making executive officers are subject to
clawback provisions with respect to annual and long-term cash incentive compensation.

Our NEOs are subject to lock-up restrictions that generally prohibit the sale of any equity awarded by our
company until September 2, 2018.

Stock Ownership Guidelines

In 2016, our Board established stock ownership guidelines for our NEOs and other executive officers to
further align their interests with those of our stockholders.

No Hedging or Pledging of
Company Securities

Under our insider trading policy, our company’s directors and executive officers, including the NEOs, are
prohibited from pledging and hedging transactions involving our company’s securities.

PROXY STATEMENT

This proxy statement sets forth information relating to the solicitation of proxies by the Board of Directors

(our “Board of Directors” or our “Board”) of XPO Logistics, Inc. (“XPO Logistics” or our “company”) in
connection with our company’s 2017 annual meeting of stockholders or any adjournment or postponement of the
annual meeting. This proxy statement is being furnished by our Board of Directors for use at the annual meeting
of stockholders to be held on May 10, 2017 at 10:00 a.m. Eastern Daylight Time at Five Greenwich Office Park,
Greenwich, Connecticut 06831.

This proxy statement and form of proxy are first being mailed on or about April 17, 2017, to our

stockholders of record as of the close of business on March 24, 2017 (the “Record Date”).

QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING

The following questions and answers address some questions you may have regarding the annual meeting.
These questions and answers may not include all the information that may be important to you as a stockholder
of our company. Please refer to the more detailed information contained elsewhere in this proxy statement.

What items of business will be voted on at the annual meeting?

We expect that the business put forth for a vote at the annual meeting will be as follows:

• To elect seven (7) members of our Board of Directors for a term to expire at the 2018 annual meeting

of stockholders or until their successors are duly elected and qualified (Proposal 1);

• To ratify the appointment of KPMG LLP (“KPMG”) as our independent registered public accounting

firm for 2017 (Proposal 2);

• To conduct an advisory vote to approve the executive compensation of our named executive officers as

disclosed in this proxy statement (Proposal 3);

• To consider and act upon a stockholder proposal, if properly presented at the annual meeting (Proposal

4); and

• To consider and transact such other business as may properly come before the annual meeting or any

adjournments or postponements thereof.

In addition, senior management of XPO Logistics and representatives of our outside auditor, KPMG, will be

available to respond to questions.

Who can attend and vote at the annual meeting?

You are entitled to receive notice of and to attend and vote at the annual meeting, or any adjournment or

postponement thereof, if, as of the close of business on March 24, 2017, the Record Date, you were a holder of
record of our common stock or Series A Convertible Perpetual Preferred Stock (the “Series A Preferred Stock”).

As of the Record Date, there were issued and outstanding 111,551,028 shares of common stock, each of
which is entitled to one vote on each matter to come before the annual meeting. In addition, as of the Record
Date, there were issued and outstanding 71,510 shares of Series A Preferred Stock. Each share of Series A
Preferred Stock is entitled to vote together with our common stock on each matter to come before the annual
meeting as if the share of Series A Preferred Stock were converted into shares of common stock as of the Record
Date, meaning that each share of Series A Preferred Stock is entitled to approximately 143 votes on each matter
to come before the annual meeting. As a result, a total of 121,766,742 votes are eligible to be cast at the annual
meeting based on the number of outstanding shares of our common stock and Series A Preferred Stock, voting
together as a single class.

If you wish to attend the annual meeting and your shares are held in an account at a broker, dealer,

commercial bank, trust company or other nominee (i.e., in “street name”), you will need to bring a copy of your
voting instruction card or statement reflecting your share ownership as of the Record Date, as well as an
admission card as outlined below. Street name holders who wish to vote at the annual meeting will need to obtain
a proxy from the broker, dealer, commercial bank, trust company or other nominee that holds their shares.

Do I need a ticket to attend the annual meeting?

Yes, you will need an admission card to enter the annual meeting. You may request tickets by providing the

name under which you hold shares of record or, if your shares are held in the name of a bank, broker or other
holder of record, the evidence of your beneficial ownership of the shares as of the Record Date, the number of
tickets you are requesting and your contact information. You can submit your request in the following ways:

• By sending an e-mail to annualmeeting@xpo.com; or

• By calling us toll-free at (855) 976-6951.

Stockholders also must present a form of personal photo identification in order to be admitted to the annual
meeting.

How many shares must be present to conduct business at the annual meeting?

A quorum is necessary to hold a valid meeting of stockholders. For each of the proposals to be presented at

the annual meeting, the holders of shares of our common stock or Series A Preferred Stock outstanding on the
Record Date representing 60,883,372 votes must be present at the annual meeting, in person or by proxy. If you
vote—including by internet, telephone or proxy card—your shares voted will be counted towards the quorum for
the annual meeting. Abstentions and broker non-votes are counted as present for the purpose of determining a
quorum.

What are my voting choices?

With respect to the election of directors, you may vote “FOR” or “AGAINST” each of the director
nominees, or you may “ABSTAIN” from voting for one or more of such nominees. With respect to the other
proposals to be considered at the annual meeting, you may vote “FOR” or “AGAINST” or you may “ABSTAIN”
from voting on any proposal. If you sign your proxy or voting instruction card without giving specific
instructions, your shares will be voted in accordance with the recommendations of our Board of Directors and in
the discretion of the proxy holders on any other matters that properly come before the annual meeting.

What vote is required to approve the proposals being considered at the annual meeting?

• Proposal 1: Election of seven (7) directors. The election of each of the seven (7) director nominees

named in this proxy statement requires the affirmative vote of a majority of the votes cast (meaning the
number of shares voted “for” a nominee must exceed the number of shares voted “against” such
nominee) by holders of shares of our common stock (including those that would be issued if all our
outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record
Date) at the annual meeting at which a quorum is present. If any incumbent director standing for
re-election receives a greater number of votes “against” his or her election than votes “for” such
election, our bylaws require that such person must promptly tender his or her resignation to our Board
of Directors. You may not accumulate your votes for the election of directors.

Brokers may not use discretionary authority to vote shares on the election of directors if they have not
received specific instructions from their clients. If you are a beneficial owner of shares, for your vote to
be counted in the election of directors, you will need to communicate your voting decisions to your

bank, broker or other nominee before the date of the annual meeting in accordance with their specific
instructions. Abstentions and broker non-votes are not considered votes cast for purposes of tabulation
of such vote, and will have no effect on the election of director nominees.

• Proposal 2: Ratification of the appointment of KPMG LLP as our independent registered public
accounting firm for 2017. Ratification of the appointment of KPMG as our independent registered
public accounting firm for the year ending December 31, 2017, requires the affirmative vote of a
majority of the votes cast (meaning the number of shares voted “for” such proposal must exceed the
number of shares voted “against” such proposal) by holders of shares of our common stock (including
those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of
our common stock as of the Record Date) at the annual meeting at which a quorum is present.
Abstentions are not considered votes cast for purposes of tabulation of the foregoing vote, and will
have no effect on the ratification of KPMG. We do not expect any broker non-votes as brokers have
discretionary authority to vote on this proposal.

• Proposal 3: Advisory vote to approve executive compensation. Advisory approval of the resolution

on executive compensation of our named executive officers as disclosed in this proxy statement
requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted “for”
such proposal must exceed the number of shares voted “against” such proposal) by holders of shares of
our common stock (including those that would be issued if all our outstanding Series A Preferred Stock
had converted into shares of our common stock as of the Record Date) at the annual meeting at which a
quorum is present. This resolution, commonly referred to as a “say-on-pay” resolution, is non-binding
on our Board of Directors. Although non-binding, our Board of Directors and the Compensation
Committee will review and consider the voting results when making future decisions regarding our
executive compensation program.

Brokers may not use discretionary authority to vote shares on the advisory vote to approve executive
compensation if they have not received specific instructions from their clients. If you are a beneficial
owner of shares, for your vote to be counted in the advisory vote to approve executive compensation,
you will need to communicate your voting decisions to your bank, broker or other nominee before the
date of the annual meeting in accordance with their specific instructions. Abstentions and broker
non-votes are not considered votes cast for purposes of tabulation of such vote, and will have no effect
on the advisory vote to approve executive compensation.

• Proposal 4: Stockholder proposal regarding an annual sustainability report. Approval of the
issuance of an annual sustainability report regarding environmental, social and governance related
issues affecting the company requires the affirmative vote of a majority of the votes cast (meaning the
number of shares voted “for” such proposal must exceed the number of shares voted “against” such
proposal) by holders of shares of our common stock (including those that would be issued if all our
outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record
Date) at the annual meeting at which a quorum is present.

Brokers may not use discretionary authority to vote shares on the stockholder proposal if they have not
received specific instructions from their clients. If you are a beneficial owner of shares, for your vote to
be counted in favor of the stockholder proposal regarding annual sustainability reporting, you will need
to communicate your voting decisions to your bank, broker or other nominee before the date of the
annual meeting in accordance with their specific instructions. Abstentions and broker non-votes are not
considered votes cast for purposes of tabulation of such vote, and will have no effect on the vote on this
stockholder proposal.

In general, other business properly brought before the annual meeting requires the affirmative vote of a
majority of the votes cast (meaning the number of shares voted “for” such proposal must exceed the number of
shares voted “against” such proposal) by holders of shares of our common stock (including those that would be
issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the
Record Date) at the annual meeting at which a quorum is present.

How does the Board of Directors recommend that I vote?

Our Board of Directors, after careful consideration, recommends that our stockholders vote “FOR” the

election of each director nominee named in this proxy statement, “FOR” ratification of KPMG as our
independent registered public accounting firm for 2017, “FOR” advisory approval of the resolution to approve
executive compensation, and “AGAINST” the approval of the stockholder proposal regarding annual
sustainability reporting, if such proposal is properly brought at the meeting.

What do I need to do now?

We urge you to read this proxy statement carefully. Then just mail your completed, dated and signed proxy
card in the enclosed return envelope as soon as possible so that your shares can be voted at the annual meeting of
stockholders. Holders of record may also vote by telephone or the internet by following the instructions on the
proxy card.

How do I cast my vote?

Registered Stockholders. If you are a registered stockholder (i.e., you hold your shares in your own name

through our transfer agent, Computershare Trust Company, N.A., and not through a broker, bank or other
nominee that holds shares for your account in “street name”), you may vote by proxy via the internet, by
telephone, or by mail by following the instructions provided on the proxy card. Proxies submitted via telephone
or internet must be received by 1:00 a.m. Eastern Daylight Time on May 10, 2017. Please see the proxy card
provided to you for instructions on how to submit your proxy by telephone or the internet. Stockholders of record
who attend the annual meeting may vote in person by obtaining a ballot from the inspector of elections.

Beneficial Owners. If you are a beneficial owner of shares (i.e., your shares are held in the name of a
brokerage firm, bank or a trustee), you may vote by proxy by following the instructions provided in the voting
instruction form or other materials provided to you by the brokerage firm, bank or other nominee that holds your
shares. To vote in person at the annual meeting, you must obtain a legal proxy from the brokerage firm, bank or
other nominee that holds your shares.

What is the deadline to vote?

If you hold shares as the stockholder of record, your vote by proxy must be received before the polls close at

the annual meeting. As indicated on the proxy card provided to you, proxies submitted via telephone or internet
must be received by 1:00 a.m. Eastern Daylight Time on May 10, 2017.

If you are the beneficial owner of shares, please follow the voting instructions provided by your broker,

trustee or other nominee.

What happens if I do not respond or if I respond and fail to indicate my voting preference or if I abstain from
voting?

If you fail to sign, date and return your proxy card or fail to vote by telephone or internet as provided on
your proxy card, your shares will not be counted towards establishing a quorum for the annual meeting, which
requires holders representing a majority of the outstanding shares of our common stock (including those that
would be issued if all of our outstanding Series A Preferred Stock had converted into shares of our common stock
as of the Record Date) to be present in person or by proxy. Failure to vote, assuming the presence of a quorum,
will have no effect on the tabulation of the vote on the proposals.

If you are a stockholder of record and you properly sign, date and return your proxy card, but do not indicate

your voting preference, we will count your proxy as a vote “FOR” the election of the seven nominees for

director named in “Proposal 1—Election of Directors,” “FOR” ratification of KPMG as our independent
registered public accounting firm for 2017, “FOR” advisory approval of the resolution to approve executive
compensation and “AGAINST” the approval of the stockholder proposal regarding annual sustainability
reporting, if properly presented at the annual meeting.

If my shares are held in “street name” by my broker, dealer, commercial bank, trust company or other
nominee, will such broker or other nominee vote my shares for me?

You should instruct your broker or other nominee on how to vote your shares using the instructions
provided by such broker or other nominee. Absent specific voting instructions, brokers or other nominees who
hold shares of our common stock in “street name” for customers are prevented by the rules set forth in the Listed
Company Manual (the “NYSE Rules”) of the New York Stock Exchange (the “NYSE”) from exercising voting
discretion in respect of non-routine or contested matters. We expect that when the NYSE evaluates the proposals
to be voted on at the annual meeting to determine whether each proposal is a routine or non-routine matter, only
“Proposal 2—Ratification of the Appointment of KPMG LLP as Our Independent Registered Public Accounting
Firm for 2017” will be evaluated as routine. Shares not voted by a broker or other nominee because such broker
or other nominee does not have instructions or cannot exercise discretionary voting power with respect to one or
more proposals are referred to as “broker non-votes.” It is important that you instruct your broker or other
nominee on how to vote your shares of our common stock held in “street name” in accordance with the voting
instructions provided by such broker or other nominee.

Can I change my vote after I have mailed my proxy card?

Yes. Whether you attend the annual meeting or not, you may revoke a proxy at any time before your proxy

is voted at the annual meeting. You may do so by properly delivering a later-dated proxy either by mail, the
internet or telephone or by attending the annual meeting in person and voting. Please note, however, your
attendance at the annual meeting will not automatically revoke any prior proxy unless you vote again at the
annual meeting or specifically request in writing that your prior proxy be revoked. You also may revoke your
proxy by delivering a notice of revocation to our company (Attention: Secretary, XPO Logistics, Inc., Five
American Lane, Greenwich, Connecticut 06831) prior to the vote at the annual meeting. If you hold your shares
through a broker, dealer, commercial bank, trust company or other nominee, you should follow the instructions
of such broker or other nominee regarding revocation of proxies.

How will the persons named as proxies vote?

If you complete and submit a proxy, the persons named as proxies will follow your instructions. If you
submit a proxy but do not provide instructions, or if your instructions are unclear, the persons named as proxies
will vote as recommended by our Board of Directors or, if no recommendation is given, by using their own
discretion.

Where can I find the results of the voting?

We intend to announce preliminary voting results at the annual meeting and will publish final results
through a Current Report on Form 8-K to be filed with the Securities and Exchange Commission (“SEC”) within
four (4) business days after the annual meeting. The Current Report on Form 8-K will be available on the internet
at our website, www.xpo.com.

Who will pay for the cost of soliciting proxies?

We will pay for the cost of soliciting proxies. We have engaged Innisfree M&A Incorporated to assist us in

soliciting proxies in connection with the annual meeting, and have agreed to pay them approximately $12,500
plus their expenses for providing such services. Our directors, officers and other employees, without additional

compensation, may solicit proxies personally, in writing, by telephone, by email or otherwise. As is customary,
we will reimburse brokerage firms, fiduciaries, voting trustees, and other nominees for forwarding our proxy
materials to each beneficial owner of common stock or Series A Preferred Stock held of record by them.

What is “householding” and how does it affect me?

In accordance with notices to many stockholders who hold their shares through a bank, broker or other
holder of record (a “street-name stockholder”) and share a single address, only one copy of our proxy statement
and 2016 annual report to stockholders is being delivered to that address unless contrary instructions from any
stockholder at that address were received. This practice, known as “householding,” is intended to reduce our
printing and postage costs. However, any such street-name stockholder residing at the same address who wishes
to receive a separate copy of this proxy statement and annual report may request a copy by contacting the bank,
broker or other holder of record, or by sending a written request to: Investor Relations, XPO Logistics, Inc., Five
American Lane, Greenwich, Connecticut 06831 or by contacting Investor Relations by telephone at
(855) 976-6951. The voting instruction form sent to a street-name stockholder should provide information on
how to request: (1) householding of future company materials, or (2) separate materials if only one set of
documents is being sent to a household. A stockholder who would like to make one of these requests should
contact us as indicated above.

Can I obtain an electronic copy of proxy materials?

Yes, this proxy statement, annual report and the proxy card are available on the internet at

www.edocumentview.com/XPO.

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Directors

Our Board of Directors currently consists of seven (7) members, as set forth in the table below. The current
term of each of our directors will expire at the 2017 annual meeting of stockholders. Our Board of Directors has
nominated all current directors to stand for re-election at the annual meeting, as set forth in Proposal 1 on
page 57 of this proxy statement.

Name

Occupation

Bradley S. Jacobs

Chairman and Chief Executive Officer, XPO Logistics, Inc.

Gena L. Ashe

Executive Vice President, Chief Legal Officer and Corporate Secretary
(retired), BrightView Landscapes, LLC

Louis DeJoy

Chief Executive Officer, Supply Chain (retired), XPO Logistics, Inc.

Michael G. Jesselson

Adrian P. Kingshott

Lead Independent Director, XPO Logistics, Inc.; President and Chief
Executive Officer, Jesselson Capital Corporation
Chief Executive Officer, AdSon LLC

Jason D. Papastavrou

Founder and Chief Investment Officer, ARIS Capital Management, LLC

Oren G. Shaffer

Vice Chairman and Chief Financial Officer (retired), Qwest
Communications International, Inc.

Under the terms of an Investment Agreement, dated June 13, 2011 (the “Investment Agreement”), by and

among Jacobs Private Equity, LLC (“JPE”), the other investors party thereto (collectively with JPE, the
“Investors”), and our company, our company must take all necessary steps to nominate, and must use its
reasonable best efforts to cause our Board of Directors to unanimously recommend that our stockholders vote in
favor of, all nominees for election to our Board of Directors designated by Bradley S. Jacobs, as the managing
member of JPE, subject to our Board of Directors’ fiduciary duties. JPE also has the right to designate certain
percentages of the nominees for our Board of Directors so long as JPE owns securities (including preferred stock
convertible into, or warrants exercisable for, securities) representing specified percentages of the total voting
power of our capital stock on a fully-diluted basis. JPE does not currently exceed the indicated voting power
thresholds under the Investment Agreement. The foregoing rights of JPE under the Investment Agreement are in
addition to, and not in limitation of, JPE’s voting rights as a holder of capital stock of our company. JPE is
controlled by Bradley S. Jacobs, our Chairman of the Board and Chief Executive Officer. The Investment
Agreement and the terms contemplated therein were approved by our stockholders at a special meeting on
September 1, 2011.

None of the foregoing will prevent our Board of Directors from acting in accordance with its fiduciary
duties or applicable law or stock exchange requirements or from acting in good faith in accordance with our
governing documents, while giving due consideration to the intent of the Investment Agreement.

Our Board of Directors consists of a highly experienced group of business leaders, many of whom have

served as executive officers or on boards and board committees of major companies and have an extensive
understanding of the principles of corporate governance. Our Board as a whole has broad expertise in business
administration, corporate finance, capital markets, compliance and risk assessment, corporate governance,
corporate responsibility, mergers and acquisitions and integration, talent management, investment banking, legal
and operational matters, as well as in the customer service, transportation and logistics sectors, and public
company board experience. In addition, our directors have a strong owner orientation—approximately 16.3% of
the voting power of our capital stock on a fully-diluted basis is held by our directors or by entities or persons
related to our directors (as of the Record Date).

We have set forth below information regarding each of our director nominees, including the experience,

qualifications, attributes or skills that led our Board of Directors to conclude that such person should serve as a
director.

Director since 2011

Age: 60
Board Committees: None
Other Public Company Boards: None

Mr. Jacobs brings to the Board:

•

In-depth knowledge of the company’s
business resulting from his years of
service with the company in various
capacities;

• Leadership experience as the company’s
Chief Executive Officer and Chairman,
and his successful track record of leading
companies that execute strategies similar
to ours; and

• Extensive past experience as the chairman
of the board of directors of several public
companies.

Director since 2016

Age: 55
Board Committees:

• Chair of Nominating and Corporate

Governance Committee

Other Public Company Boards: None

Ms. Ashe brings to the Board:

• More than two decades of valuable legal
experience with public and private
companies, which enables her to provide
guidance to the Board and company
management on legal matters, compliance
and risk assessment and corporate
governance best practices; and

• An in-depth understanding of the

dynamics of three of our most important
customer verticals: e-commerce,
technology and food and beverage.

Bradley S. Jacobs
Mr. Jacobs has served as our Chief Executive Officer and
Chairman of our Board of Directors since September 2, 2011.
Mr. Jacobs is also the managing director of JPE, which is our
second largest stockholder. He has led two public companies:
United Rentals, Inc. (NYSE: URI), which he founded in 1997,
and United Waste Systems, Inc., which he founded in 1989.
Mr. Jacobs served as chairman and chief executive officer of
United Rentals for that company’s first six years, and as its
executive chairman for an additional four years. He served
eight years as chairman and chief executive officer of United
Waste Systems. Previously, Mr. Jacobs founded Hamilton
Resources (UK) Ltd. and served as its chairman and chief
operating officer. This followed the co-founding of his first
venture, Amerex Oil Associates, Inc., where he was chief
executive officer.

Gena L. Ashe
Ms. Ashe joined our Board of Directors on March 21, 2016.
Ms. Ashe has more than 20 years of broad-based legal
experience across a variety of industries, most recently serving
as executive vice president, chief legal officer and corporate
secretary of BrightView Landscapes, LLC (formerly The
Brickman Group, Ltd. LLC), the largest national commercial
landscape, lawncare maintenance/construction and snow
management company in the United States. In that role, which
she held from February 2013 until March 2016, she was
responsible for leading all aspects of BrightView’s legal, risk
management, safety, compliance and corporate governance
functions. Prior to joining BrightView, from September 2010
until October 2012, Ms. Ashe was senior vice president of
legal affairs of Catalina Marketing Corporation, a global
digital media enterprise for some of the world’s most well-
known brands, and prior to that she held senior legal roles with
the Public Broadcasting Service (PBS), Darden Restaurants,
Inc. (parent company of Olive Garden, Red Lobster, Capital
Grille, LongHorn Steakhouse, Bahama Breeze, and Eddie V’s
restaurants), Lucent Technologies, Inc. and AT&T. Earlier,
she was an electrical engineer with IBM Corporation before
joining IBM’s legal team. Ms. Ashe holds a bachelor’s degree
in mathematics, with a minor in physics, from Spelman
College; a master’s degree in electrical engineering from
Georgia Institute of Technology; and a doctor of law degree
from Georgetown University, where she currently serves as a
Georgetown University Law Advisory Board Member. She is
a graduate of the executive development program of the
Wharton School of the University of Pennsylvania, and holds
a certificate in international management from Oxford
University in England.

Louis DeJoy
Mr. DeJoy has served as a director of the company since
December 3, 2015. He was most recently chief executive officer
of the XPO Logistics supply chain business in the Americas
(retired as of December 7, 2015). Previously, he led New Breed
Logistics as its chairman and chief executive officer from 1983
until XPO Logistics acquired New Breed in 2014. During that
time, he grew the company from a small, regional operation to a
leading U.S. provider of highly engineered, technology-driven
contract logistics solutions. Mr. DeJoy is a member of the
boards of trustees of Elon University and the PGA Wyndham
Championship, and serves on the board of directors for The
Fund for American Studies in Washington, DC. He is a past
member of the board of trustees of Moses Cone Health System
in North Carolina, and was an appointee to the President’s
Commission on White House Fellowships. He holds a business
degree from Stetson University.

Michael G. Jesselson
Mr. Jesselson has served as a director of the company since
September 2, 2011, and as lead independent director since
March 20, 2016. Mr. Jesselson has served as president and
chief executive officer of Jesselson Capital Corporation since
1994. He is a longstanding director of American Eagle
Outfitters, Inc. and serves as that company’s lead independent
director. Additionally, he is a director of C-III Capital Partners
LLC and other private companies, as well as numerous
philanthropic organizations. Mr. Jesselson was recently
elected chairman of Bar Ilan University in Israel.

Adrian P. Kingshott
Mr. Kingshott has served as a director of the company since
September 2, 2011. He is the chief executive officer of AdSon
LLC and managing director of Spotlight Advisors, LLC. He
has been a senior advisor to Headwaters Merchant Bank since
2013. Previously, for Goldman Sachs, he was co-head of that
firm’s Leveraged Finance business and held other positions
over a 17-year tenure. More recently, Mr. Kingshott was a
managing director and portfolio manager at Amaranth
Advisors, LLC. He is an adjunct professor of Global Capital
Markets at Fairfield University’s Dolan School of Business,
and an adjunct professor of Global Capital Markets and
Investments at Fordham University’s Gabelli School of
Business. He holds a master of business administration degree
from Harvard Business School and a master of jurisprudence
degree from Oxford University. Mr. Kingshott is a member of
the board of directors of Centre Lane Investment Corp.

Director since 2015

Age: 59
Board Committees:

• Member of Acquisition Committee
Other Public Company Boards: None

Mr. DeJoy brings to the Board:

•

Significant expertise in supply chain
operations that allows him to provide
valuable guidance to our Board on
strategic and operational matters with
respect to our logistics business unit.

Director since 2011, Lead Independent
Director since 2016

Age: 65
Board Committees:

• Member of Compensation Committee
• Member of Nominating and Corporate

Governance Committee

Other Public Company Boards: American
Eagle Outfitters, Inc. (since 1997)

Mr. Jesselson brings to the Board:

•

Significant experience with public
company corporate governance issues
through service with American Eagle
Outfitters on its board since 1997, and as its
lead independent director since 2012; and

Investment expertise.

Director since 2011

Age: 57
Board Committees:

• Chairman of Compensation Committee

• Member of Audit Committee

• Member of Acquisition Committee
Other Public Company Boards: None

Mr. Kingshott brings to the Board:

• More than 25 years of experience in the
investment banking and investment
management industries; and

• Expertise with respect to corporate

governance, acquisition transactions, debt
and equity financing and corporate
financial management issues.

Jason D. Papastavrou, Ph.D.
Dr. Papastavrou has served as a director of the company since
September 2, 2011. Dr. Papastavrou is the founder and chief
investment officer of ARIS Capital Management, LLC.
Previously, Dr. Papastavrou was the founder and managing
director of the Fund of Hedge Funds Strategies Group of Banc
of America Capital Management (BACAP), president of
BACAP Alternative Advisors, and a senior portfolio manager
with Deutsche Asset Management. He was a tenured professor
at Purdue University School of Industrial Engineering, and
holds a doctorate in electrical engineering and computer
science from the Massachusetts Institute of Technology.
Dr. Papastavrou serves on the board of directors of United
Rentals, Inc.

Oren G. Shaffer
Mr. Shaffer has served as a director of the company since
September 2, 2011. From 2002 to 2007, Mr. Shaffer was vice
chairman and chief financial officer of Qwest
Communications International, Inc. (now CenturyLink, Inc.).
Previously, Mr. Shaffer was president and chief operating
officer of Sorrento Networks, Inc., executive vice president
and chief financial officer of Ameritech Corporation, and held
senior executive positions with The Goodyear Tire & Rubber
Company, where he also served on the board of directors.
Mr. Shaffer is a director on the board of Terex Corporation
and Konecranes Plc. He holds a master’s degree in
management from the Sloan School of Management,
Massachusetts Institute of Technology, and a degree in finance
and business administration from the University of California,
Berkeley.

Director since 2011

Age: 54
Board Committees:

• Chairman of Acquisition Committee

• Member of Audit Committee

• Member of Compensation Committee

• Member of Nominating and Corporate

Governance Committee

Other Public Company Boards: United
Rentals, Inc. (since 2005)

Dr. Papastavrou brings to the Board:

•

Financial expertise from his qualifications
as an “audit committee financial expert”
under SEC regulations; and

• Extensive experience with finance and

risk-related matters from holding senior
positions at investment management
firms.

Director since 2011

Age: 74
Board Committees:

• Chairman of Audit Committee
Other Public Company Boards: Terex
Corporation (since 2007)

Mr. Shaffer brings to the Board:

•

Senior financial, operational and strategic
experience with various large companies;

• Corporate governance expertise from
serving as director of various public
companies; and

•

Financial expertise from his qualifications
as an “audit committee financial expert”
under SEC regulations.

Summary of Director Qualifications and Experience

Bradley S.
Jacobs

Gena L.
Ashe

Louis
DeJoy

Michael G.
Jesselson

Adrian P.
Kingshott

Jason D.
Papastavrou,
Ph.D.

Oren G.
Shaffer

BUSINESS ADMINISTRATION experience brings
valuable organizational techniques and leadership
qualities.

BUSINESS OPERATIONS experience provides a
practical understanding of developing, implementing
and assessing our operating plan and business strategy.

CORPORATE GOVERNANCE experience bolsters
Board and management accountability, transparency
and a focus on stockholder interests.

CUSTOMER SERVICE INDUSTRY experience
brings important perspective to our Board given the
importance of customer service to our business model.

ENVIRONMENTAL, SUSTAINABILITY,
CORPORATE RESPONSIBILITY experience
allows our Board’s oversight to guide our long-term
value creation for stockholders in a way that is
responsible and sustainable.

FINANCE/CAPITAL ALLOCATION experience is
crucial to our Board’s evaluation of our financial
statements and capital structure.

FINANCIAL EXPERTISE/LITERACY assists our
directors in understanding and overseeing our financial
reporting and internal controls.

HUMAN CAPITAL MANAGEMENT experience
allows our Board to further our company’s goals for
making XPO an attractive employment environment
and aligning human resource objectives with our
strategic and operational priorities.

INTERNATIONAL experience is important given the
global nature of our business strategy and operations.

INVESTMENTS experience assists our Board in
evaluating our financial statements and investment
strategy.

MARKETING/SALES experience helps our Board
assist our business strategy and developing new
products and operations.

MERGERS & ACQUISITIONS and
INTEGRATION experience helps our company
identify the right targets for M&A activity that achieve
our strategic objectives, and realize synergies and
optimal growth.

LOGISTICS INDUSTRY experience is important in
understanding and reviewing our business and strategy.

RISK MANAGEMENT experience is critical to our
Board’s role in overseeing the risks facing our
company.

TALENT MANAGEMENT experience helps XPO
attract, motivate and retain top candidates for our
management and leadership.

TECHNOLOGY/SYSTEMS experience is relevant as
our company is continually seeking to enhance our
customer experience and internal operations.

Role of the Board and Board Leadership Structure

Our business and affairs are managed under the direction of our Board of Directors, which is our company’s

ultimate decision-making body, except with respect to those matters reserved to our stockholders. Our Board’s
primary responsibility is to seek to maximize long-term stockholder value. Our Board establishes our overall
corporate policies, selects and evaluates our senior management team, which is charged with the conduct of our
business, monitors the performance of our company and management, and provides advice and counsel to
management. In fulfilling the Board’s responsibilities, our directors have full access to our management, internal
and external auditors and outside advisors.

Furthermore, our Board of Directors is committed to independent Board oversight. Our current Board

leadership structure includes an executive Chairman and a lead director who is an independent director. The
positions of Chairman of the Board and Chief Executive Officer are both currently held by Mr. Jacobs. Our
Board believes that this combination of roles is currently appropriate because the structure enables decisive
leadership and ensures clear accountability in the context of strong Board practices and a Board culture that
facilitates independent oversight. Our Board believes the dual roles function well for our company based on our
current strategy, governance and ownership structure.

In 2016, our Board of Directors approved amendments to our company’s Corporate Governance Guidelines

(the “Guidelines”) to provide that the independent directors may appoint a lead independent director who
presides over executive sessions of the independent directors, and who shall serve a term of at least one year. On
March 20, 2016, the independent directors appointed Mr. Jesselson to serve as lead independent director. The
position of lead independent director has been structured to serve as an effective balance to the dual roles served
by Mr. Jacobs. The lead independent director is selected from the independent directors of the Board of
Directors. The lead independent director presides at all meetings of the Board of Directors at which the Chairman
is not present and presides at all executive sessions of the independent directors. The Guidelines require that the
independent directors meet at least once a year without members of management present, and the lead
independent director is empowered to call additional meetings of the independent directors as necessary. In
practice, our independent directors have met much more frequently in executive session. The lead independent
director also serves as a liaison between the Chairman and the independent directors. Together with the
Chairman, the lead independent director develops and approves Board meeting agendas, meeting schedules, and
meeting materials to be distributed to our Board of Directors in order to assure sufficient time for informed
discussions of issues. The lead independent director is also available to meet with significant stockholders as
appropriate and required.

Further information regarding the position of lead independent director is set forth in the Guidelines. The

Guidelines are available on the company’s corporate website at www.xpo.com under the Investors tab.

Our Board of Directors held ten meetings during 2016. In 2016, each person serving as a director attended at

least 75% of the meetings of our Board of Directors and any Board committee on which he or she served. Our
Board of Directors also acted five times during 2016 via unanimous written consent.

Our directors are expected to attend the annual meeting. Any director who is unable to attend the annual
meeting is expected to notify the Chairman of the Board in advance of the annual meeting. Each person who was
then serving as a director attended the 2016 annual meeting of stockholders.

Board Risk Oversight

Our Board of Directors provides overall risk oversight with a focus on the most significant risks facing our
company. The management of the risks that we face in the conduct of our business is primarily the responsibility
of our senior management team. Our senior management team periodically reviews with our Board of Directors
any significant risks facing our company. Our business, strategy, operations, policies, controls and prospects are
regularly discussed by our Board of Directors and management team, including discussions as to current and

potential risks and approaches for assessing, monitoring, mitigating and controlling risk exposure. Our Board of
Directors has delegated responsibility for the oversight of specific risks to the committees of the Board as
follows:

• Audit Committee. The Audit Committee oversees the policies that govern the process by which our

exposure to risk is assessed and managed by management. In that role, the Audit Committee discusses
with our management major financial risk exposures and the steps that management has taken to
monitor and control these exposures. The Audit Committee also is responsible for reviewing risks
arising from related party transactions involving our company and for overseeing our company-wide
Code of Business Ethics.

• Compensation Committee. The Compensation Committee monitors the risks associated with our

compensation philosophy and programs.

• Nominating and Corporate Governance Committee. The Nominating and Corporate Governance

Committee oversees risks related to our governance structure and processes.

• Acquisition Committee. The Acquisition Committee oversees risks related to the execution of our

acquisition strategy.

Our Board of Directors and Compensation Committee, in consultation with our independent compensation

consultant Semler Brossy Consulting Group, LLC (“Semler Brossy”), have assessed the risks that could arise
from our employee compensation policies and do not believe that such policies are reasonably likely to have a
materially adverse effect on our company.

Committees of the Board and Committee Membership

Our Board of Directors has established four separately designated standing committees to assist our Board

of Directors in discharging its responsibilities: the Audit Committee, the Compensation Committee, the
Nominating and Corporate Governance Committee, and the Acquisition Committee. Our Board of Directors may
eliminate or create additional committees as it deems appropriate. The charters for our Board committees are in
compliance with applicable SEC rules and the NYSE Listed Company Manual. These charters are available at
www.xpo.com. You may obtain a printed copy of any of these charters by sending a request to: Investor
Relations, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831.

The Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance
Committee are composed entirely of independent directors within all applicable standards (as further discussed
below). Our Board of Directors’ general policy is to review and approve committee assignments annually. The
Nominating and Corporate Governance Committee is responsible, after consultation with our Chairman of the
Board and Chief Executive Officer and consideration of appropriate member qualifications, to recommend to our
Board of Directors for approval all committee assignments, including designations of the chairs. Each committee
is authorized to retain its own outside counsel and other advisors as it desires.

The following table sets forth the current membership of each of our Board committees as of the Record

Date. Mr. Jacobs does not serve on any Board committees.

Name

Gena L. Ashe
Louis DeJoy
Michael G. Jesselson
Adrian P. Kingshott
Jason D. Papastavrou*
Oren G. Shaffer*

Audit Committee

Compensation
Committee

Nominating and Corporate
Governance Committee

Acquisition
Committee

✓

C
✓

✓
✓

✓

C = Committee Chair

✓ = Committee Member

* = Audit Committee Financial Expert

A brief summary of the committees’ responsibilities follows:

Audit Committee. The Audit Committee assists our Board of Directors in fulfilling its responsibilities in a

number of areas, including, without limitation, oversight of: (i) our accounting and financial reporting processes,
including our systems of internal controls and disclosure controls, (ii) the integrity of our financial statements,
(iii) our compliance with legal and regulatory requirements, (iv) the qualifications and independence of our
outside auditors, (v) the performance of our outside auditors and internal audit function, and (vi) related party
transactions. Each member of the Audit Committee satisfies all applicable independence standards, has not
participated in the preparation of our financial statements at any time during the past three years, and is able to
read and understand fundamental financial statements. From January 1, 2016, to March 20, 2016, the Audit
Committee was comprised of the following three directors: Dr. Papastavrou (Chair), Mr. Jesselson and
Mr. Kingshott. On March 20, 2016, Mr. Shaffer replaced Mr. Jesselson and was appointed the Chair of the
Committee. The Audit Committee met five times during 2016 and acted once via unanimous written consent.
Our Board of Directors has determined that Mr. Shaffer and Dr. Papastavrou each qualify as an “audit committee
financial expert” as defined under Item 407(d)(5) of Regulation S-K under the Exchange Act.

Compensation Committee. The primary responsibilities of the Compensation Committee are, among other

things: (i) to oversee the administration of our compensation programs, (ii) to review the compensation of our
executive management and annual bonus compensation, (iii) to review company contributions to qualified and
non-qualified plans, and (iv) to prepare any report on executive compensation required by SEC rules and
regulations. From January 1, 2016, to March 20, 2016, the Compensation Committee was comprised of the
following three directors: Mr. G. Chris Andersen (Chair), Dr. Papastavrou and Mr. Shaffer. On March 20, 2016,
Mr. Kingshott replaced Mr. Shaffer and was appointed the Chair of the Committee. On May 11, 2016,
Mr. Jesselson replaced Mr. Andersen. The Compensation Committee met seven times during 2016 and acted
eight times via unanimous written consent.

Nominating and Corporate Governance Committee. The primary responsibilities of the Nominating and

Corporate Governance Committee are, among other things: (i) to identify individuals qualified to become Board
members and recommend that our Board of Directors select such individuals to be presented for stockholder
consideration at the annual meeting or to be appointed by the Board of Directors to fill a vacancy, (ii) to make
recommendations to our Board of Directors concerning committee appointments, (iii) to develop, recommend to
our Board of Directors and annually review the Guidelines and oversee corporate governance matters, and (iv) to
oversee an annual evaluation of our Board of Directors and committees. From January 1, 2016, to March 20,
2016, the Nominating and Corporate Governance Committee was comprised of the following three directors:
Mr. Jesselson (Chair), Mr. Kingshott and Mr. Martell. On March 20, 2016, Ms. Ashe replaced Mr. Kingshott and
was appointed the Chair of the Committee, and Dr. Papastavrou replaced Mr. Martell. The Nominating and
Corporate Governance Committee met once during 2016.

Acquisition Committee. The Acquisition Committee is responsible for reviewing and approving acquisition,

divestiture and related transactions proposed by our management in which the total consideration to be paid or
received by us, for any particular transaction, does not exceed the limits that may be established by our Board of
Directors from time to time. From January 1, 2016, to March 20, 2016, the Acquisition Committee was
comprised of the following three directors: Mr. Kingshott (Chair), Mr. Jesselson and Dr. Papastavrou. On
March 20, 2016, Dr. Papastavrou was appointed the Chair of the Committee and Mr. DeJoy replaced
Mr. Jesselson. The Acquisition Committee did not meet during 2016.

Director Compensation

The following table sets forth information concerning the compensation of each person who served as a

non-employee director of our company during 2016.

2016 Director Compensation Table(1)

Name

G. Chris Andersen(3)

Gena L. Ashe(4)

Louis DeJoy(5)

Michael G. Jesselson(6)

Adrian P. Kingshott(7)

James J. Martell(8)

Jason D. Papastavrou(9)

Oren G. Shaffer(9)

Fees Earned
or Paid in
Cash ($)

Stock Awards(2)
($)

Option Awards(2)
($)

$20,743

$44,863

$50,000

$63,411

$61,401

$17,995

$58,599

$59,753

$172,081

$140,716

$172,081

—

Total ($)

$192,824

$185,579

$222,081

$235,492

$233,482

$190,076

$230,680

$231,834

(1) Compensation information for Mr. Jacobs, who is a named executive officer of our company, is disclosed in

(2)

this proxy statement under the heading “Executive Compensation—Compensation Tables.” Mr. Jacobs did
not receive additional compensation for his service as a director.
The amounts reflected in this column represent the grant date fair value of the awards made in 2016, as
computed in accordance with Financial Accounting Standards Board Accounting Standards Codification
718 “Compensation—Stock Compensation” (“ASC 718”). For further discussion of the assumptions used in
the calculation of the grant date fair value, please see “Notes to Consolidated Financial Statements—Note
12. Stock-Based Compensation” of our company’s Annual Report on Form 10-K for the year ended
December 31, 2016. The values reported in this column represent 6,501 restricted stock units (“RSUs”)
granted to each of Messrs. Andersen, DeJoy, Jesselson, Kingshott, Martell and Shaffer and Dr. Papastavrou
on January 4, 2016, for service as a director in 2016, which vested on January 4, 2017. Each current director
serving on January 3, 2017, also received a grant of 3,970 RSUs on such date for service as a director in
2017, which grants are not reflected in the table above.

(3) Mr. Andersen retired from the Board on May 11, 2016. As of December 31, 2016, Mr. Andersen held

24,000 stock options and 6,501 RSUs. On May 11, 2016, the company entered into a consulting agreement
with Mr. Andersen for a one year term. Pursuant to the consulting agreement, Mr. Andersen will receive
(i) cash compensation of $1, (ii) vested stock options exercisable into 24,000 shares will continue to be
exercisable during the one year term of the consulting agreement and until the earlier of the tenth
anniversary of the grant date and one year after the expiration of the one year term of the consulting
agreement, and (ii) 6,501 restricted stock units will vest on January 4, 2017 if services are continued under
the consulting agreement.

(4) Ms. Ashe joined the Board on March 20, 2016.

(5) As of December 31, 2016, Mr. DeJoy held 6,501 RSUs. Mr. DeJoy beneficially owns a total of 1,125,448

shares of our common stock as disclosed in this proxy statement under the heading “Security Ownership of
Certain Beneficial Owners and Management.”

(6) As of December 31, 2016, Mr. Jesselson held 24,000 stock options and 6,501 RSUs. Mr. Jesselson

beneficially owns a total of 341,723 shares of our common stock as disclosed in this proxy statement under
the heading “Security Ownership of Certain Beneficial Owners and Management.”

(7) As of December 31, 2016, Mr. Kingshott held 24,000 stock options and 10,758 RSUs. Mr. Kingshott

beneficially owns a total of 127,972 shares of our common stock as disclosed in this proxy statement under
the heading “Security Ownership of Certain Beneficial Owners and Management.”

(8) Mr. Martell retired from the Board on May 11, 2016. As of December 31, 2016, Mr. Martell held 49,000
stock options and 6,501 RSUs. On May 11, 2016, the company entered into a consulting agreement with
Mr. Martell for a two year term. Pursuant to the consulting agreement, Mr. Martell will receive (i) $6,250
per month, (ii) vested stock options exercisable into 25,000 shares of common stock will continue to be
exercisable during the two year term of the consulting agreement and until the earlier of the tenth
anniversary of the grant date and thirty days after the expiration of the two year term of the consulting
agreement, (iii) vested stock options exercisable into 24,000 shares of common stock will continue to be
exercisable during the two year term and until the earlier of the tenth anniversary of the grant date and one
year after the expiration of the two year term of the consulting agreement, and (iv) 6,501 restricted stock
units will vest on January 4, 2017 if services are continued under the consulting agreement.

(9) As of December 31, 2016, Dr. Papastavrou and Mr. Shaffer each held 24,000 stock options and 15,758

RSUs. Dr. Papastavrou beneficially owns a total of 236,847 shares of our common stock and Mr. Shaffer
beneficially owns a total of 60,758 shares of our common stock as disclosed in this proxy statement under
the heading “Security Ownership of Certain Beneficial Owners and Management.”

The compensation of our directors is subject to the approval of our Board of Directors, which is based, in
part, on the review and recommendation of the Compensation Committee. Directors who are employees of our
company do not receive additional compensation for service as members of either our Board of Directors or its
committees. In December 2015, in consultation with Semler Brossy and upon the recommendation of our
Compensation Committee, our Board of Directors reviewed our outside director compensation program and
decided that no changes were necessary for 2016.

During 2016, our non-employee directors received an annual cash retainer of $50,000, payable quarterly in
arrears, and an annual RSU grant with a target grant date value of $175,000. The RSUs were granted on the first
business day of the calendar year and vested on the first anniversary of the grant date. The number of RSUs
granted to each outside director was determined by dividing $175,000 by the average of the closing prices of the
company’s common stock on the ten trading days immediately preceding the grant date. Unvested stock options
and RSUs will be forfeited upon termination of service for any reason. Also, during 2016, under our outside
director compensation program, the chairpersons of our Audit Committee, Compensation Committee,
Nominating and Corporate Governance Committee and Acquisition Committee each received an additional
annual cash retainer of $12,500, $12,500, $7,500 and $7,500, respectively, payable quarterly in arrears. No other
fees were paid to our directors for their attendance at or participation in meetings of our Board or its committees.
We also reimbursed our directors for expenses incurred in the performance of their duties, including
reimbursement for air travel and hotel expenses.

In 2016, our Board adopted stock ownership guidelines and stock retention requirements that apply to our

non-employee directors and executive officers. Non-employee directors are subject to a stock ownership
guideline of six (6) times the annual cash retainer. To determine compliance with these guidelines, generally,
common shares held directly or indirectly, and unvested restricted stock units subject solely to time-based
vesting, count towards meeting the stock ownership guidelines. Stock options, whether vested or unvested, and
equity-based awards subject to performance-based vesting conditions, are not counted towards meeting the stock
ownership guidelines. Until the guidelines are met, 70% of the net shares (after tax withholding) received upon
vesting of equity-based awards are required to be retained by the director. As of the Record Date, each of our

non-employee directors other than Ms. Ashe, who joined the Board in March 2016, was in compliance with our
stock ownership guidelines.

On March 14, 2017, the Board of Directors, acting upon the recommendation of the Compensation
Committee and in consultation with its independent compensation consultant, Semler Brossy, approved and
adopted a revised non-employee director annual compensation program that will apply in calendar year 2017 and
subsequent years. Effective January 1, 2017, our non-employee directors will receive an annual cash retainer of
$75,000, payable quarterly in arrears and time-based restricted stock units (“Time-Based RSUs”) worth
$175,000. The annual grant of such Time-Based RSUs will be made on the first business day of each year (the
“RSU Grant Date”) and the number of such units will be determined by dividing $175,000 by the average of the
closing prices of the company’s common stock on the ten trading days immediately preceding the RSU Grant
Date. The lead independent director will also receive a $25,000 annual cash retainer, payable quarterly in arrears.
Under the revised non-employee director annual compensation program, the chairpersons of our Audit
Committee, Compensation Committee, Nominating and Corporate Governance Committee and Acquisition
Committee will each receive an additional cash retainer of $25,000, $15,000, $15,000 and $15,000, respectively,
payable quarterly in arrears.

Under the revised non-employee director annual compensation program, Mr. Jesselson received a one-time
cash retainer for his service as lead independent director in 2016 in an amount equal to the pro rata portion of an
annualized retainer of $15,000, calculated from the date of his appointment on March 20, 2016. Ms. Ashe also
received a one-time grant of Time-Based RSUs for her service as a director in 2016 in an amount equal to the pro
rata portion of an annual grant of $175,000, calculated from the date of her appointment on March 20, 2016 and
determined by dividing the pro rata portion of $175,000 by the average of the closing prices of the company’s
common stock on the ten trading days immediately preceding the One-Time Grant Date. The vesting date of
Ms. Ashe’s one-time grant will be January 1, 2018.

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee has been an officer or employee of our company.
During our last completed fiscal year, none of our executive officers served as a member of the compensation
committee of any entity that has one or more executive officers serving on our Compensation Committee.

Corporate Governance Guidelines and Codes of Ethics

Our Board of Directors is committed to sound corporate governance principles and practices. Our Board
adopted the Guidelines on January 16, 2012, and most recently adopted amendments to the Guidelines in March
2016, to, among other matters (i) provide for a robust lead independent director position as described further in
“Role of the Board and Board Leadership Structure” on page 15, and (ii) reflect the Board’s commitment, when
searching for new directors, to actively seek out highly qualified women and individuals from minority groups to
include in the pool from which Board nominees are chosen. Our Board continues to seek out highly qualified
board candidates who bring relevant expertise and reflect the company’s growing scale and diversity.

The Guidelines serve as a framework within which our Board of Directors conducts its operations. Among
other things, the Guidelines include criteria for determining the qualifications and independence of the members
of our Board, requirements for the standing committees of our Board, responsibilities for members of our Board,
and the annual evaluation of the effectiveness of our Board and its committees. The Nominating and Corporate
Governance Committee is responsible for reviewing the Guidelines annually, or more frequently as appropriate,
and recommending to our Board appropriate changes in light of applicable laws and regulations, the governance
standards identified by leading governance authorities, and our company’s evolving needs.

We have a Code of Business Ethics that applies to our directors and executive officers. This code is
designed to deter wrongdoing, to promote the honest and ethical conduct of all employees and to promote

compliance with applicable governmental laws, rules and regulations, as well as to provide clear channels for
reporting concerns. The Code of Business Ethics constitutes a “code of ethics” as defined in Item 406(b) of
Regulation S-K. We intend to satisfy the disclosure requirements under applicable SEC rules relating to
amendments to the Code of Business Ethics or waivers from any provision thereof applicable to our principal
executive officer, our principal financial officer and principal accounting officer by posting such information on
our website pursuant to SEC rules.

The Guidelines and our Code of Business Ethics are available on our website at www.xpo.com. In addition,

you may obtain a printed copy of these documents, without charge, by sending a request to: Investor Relations,
XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831.

Exclusive Forum Bylaw Amendment

In March 2017, our Board of Directors approved an amendment of our bylaws in order to provide that
certain types of stockholder litigation be litigated exclusively in the Chancery of Court of the State of Delaware,
which is our state of incorporation. In adopting the amendment and determining that doing so is in the best
interests of our company and our stockholders, our Board considered various factors, including, among others:
prevailing market practice and perspectives on such provisions; the importance to our company and our
stockholders of reducing litigation costs and preventing corporate resources from being unnecessarily diverted to
address duplicative, costly and wasteful multi-forum litigation; the value of facilitating consistency and
predictability in litigation outcomes for the benefit of our company and our stockholders; that our company is
incorporated under the laws of the state of Delaware; that adopting such an exclusive forum provision covering
specified claims does not materially change the substantive legal claims available to stockholders; Section 115 of
the Delaware General Corporation Law and case law developments upholding the authority of the board of
directors to adopt such a provision and confirming its validity and enforceability; and case law developments
outside of Delaware enforcing such provisions.

Director Independence

Under the Guidelines, our Board of Directors is responsible for making independence determinations
annually with the assistance of the Nominating and Corporate Governance Committee. Such independence
determinations are made by reference to the independence standard under the Guidelines and the definition of
“independent director” under Section 303A.02 of the NYSE Listed Company Manual. Our Board of Directors
has affirmatively determined that each person who served as a director during any part of 2016, except
Mr. Jacobs, our Chairman of the Board and Chief Executive Officer, and Mr. DeJoy, satisfies the independence
standards under the Guidelines and the NYSE Listed Company Manual.

In addition to the independence standards provided in the Guidelines, our Board of Directors has determined

that each director who serves on our Audit Committee satisfies standards established by the SEC providing that,
in order to qualify as “independent” for the purposes of membership on that committee, members of audit
committees may not (1) accept directly or indirectly any consulting, advisory or other compensatory fee from our
company other than their director compensation, or (2) be an affiliated person of our company or any of its
subsidiaries. Our Board of Directors has also determined that each member of the Compensation Committee
satisfies the NYSE standards for independence of Compensation Committee members, which became effective
on July 1, 2013. Additionally, our Board of Directors has determined that each member of the Nominating and
Corporate Governance Committee satisfies the NYSE standards for independence. In making the independence
determinations for each director, our Board of Directors and the Nominating and Corporate Governance
Committee analyzed certain relationships of the directors that were not required to be disclosed pursuant to
Item 404(a) of Regulation S-K. For Ms. Ashe, those relationships included ordinary course commercial
transactions between our company and an entity for which Ms. Ashe was an executive prior to becoming a
director of the Company. For Mr. Jesselson, those relationships included ordinary course commercial
transactions between our company and an entity for which Mr. Jesselson is the president. For Dr. Papastavrou,

those relationships included ordinary course commercial transactions between our company and an entity for
which Dr. Papastavrou is a director. For Mr. Shaffer, those relationships included ordinary course commercial
transactions between our company and an entity for which Mr. Shaffer is a director.

Director Selection Process

The Nominating and Corporate Governance Committee is responsible for recommending to our Board of
Directors all nominees for election to the Board, including nominees for re-election to the Board, in each case
after consultation with the Chairman of the Board and in accordance with our company’s contractual obligations.
Pursuant to the Investment Agreement, JPE has had and may in the future have the contractual right based on its
securities ownership, as described above under “Directors,” to designate for nomination by our Board of
Directors a certain percentage of the members of our Board of Directors. Subject to the foregoing, in considering
new nominees for election to our Board, the Nominating and Corporate Governance Committee considers,
among other things, breadth of experience, financial expertise, wisdom, integrity, an ability to make independent
analytical inquiries, an understanding of our company’s business environment, knowledge and experience in such
areas as technology and marketing, and other disciplines relevant to our company’s businesses, the nominee’s
ownership interest in our company, and a willingness and ability to devote adequate time to Board duties, all in
the context of the needs of the Board at that point in time and with the objective of ensuring diversity in the
background, experience, and viewpoints of Board members. When searching for new directors, our Board
endeavors to actively seek out highly qualified women and individuals from minority groups to include in the
pool from which Board nominees are chosen. Our Board aims to create a team of directors with diverse
experiences and backgrounds to provide our company with thoughtful and engaged board oversight.

Subject to the contractual rights granted to JPE pursuant to the Investment Agreement, the Nominating and
Corporate Governance Committee may identify potential nominees for election to our Board of Directors from a
variety of sources, including recommendations from current directors or management, recommendations from
our stockholders or any other source the committee deems appropriate.

Our Board of Directors will consider nominees submitted by our stockholders subject to the same factors
that are brought to bear when it considers nominees referred by other sources. Our stockholders can nominate
candidates for election as directors by following the procedures set forth in our bylaws, which are summarized
below. We did not receive any director nominees from our stockholders for the 2017 annual meeting.

Our bylaws require that a stockholder who wishes to nominate an individual for election as a director at our

annual meeting must give us advance written notice. The notice must be delivered to or mailed and received by
the Secretary of our company not less than 90 days, and not more than 180 days, prior to the earlier of the date of
the annual meeting and the first anniversary of the preceding year’s annual meeting. As more specifically
provided in our bylaws, any nomination must include: (i) the nominator’s name and address and the number of
shares of each class of our capital stock that the nominator owns, (ii) the name and address of any person with
whom the nominator is acting in concert and the number of shares of each class of our capital stock that any such
person owns, (iii) the information with respect to each such proposed director nominee that would be required to
be provided in a proxy statement prepared in accordance with applicable SEC rules, and (iv) the consent of the
proposed candidate to serve as a member of our Board.

Any stockholder who wishes to nominate a potential director candidate must follow the specific

requirements set forth in our bylaws, a copy of which may be obtained by sending a request to: Secretary, XPO
Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831.

Human Capital Management

Our talent management efforts go beyond the director and management level. Our business model relies on
our strong customer service culture, which is deeply interconnected with the talent and satisfaction levels of all

our employees. As we strive to grow our business, we are focused on maintaining XPO’s great work
environment. Our efforts in human capital management focus on enhancing the robust training of our work force,
improving management capabilities and seeking to harmonize best practices across our global operations. We
tailor the development and management of each operating location to the specific type of operation and labor
force. We also conduct regular surveys multiple times each year, including local assessments of the work force at
each site.

Our recent appointment of Meghan Henson to the position of Chief Human Resources Officer reflects the

emphasis on human capital management embedded in the culture of XPO. Ms. Henson leads the company’s
global human resources organization and brings a renewed focus for the company on human capital management.
Our management team and Board of Directors work together in a transparent manner, allowing for open
communication, including with respect to human capital-related matters. Our directors have access to all
information about our human capital management operations and plans, and our Chief Human Resources Officer
is invited to attend and speak at the meetings of our Board of Directors when appropriate, updating the Board on
issues related to talent and methods used to evaluate the working atmosphere at XPO. Our directors also have
opportunities to attend and participate in employee town halls, which our CEO runs throughout the year at
varying operating sites, as well as executive leadership meetings with our mid- and senior-level operating
executives. We aim to integrate our human resources functions with our operational objectives.

Stockholder Communication with the Board

Stockholders and parties interested in communicating with our Board of Directors, any Board committee,

any individual director, including our lead independent director, or any group of directors (such as our
independent directors) should send written correspondence to: Board of Directors c/o Secretary, XPO Logistics,
Inc., Five American Lane, Greenwich, Connecticut 06831. Please note that we will not forward communications
that are spam, junk mail and mass mailings, resumes and other forms of job inquiries, surveys, business
solicitations or advertisements.

Stockholder Proposals for Next Year’s Annual Meeting

Stockholder proposals intended to be presented at our 2018 annual meeting of stockholders must be received

by our Secretary not later than December 18, 2017, to be considered for inclusion in our proxy materials,
pursuant to Rule 14a-8 under the Exchange Act.

As more specifically provided in our bylaws, no business may be brought before an annual meeting of our
stockholders unless it is specified in the notice of the annual meeting or is otherwise brought before the annual
meeting by or at the direction of our Board of Directors or by a stockholder entitled to vote who has delivered
proper notice to us not less than 90 days, and not more than 180 days, prior to the earlier of the date of the annual
meeting and the first anniversary of the preceding year’s annual meeting. Accordingly, assuming that our 2018
annual meeting of stockholders is held on or after May 10, 2018, any stockholder proposal to be considered at the
2018 annual meeting, including nominations of persons for election to our Board of Directors, must be properly
submitted to us not earlier than November 11, 2017, nor later than February 9, 2018.

Detailed information for submitting stockholder proposals or nominations of director candidates will be

provided upon written request to: Secretary, XPO Logistics, Inc., Five American Lane, Greenwich,
Connecticut 06831.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Under its written charter, the Audit Committee of our Board of Directors is responsible for reviewing and

approving or ratifying any transaction between our company and a related person (as defined in Item 404 of
Regulation S-K) that is required to be disclosed under the rules and regulations of the SEC. Our management is
responsible for bringing any such transaction to the attention of the Audit Committee. In approving or rejecting
any such transaction, the Audit Committee considers the relevant facts and circumstances, including the material
terms of the transaction, risks, benefits, costs, availability of other comparable services or products and, if
applicable, the impact on a director’s independence.

Since January 1, 2016, we have not been a participant in any transaction or series of similar transactions in
which the amount exceeded or will exceed $120,000 and in which any current director, executive officer, holder
of more than five percent of our capital stock, or any member of the immediate family of the foregoing, had or
will have a material interest, except for the transactions described below or as previously disclosed in this proxy
statement.

During the year ended December 31, 2016, the company provided certain air charter schedule recovery
services to Ameriflight, LLC (“Ameriflight”), a regional air cargo carrier. James J. Martell, a member of our
Board of Directors until May 11, 2016, owns and serves as the executive chairman of Ameriflight. The company
provides its services to Ameriflight on a transactional basis without a written contract. The company received
payments from Ameriflight or its affiliates in an amount of approximately $974,000 for the year ended
December 31, 2016. Pursuant to the company’s policies and procedures described above, the Audit Committee
reviewed and ratified the transactions between XPO Air Charter and Ameriflight, concluding that the transactions
were in the best interests of the company and our stockholders and did not impair Mr. Martell’s independence as
a director.

During the year ended December 31, 2016, the company leased office space from two entities partially
owned and controlled by Louis DeJoy, a member of our Board of Directors. In September 2014, in conjunction
with the company’s acquisition of New Breed Holding Company, XPO Logistics, through certain of our
subsidiaries, entered into four commercial lease agreements covering a total of approximately 142,991 square
feet of office space located in High Point, N.C., with the entities affiliated with Mr. DeJoy. The non-cancellable
lease agreements expire at various dates in 2019. Each lease agreement provides the company, as tenant, with
two five-year option periods to extend the lease term. The company made rent payments associated with these
lease agreements in an aggregate amount of $2.0 million for the year ended December 31, 2016. In addition, the
company paid operating expenses in connection with these leased properties of $0.3 million for the year ended
December 31, 2016.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information concerning the beneficial ownership of our voting securities as of

the Record Date by: (i) each person who is known by us, based solely on a review of public filings, to be the
beneficial owner of more than 5% of any class of our outstanding voting securities, (ii) each director, (iii) each
named executive officer, and (iv) all executive officers and directors as a group. None of the foregoing persons
beneficially owned any shares of equity securities of our subsidiaries as of the Record Date.

Under applicable SEC rules, a person is deemed to be the “beneficial owner” of a voting security if such

person has (or shares) either investment power or voting power over such security or has (or shares) the right to
acquire such security within 60 days by any of a number of means, including upon the exercise of options or
warrants or the conversion of convertible securities. A beneficial owner’s percentage ownership is determined by
assuming that options, warrants and convertible securities that are held by the beneficial owner, but not those
held by any other person, and which are exercisable or convertible within 60 days, have been exercised or
converted.

Unless otherwise indicated, we believe that all persons named in the table below have sole voting and

investment power with respect to all voting securities shown as being owned by them. Unless otherwise
indicated, the address of each beneficial owner in the table below is care of XPO Logistics, Inc., Five American
Lane, Greenwich, Connecticut 06831.

Name of Beneficial Owner

Beneficial Ownership of 5% or more
Orbis Investment Management Limited(3)

Orbis House, 25 Front Street
Hamilton Bermuda HM11
Jacobs Private Equity, LLC
Coral Blue Investment Pte. Ltd(5)

168 Robinson Road #37-01, Capital
Tower, Singapore 068912

The Vanguard Group(6)
100 Vanguard Blvd.
Malvern, PA 19355

Spruce House Investment Management LLC(7)

435 Hudson Street, 8th Floor
New York, NY 10014

BlackRock, Inc.(8)

55 East 52nd Street
New York, NY 10055

Directors:
Gena L. Ashe
Louis DeJoy
Michael G. Jesselson
Adrian P. Kingshott
Jason D. Papastavrou
Oren G. Shaffer

Shares of
Common
Stock
Beneficially
Owned

Percentage of
Common Stock
Outstanding(1)

Shares of Series
A Preferred
Stock
Beneficially
Owned(2)

Percentage of
Series A Preferred
Stock
Outstanding

20,815,297
19,285,714(4)

18.7%
14.7%

—
67,500

—
94.4%

—

—
—
725(11)
300
650(14)
—

—

—
—
1.0%
*
*

—

8,153,946

7.3%

7,825,426

7.0%

7,797,055

7.0%

5,902,754

5.3%

—

1,125,448(9)
341,723(10)
127,972(12)
236,847(13)
60,758(15)

—
1.0%
*
*
*
*

Name of Beneficial Owner

Named Executive Officers:
Bradley S. Jacobs+
Troy A. Cooper
John J. Hardig
Gordon E. Devens
Scott B. Malat
Current Executive Officers and Directors as a

Shares of
Common
Stock
Beneficially
Owned

Percentage of
Common Stock
Outstanding(1)

Shares of Series
A Preferred
Stock
Beneficially
Owned(2)

Percentage of
Series A Preferred
Stock
Outstanding

19,662,175(16)
128,085(17)
130,749(18)
179,979(19)
127,981(20)

15.0%
*
*
*
*

67,500
—
—
—
—

94.4%
—
—
—
—

96.7%

Group (12 People)

22,320,801(21)

16.9%

69,175

*
+
(1)

(2)

Less than 1%
Director and Executive Officer
For purposes of this column, the number of shares of the class outstanding reflects the sum of: (i)
111,551,028 shares of our common stock that were outstanding as of the Record Date, (ii) the number of
shares of our common stock into which the outstanding shares of our preferred stock held by the relevant
person, if any, were convertible on the Record Date, (iii) the number of shares of our common stock, if any,
which the relevant person could acquire on exercise of options or warrants within 60 days of the Record
Date, and (iv) the number of restricted stock units (“RSUs”), if any, held by the relevant person that are or
will become vested within 60 days of the Record Date.
Each share of our Series A Preferred Stock that was outstanding on the Record Date has an initial
liquidation preference of $1,000 per share and is convertible into approximately 143 shares of our common
stock at an effective conversion price of $7.00 per share of our common stock. Our Series A Preferred Stock
votes together as a single class with our common stock on an as-converted basis, except with respect to
certain matters that impact the rights of holders of our Series A Preferred Stock, in which case our Series A
Preferred Stock votes separately as a single class.

(3) Based on Amendment No. 3 to the Schedule 13G filed on February 14, 2017 by Orbis Investment

Management Limited (“OIML”), Orbis Investment Management (U.S.), LLC (“OIMUS”) and Orbis Asset
Management Limited (“OAML”), which reported that, as of December 31, 2016, OIML beneficially owned
20,368,113 shares, OIMUS beneficially owned 361,524 shares, and OAML beneficially owned 85,660
shares. The group has sole voting and sole dispositive power over such shares.

(4) Consists of 9,642,857 shares of our common stock issuable upon the exercise of 9,642,857 warrants at an

exercise price of $7.00 per share of common stock, and 9,642,857 shares of our common stock issuable
upon conversion of 67,500 shares of our Series A Preferred Stock. Mr. Jacobs has indirect beneficial
ownership of the shares of our common stock and our Series A Preferred Stock beneficially owned by JPE
as a result of being its Managing Member. In addition, Mr. Jacobs beneficially owns 126,461 shares of our
common stock held directly following the vesting of equity incentive awards and 250,000 shares of our
common stock issuable upon the exercise of options that are or will become exercisable within 60 days of
the Record Date. See footnote 16 below.

(5) Based on Amendment No. 3 to Schedule 13G filed on February 13, 2017 by Coral Blue Investment Pte. Ltd.
and GIC Private Limited, which reported that, as of December 31, 2016, Coral Blue Investment Pte. Ltd.
beneficially owned 8,153,946 shares of common stock and shares voting and dispositive power over such
shares of common stock with GIC Private Limited.

(6) Based on Amendment No. 1 to the Schedule 13G filed on February 10, 2017 by The Vanguard Group,

which reported that, as of December 31, 2016, The Vanguard Group beneficially owned 7,825,426 shares
with sole voting power over 111,942 shares, shared voting power over 10,838 shares, sole dispositive power
over 7,708,046 shares and shared dispositive power over 117,380 shares.

(7) Based on Amendment No. 2 to the Schedule 13G filed on February 14, 2017, filed by Spruce House

Investment Management LLC, Spruce House Capital LLC, The Spruce House Partnership LP, Zachary

Sternberg, and Benjamin Stein, which reported that, as of December 31, 2016, Spruce House Investment
Management LLC beneficially owned 7,750,000 shares, Spruce House Capital LLC beneficially owned
7,750,000 shares, The Spruce House Partnership LP beneficially owned 7,750,000 shares, Zachary
Sternberg beneficially owned 7,795,000 shares and Benjamin Stein beneficially owned 7,797,055 shares.
Spruce House Investment Management LLC, Spruce House Capital LLC, The Spruce House Partnership
LP, Zachary Sternberg and Benjamin Stein have shared voting and dispositive power over 7,750,000 shares
of common stock. Zachary Sternberg has sole voting and dispositive power over 45,000 shares. Benjamin
Stein has sole voting and dispositive power over 47,055 shares.

(8) Based on the Schedule 13G filed on January 30, 2017 by BlackRock, Inc., which reported that, as of

(9)

(10)

December 31, 2016, BlackRock, Inc. beneficially owned 5,902,754 shares, with sole voting power over
5,686,450 shares and sole dispositive power over 5,902,754 shares.
Includes: (i) 192,086 shares of our common stock beneficially owned by The Louis DeJoy Family
Partnership, LLC, of which Mr. DeJoy is the managing member, and (ii) 484,340 shares of our common
stock owned by the Louis DeJoy and Aldona Z. Wos Family Foundation, of which Mr. DeJoy is the
president.
Includes: (i) 12,000 shares of our common stock beneficially owned by the SJJ Irrevocable Trust, of which
Mr. Jesselson is a trustee, (ii) 12,000 shares of our common stock beneficially owned by the RAJ
Irrevocable Trust, of which Mr. Jesselson is a trustee, (iii) 12,000 shares of our common stock beneficially
owned by the JJJ Irrevocable Trust, of which Mr. Jesselson is a trustee, (iv) 10,000 shares of our common
stock beneficially owned by the Michael G. Jesselson and Linda Jesselson 6/30/93 Trust, of which
Mr. Jesselson is a trustee, (v) 10,000 shares of our common stock owned by Mr. Jesselson’s spouse, (vi)
103,572 shares of our common stock issuable upon the exercise of 103,572 warrants at an exercise price of
$7.00 per share of our common stock, which warrants are beneficially owned by the Michael G. Jesselson
12/18/80 Trust and the Michael G. Jesselson 4/8/71 Trust, of which trusts Mr. Jesselson is the beneficiary,
(vii) 21,322 shares of our common stock issuable upon the exercise of 21,322 warrants at an exercise price
of $7.00 per share of our common stock, which warrants are beneficially owned by the Michael G. Jesselson
and Linda Jesselson, Trustees UID 6/30/93 FBO Maya Ariel Ruth Jesselson, of which Mr. Jesselson is the
beneficiary, (viii) 103,570 shares of our common stock issuable upon conversion of 725 shares of our Series
A Preferred Stock, which shares of our Series A Preferred Stock are beneficially owned by the Michael G.
Jesselson 12/18/80 Trust and the Michael G. Jesselson 4/8/71 Trust, of which trusts Mr. Jesselson is the
beneficiary, and (ix) 24,000 shares of our common stock issuable upon the exercise of options that are or
will become exercisable within 60 days of the Record Date.

(11) See clause (viii) of footnote (10).
(12)

(13)

Includes: (i) 42,857 shares of our common stock issuable upon the exercise of 42,857 warrants at an
exercise price of $7.00 per share of our common stock, (ii) 42,857 shares of our common stock issuable
upon conversion of 300 shares of our Series A Preferred Stock, (iii) 24,000 shares of our common stock
issuable upon the exercise of options that are or will become exercisable on within 60 days of the Record
Date, and (iv) 10,758 RSUs that are or will become vested within 60 days of the Record Date.
Includes: (i) 1,375 shares of our common stock beneficially owned by the Brett A. Athans Declaration of
Trust, of which Dr. Papastavrou is the trustee, (ii) 92,857 shares of our common stock issuable upon the
exercise of 92,857 warrants at an exercise price of $7.00 per share of our common stock, which warrants are
beneficially owned by Springer Wealth Management LLC, of which Dr. Papastavrou is the owner of 100%
of the equity securities, (iii) 92,857 shares of our common stock issuable upon conversion of 650 shares of
our Series A Preferred Stock, which shares of Series A Preferred Stock are beneficially owned by Springer
Wealth Management LLC, of which Dr. Papastavrou is the owner of 100% of the equity securities, (iv)
24,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable
within 60 days of the Record Date, and (v) 15,758 RSUs that are or will become vested within 60 days of
the Record Date.

(14) See clause (iii) of footnote (13).
(15)

Includes: (i) 8,500 shares of our common stock issuable upon the exercise of 8,500 warrants at an exercise
price of $7.00 per share of common stock, (ii) 24,000 shares of our common stock issuable upon the

exercise of options that are or will become exercisable within 60 days of the Record Date, and (iii) 15,758
RSUs that are or will become vested within 60 days of the Record Date.

(16) Mr. Jacobs has indirect beneficial ownership of the shares of our common stock and our Series A Preferred
Stock beneficially owned by JPE as a result of being its Managing Member. See footnote (4). Also includes
126,461 shares of our common stock held directly by Mr. Jacobs following the vesting of equity incentive
awards and 250,000 shares of our common stock issuable upon the exercise of options that are or will
become exercisable within 60 days of the Record Date.
Includes: (i) 10,000 shares of common stock issuable upon the exercise of 10,000 warrants at an exercise
price of $7.00 per share of common stock, and (ii) 25,000 shares of our common stock issuable upon the
exercise of options that are or will become exercisable within 60 days of the Record Date.
Includes 50,000 shares of our common stock issuable upon the exercise of options that are or will become
exercisable within 60 days of the Record Date.

(18)

(17)

(19) Mr. Devens resigned as Chief Legal Officer of the Company effective February 15, 2017. Includes: (i)

(20)

(21)

20,000 shares of our common stock issuable upon the exercise of 20,000 warrants at an exercise price of
$7.00 per share of common stock, and (ii) 125,000 shares of our common stock issuable upon the exercise
of options that are or will become exercisable within 60 days of the Record Date.
Includes: (i) 12,750 shares of our common stock issuable upon the exercise of 12,750 warrants at an
exercise price of $7.00 per share of common stock, and (ii) 48,000 shares of our common stock issuable
upon the exercise of options that are or will become exercisable within 60 days of the Record Date.
Includes: (i) 9,954,715 shares of our common stock issuable upon the exercise of 9,954,715 warrants at an
exercise price of $7.00 per share of our common stock, (ii) 9,882,142 shares of our common stock issuable
upon conversion of 69,175 shares of our preferred stock, (iii) 729,000 shares of our common stock issuable
upon the exercise of options that are or will become exercisable within 60 days of the Record Date, and (iv)
42,274 RSUs that are or will become vested within 60 days of the Record Date.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes XPO Logistics’ executive compensation program for

2016. The Compensation Committee of our Board (referred to as the “Committee” in this section) oversees our
executive compensation program and practices. In this section, we explain how and why the Committee made its
2016 compensation decisions for the following named executive officers, or NEOs, including Mr. Gordon E.
Devens, our former Chief Legal Officer, who resigned from the company effective February 15, 2017:

NEO

Title

Chairman and Chief Executive Officer

Chief Operating Officer

Chief Financial Officer

Former Chief Legal Officer

Chief Strategy Officer

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig

Gordon E. Devens

Scott B. Malat

Executive Summary

2016 Highlights

Throughout 2016, our NEOs executed our strategy for high growth and high returns, successfully
leading the integration of our two largest acquisitions and establishing XPO Logistics as one of the ten
largest logistics companies in the world. During this period, our operations became a highly integrated
network of people, technology and physical assets, and we helped more than 50,000 customers manage their
goods more efficiently throughout their supply chains. As of December 31, 2016, our network encompassed
over 87,000 employees and approximately 1,425 locations in 34 countries, primarily in North America and
Europe.

For the full year 2016, our company reported net income attributable to common shareholders of

$63.1 million, compared with a net loss of $245.9 million for 2015, and achieved an absolute total
shareholder return (“TSR”) of 58%, well above the TSRs of the S&P 500 (12%) and the S&P
Transportation Select Industry Index (27%) and created approximately $2.14 billion of shareholder value in
2016 (based on the price per share of our common stock as of December 31, 2015 of $27.25 and
December 31, 2016 of $43.16).

A Springboard for Value Creation

Based on the significant progress made by our NEOs in 2016, we are in a strong position to continue to

execute our strategy in 2017 and beyond. Our focus remains on further enhancing customer service while
realizing the numerous profit improvement opportunities embedded in our business. In 2017, we will get the
full 12-month benefit of numerous efficiencies we implemented throughout 2016 in procurement, real
estate, back office operations and workplace technologies. We have more savings to realize in each of these
areas, along with cross-dock and warehouse automation, labor productivity and the global adoption of best
practices. In addition, we are marketing our services with a high caliber sales organization that draws on our
total supply chain offering to help customers operate more productively.

We have met or exceeded every financial target that our company has issued from 2012 through 2016.
Our full year targets forecast adjusted EBITDA of at least $1.350 billion in 2017 and $1.575 billion in 2018.
Our 2017-2018 cumulative free cash flow target is approximately $900 million, including at least
$350 million of free cash flow in 2017.

Our Compensation Philosophy

Our executive compensation philosophy is to align the interests of our executive team with the interests of

our stockholders and to ensure that the total compensation paid to our executive officers is reasonable and
competitive.

Key Objectives of Our Executive Compensation Program

Align executive
compensation with
long-term stockholder
value

We use varied compensation
elements to align the financial
interests and objectives of our
NEOs with those of our
stockholders and to sustain our
unified focus on the execution
of our strategy, which we
believe will create long-term
stockholder value.

Strongly correlate pay and
performance

Our executive
compensation program is
designed to strongly
correlate the compensation
received by our NEOs with
their performance and the
performance of XPO
Logistics.

Attract, retain and
motivate
high-performing
executive talent

We operate in a highly
competitive market for
executive talent; as such,
we believe it is essential
to attract, retain and
motivate a high-
performing executive
team with market
competitive pay
opportunities that deliver
the majority of pay in
at-risk elements.

How We Meet These Objectives

Our executive compensation program is heavily weighted towards variable compensation, including long-
term incentives, such as cash settled performance-based restricted stock units (“PRSU”) and annual cash
incentives.

Substantially all of the annual long-term awards granted to our NEOs are subject to meaningful share
price and/or earnings-related performance goals with service-based vesting periods.

Our NEOs are subject to significant stock ownership and retention requirements.

Our NEOs are subject to lock-up restrictions that generally prohibit the sale of any shares of our common
stock (on an after-tax basis) delivered pursuant to equity awards granted by our company – in 2016, these
lock-up restrictions were extended for an additional two years until September 2, 2018.

Our NEOs are subject to clawback restrictions with respect to equity and cash incentive compensation.

Our NEOs are subject to comprehensive non-competition and other restrictive covenants.

Executive Compensation Structure

Our executive compensation program consists of three primary elements: annual base salary, annual cash

incentive bonuses and long-term incentive awards. Each of these elements is described in more detail below:

Element

Base Salary

Annual
Incentives

Long-term
Incentives

Objective

Mechanics

Provide a competitive fixed component of
compensation that enables XPO Logistics to
attract and retain top talent.

Reviewed against the executive’s experience
and responsibilities, and for competitiveness
against XPO Logistics’ peer group.

Offer a variable annual cash compensation
opportunity based upon both financial and
strategic objectives.

Based on individual and company
performance; a portion may be subject to
repayment in certain termination scenarios.

Align the interests of our executives with
those of our stockholders through the use of
long-term incentive awards that reward
executives for increases in our stock price
over time. These awards are also meant to
focus executives on financial metrics that are
complementary to the financial metrics for
our annual cash incentive program.

The NEOs were granted cash-settled
performance-based restricted stock units
(“PRSUs”) in 2016 with performance goals
based on annual adjusted cash flow per share
for the four-year period from 2016 to 2019.
PRSUs will vest annually if the following
adjusted cash flow per share goals are
achieved: $2.93 in 2016, $3.96 in 2017,
$5.38 in 2018, and $6.39 in 2019.

See pages 39—40 for additional information.

Other
Governance-
related Policies

To meet the key objectives of our executive
compensation programs and to mitigate
overall compensation risk, we have adopted a
clawback policy, equity lock-up restrictions,
and equity ownership guidelines.

Because the Committee feels strongly that executive compensation should be tightly linked to both company
and individual performance, the executive compensation for our NEOs is heavily weighted towards equity-based
and variable cash incentive awards. At target, 90% of our CEO’s 2016 total direct compensation (“TDC”) is
incentive-based, and 80% is based on the achievement of long-term performance goals. For our other NEOs, on
average, 75% of their 2016 target total direct compensation is incentive-based and 50% is based on achievement
of long-term performance goals. The Committee believes that this mix is appropriate to drive execution of our
long-term strategy and to further align the interests of our NEOs with those of our stockholders. Details of each
component of compensation are outlined further in the 2016 Executive Compensation Outcomes section below.

CEO
2016 Target TDC Mix
(LTI Reflects Annualized Cash PRSU Value)

Other NEOs
2016 Target TDC Mix
(LTI Reflects Annualized Cash PRSU Value)

Base
Salary
10%

Annual
Incentive
10%

LTI
80%

LTI
50%

Base
Salary
25%

Annual
Incentive
25%

Compensation Governance Framework

To meet the key objectives of our executive compensation program and to mitigate risk from our
compensation practices and principles, the company has adopted a compensation governance framework that
includes the components described below, each of which the Committee believes reinforces the company’s
executive compensation philosophy and objectives.

• Clawback policy: Our NEOs and other executive officers are required to repay overpayments of

annual and long-term cash incentive compensation awards in the event of fraud or in the event of a
financial restatement occurring within one year following the award payment. Additionally, in order to
enhance the long-term retentive value of the 2016 annual cash incentive awards, the Committee made a
significant portion of certain executives’ 2016 cash incentive awards subject to repayment if a NEO’s
employment with our company terminates for any reason within two years immediately following the
payment date, as discussed more fully below.

• Lock-up restrictions: Our NEOs are subject to lock-up restrictions that generally prohibit the sale of
any shares of our common stock (on an after-tax basis) delivered pursuant to equity awards granted by
our company—in 2016, in connection with the renewal of our NEOs’ employment agreements, these
lock-up restrictions were extended for an additional two years until September 2, 2018.

•

Stock ownership guidelines and stock retention requirements: In 2016, our Board established stock
ownership guidelines for our NEOs and other executive officers to further align the interests of our
executives with those of our stockholders. See Page 40 for more detail.

• No stock option repricing: Our company’s equity incentive plan does not permit either stock option
repricing without stockholder approval or stock option grants with an exercise price below fair market
value.

• No tax gross-ups: Our company does not provide tax gross-ups on any benefits or perquisites,

including severance payments and other benefits received in connection with, or following, a change in
control.

•

Independent compensation consultant: The Committee retains an independent compensation
consultant who performs services only for the Committee, as discussed more fully below.

• No hedging or pledging of company stock: Under our insider trading policy, our company’s directors

and executive officers, including the NEOs, are prohibited from pledging or holding company
securities in a margin account without pre-clearance. In addition, such persons are prohibited from
engaging in hedging transactions without pre-clearance, such as prepaid variable forwards, equity
swaps, collars and exchange funds or any other transactions that are designed to or have the effect of
hedging or offsetting any decrease in the market value of equity securities.

2016 Executive Compensation Outcomes

Highlights of 2016 executive compensation include:

• Annual Base Salary: To recognize continued strong company performance and align with market levels
for companies of similar size, the Committee increased NEO base salaries. These base salaries had
been at comparatively low levels relative to market levels and had not been increased for the preceding
three years. This increase in NEO base salaries is fixed for the term of the NEOs’ employment
agreements.

• Annual Cash Incentive Bonuses: Our company’s strong financial performance and the Committee’s

assessment of both company and individual performance during a transformative year for the company
led to above-target annual cash bonus payouts for the NEOs.

• Long-term Incentive Program: NEOs earned the first of four tranches of the PRSU awards because our

company’s actual 2016 adjusted cash flow per share exceeded the goal of $2.93.

Annual Base Salary

The Committee increased annual base salaries for each of our NEOs during 2016 as part of renewing their
employment agreements. These increases were made to recognize continued strong company performance and
increases in executive’s roles and responsibilities as well as to better align these base salaries with market levels
for companies of similar size. Base salaries provide our NEOs with fixed cash compensation for service during
the year, with consideration given to the scope of each NEO’s responsibilities, experience and other
qualifications essential to his role.

Accordingly, annual base salary rates as of December 31, 2016, were as follows:

NEOs

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig

Gordon E. Devens

Scott B. Malat

2016 Annual
Base Salary

$625,000

$537,500

$515,000

$500,000

Annual Cash Incentive Bonuses

The following table sets forth the target awards established by the Committee under the 2016 annual cash

incentive awards, expressed as a percentage of salary and as a dollar amount for each NEO:

NEO

Target Award
% of Salary

Target Award
in Dollars

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig

Gordon E. Devens

Scott B. Malat

100%

$625,000

$537,500

$515,000

$500,000

In March 2016, for each NEO, the Committee established a target annual cash incentive award for 2016

under the terms of our Amended and Restated 2011 Omnibus Incentive Compensation Plan (the “2011 Plan”).
Pursuant to the terms of the awards, the Committee set a performance goal based on the previously forecasted
adjusted EBITDA for 2016 at that time. In October 2016, the company completed the sale of its truckload
business. This transaction strengthened the company’s balance sheet and improved our long-term growth profile
by deleveraging the company, reducing our annual capital expenditure requirements and increasing the return on
our capital. However, as a result of the sale of the truckload business in the fourth quarter of 2016, the company
reduced its forecast adjusted EBITDA for 2016 to reflect this divestment and the previously determined
performance goal set under the 2011 Plan was not achieved. The Committee exercised its discretion in light of
the beneficial impact of the truckload divestment as well as the company’s strong overall performance to grant
new cash incentive awards under the 2011 Plan in respect of 2016, the amount of which was determined as
described below.

Under the terms of the awards, the Committee is responsible for determining the bonus award payable to a

participant based on the achievement of individual or organizational goals, as determined by the Committee in its
sole discretion. The Committee, in consultation with our CEO (except with respect to his own performance
assessment), conducted a performance assessment of each NEO. The CEO’s performance assessment
recommendations were based on an overall subjective assessment of each officer’s performance and contribution
to our company’s achievement of its strategic objectives. The Committee conducted a separate assessment of
Mr. Jacobs’ performance without his involvement.

The Committee considers company performance as well as each NEO’s individual performance
contributions. For 2016, the Committee determined that our company accomplished and exceeded its key
financial and strategic objectives for the year, as outlined above in the “Executive Summary” section of this
Compensation Discussion and Analysis section. Under the leadership and guidance of our NEOs, in 2016 we
continued to integrate two significant acquisitions from 2015 and continued to optimize our existing operations.

Each of the NEOs was determined to have contributed significantly to the company’s achievements during
2016. In determining 2016 cash incentive award payouts for the NEOs, the Committee’s goal was to recognize
and reward each NEO’s performance, while also awarding cash bonus amounts that had the effect of relatively
balancing total cash compensation across the group of NEOs, with consideration to each NEO’s job
responsibilities and position. Accordingly, differences in the award payouts to the NEOs, as compared to the
target awards, do not reflect a determination by the Committee of the relative performance of any single NEO.

As a result of the above-described performance assessments, and taking into account the indicated total cash

compensation payable to each NEO, the Committee approved the cash incentive award payouts below to our
NEOs for 2016 other than Mr. Devens, who resigned from the company, effective February 15, 2017, prior to the
award of the 2016 cash incentive bonus. Mr. Devens’ 2016 bonus of $500,000 was approved by the Committee

as one of the terms of Mr. Devens’ separation agreement. In order to enhance the long-term retentive value of the
2016 annual cash incentive awards, the Committee made a significant portion of the 2016 cash bonuses paid to
Messrs. Jacobs, Cooper and Hardig ($750,000, $537,500 and $400,000, respectively) subject to repayment if any
of them leaves our company for any reason within two years immediately following the payment date other than
following a Change of Control (as defined in the 2016 Plan).

NEO

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig

Scott B. Malat

2016 Annual Bonus
Payout

$1,375,000

$1,075,000

$ 915,000

$ 500,000

Long-Term Incentive Program

The Committee designed our 2016 long-term equity incentive awards to align the interests of our executives
with those of our stockholders through the use of long-term incentive awards that reward executives for increases
in our stock price over time. These awards are also meant to focus executives on financial metrics that are
complementary to the performance metric of adjusted EBITDA that is applicable to our annual cash incentive
program.

For 2016, the Committee determined that it would be advisable to make PRSU awards to our leadership
team to maximize retention and incentivize a unified focus on execution of our long-term strategy. The target
grant date value of the PRSU awards granted by the Committee to each of our NEOs are as follows:

NEO

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig

Gordon E. Devens

Scott B. Malat

2016-2019 Total Target Award
in Dollars

Annualized Target Award
in Dollars

$20,000,000

$ 4,500,000

$ 4,000,000

$5,000,000

$1,125,000

$1,000,000

Key Features of the PRSU Program

• As shown above, a significant amount of the pay opportunity for our NEOs is awarded in long-term

PRSU incentives that are tied to high growth financial targets.

• The PRSUs granted in February 2016 will vest 25% annually over four years only if the

pre-determined performance goals for each year are achieved.

• There is zero payout if the established financial targets are not attained (i.e., no minimum

achievement threshold upon which any portion of the award would be earned).

• There is no upside leverage if the target is exceeded in any given year; the maximum achievement

is the target itself (100%).

•

Payouts are tied directly to stock price performance, in direct alignment with stockholder
interests. If our stock price increases from grant date to vesting date, the award will pay out at a
higher amount than the original grant. Conversely, if the stock price declines in that same period, the
original grant will decline in value at the same rate as the stock price.

• Awards are subject to clawback both during the vesting period and after payout based on the

circumstances as specified by the terms of the awards.

The PRSU payout is dependent on specified adjusted cash flow per share for 2016 and the company’s stock

price at the time the award is settled. The exhibit below provides an illustration of XPO Logistics’ total
shareholder return during the most recent one, three and five calendar years as compared to the S&P 500 and
S&P Transportation Index, which demonstrates the strong relative performance of the company’s stock price in
these periods.

250%

200%

150%

100%

50%

58%

27%
12%

64%

36%

29%

249%

XPO

S&P Transportation Index

S&P 500

148%

97%

1- year TSR

3- year TSR

5- year TSR

Note: TSR calculations reflect the relevant trading price of our common stock and that of the relevant index as of the last
trading day of the relevant calendar year in 2016, 2015, 2014, 2013, 2012 and 2011 as reported by Bloomberg Finance L.P.

Based on the equity award agreements, 25% of each PRSU award will vest annually if the following
adjusted cash flow per share goals are achieved: $2.93 in 2016, $3.96 in 2017, $5.38 in 2018, and $6.39 in 2019.

“Adjusted cash flow per share” for purposes of these PRSU awards means (i) adjusted EBITDA (determined in
accordance with the company’s monthly operating reports and for external reporting purposes and adjusted for
the impact of stock and phantom stock compensation) less any capital expenditures and interest divided by
(ii) diluted shares outstanding. The adjusted cash flow per share metric was selected consistent with the
company’s philosophy to encourage appropriate business risk without incentivizing behaviors that may have a
material adverse effect on the company. The targeted annual award values were determined with reference to
each NEO’s contributions to our company to date, his anticipated contribution to the achievement of our strategic
objectives in the future, and prior equity-based awards granted to the NEO. No particular weighting was assigned
to any of these considerations. In granting the PRSUs, the Committee also determined that the structure of the
award, with achievement of the final adjusted cash flow per share performance goal not possible until after the
end of 2019, provided an important retentive element and increased long-term focus for our NEOs.

The first tranche of the award was earned based on the achievement of the 2016 adjusted cash flow per share

performance target, as approved by the Committee on February 16, 2017. Based on XPO Logistics’ share price
on the vesting date, Messers. Jacobs, Cooper, Hardig, Devens, and Malat received cash payments specified by
the terms of the awards.

Result of Stockholder Advisory Vote

We conducted our annual advisory vote on executive compensation at our 2016 Annual Meeting on May 11,

2016. While this vote was not binding on our company, our Board or the Committee, we believe that it is
important for our stockholders to have an opportunity to vote on this proposal on an annual basis as a means to
express their views on our executive compensation philosophy, our executive compensation program and
policies, and our decisions regarding executive compensation, all as disclosed in our proxy statement.

At our 2016 Annual Meeting, approximately 95% of the votes cast on the advisory vote on executive
compensation were in favor of our NEO compensation program as disclosed in our 2016 proxy statement. The
Committee reviewed and considered the final results of the advisory vote as it completed its annual review of the
executive compensation program.

The company communicates directly and frequently with its stockholders about business strategy. In the
course of such stockholder engagement, we often discuss our executive compensation and the further alignment
of our executive team’s interests with the interests of our stockholders.

Process for Determining Executive Compensation

The Committee believes that its emphasis on variable annual cash incentives and long-term equity-based
awards allows it to retain significant flexibility and discretion from year to year in order to strongly motivate our
NEOs. Specifically, the total compensation package for each of our NEOs reflects assessments of individual
responsibilities, contributions to corporate performance and overall company success in reaching strategic goals.
The general framework for our compensation packages includes fixed base salaries and variable incentive
compensation consisting of annual cash incentives and equity grants that emphasize pay for performance and, in
the case of equity-based grants, achievement of long-term performance goals. The Committee has tended to
heavily weight our NEOs’ compensation towards variable incentive compensation rather than base salary.

Role of the Compensation Committee

The Committee is responsible for approving our compensation philosophy and overseeing our executive
compensation program in a manner consistent with such compensation philosophy. The Committee is tasked with
setting annual and long-term performance goals for our NEOs, evaluating and approving award grants under
incentive compensation and equity-based plans, and reviewing and approving all other compensation and
benefits for our NEOs on an ongoing basis. The Committee acts independently but works closely with our full

Board and executive management in making many of its decisions. To assist it in discharging its responsibilities,
the Committee has retained the services of Semler Brossy, as discussed further below.

Role of Management

Executive management provides input to the Committee as it establishes, reviews and evaluates executive

compensation packages and policies, including with respect to the design of our executive compensation
program. In particular, our CEO, Mr. Jacobs, provides recommendations as to proposed compensation actions
with respect to our executive team, but not with respect to his own compensation. The Committee carefully and
independently reviews the recommendations of management, without members of management present, and
consults with independent advisors before making its final determinations. We believe this process ensures that
our executive compensation program effectively aligns with our compensation philosophy and our stockholders’
interests.

Role of Independent Compensation Consultant

The Committee directly retained Semler Brossy as its independent advisor. During 2016, Semler Brossy
supported the Committee in: reviewing the reasonableness of the 2016 compensation packages and long-term
incentive grants for the NEOs and our other senior officers; reviewing this Compensation Discussion and
Analysis and the related tables and narratives; structuring the 2016 performance-based equity-based awards to
executives; evaluating our non-employee director compensation program; assessing the risks associated with the
company’s overall compensation policies and practices; monitoring trends and evolving market practices in
executive compensation; and providing general advice and support to the Committee and Committee Chair.
Semler Brossy does not provide any other services to the Committee or the company.

As part of the annual performance evaluation of its independent compensation consultant, the Committee
considered Semler Brossy’s independence in light of applicable SEC rules and NYSE listing standards. After
taking into account: (i) Semler Brossy’s absence of relationships with management and the members of the
Committee, (ii) Semler Brossy’s internal policies, and (iii) other information provided to the Committee by
Semler Brossy, the Committee determined that Semler Brossy’s work did not raise any conflicts of interest that
would prevent it from serving as an independent compensation consultant to the Committee.

Comparative Analysis

The Committee, with input from its independent compensation consultant, reviews and approves the peer

group used in evaluating executive compensation to ensure that the peer group continues to reflect certain
characteristics comparable to the company. These peer group characteristics include being in the transportation
and logistics industries and having annual revenue of at least $1 billion. The peers comprising the 2016 peer
group represent most of our publicly traded competitors and, in the Committee’s view, were reasonable given the
revenue scale of XPO Logistics in 2016, following our company’s June 2015 acquisition of Norbert
Dentressangle SA and October 2015 acquisition of Con-way Inc.

While we monitor the structure of our peers’ pay programs, the Committee does not target a specific
percentile positioning against the peer group. Also, the Committee does not target a specific mix between cash
and equity or short-term and long-term compensation relative to the mix used by peer group companies. The peer
group for 2016 consisted of the following logistics and distribution or trucking companies:

Peer Name
C.H. Robinson Worldwide, Inc.

Expeditors International of Washington, Inc.

Hub Group, Inc.

J.B. Hunt Transport Services, Inc.

Landstar Systems, Inc.

Ryder System, Inc.

Swift Transportation Co.

UTi Worldwide, Inc.

YRC Worldwide, Inc.

XPO Logistics, Inc. (as reported)

FY 2016
Percent Rank

FY 2015
Percent Rank

Ticker Symbol
CHRW

2016 Annual Revenue
($ in millions)
$13,144

EXPD

HUBG

JBHT

LSTR

SWFT

UTIW

YRCW

XPO

$ 6,098

$ 3,572

$ 6,555

$ 3,168

$ 6,787

$ 4,032

$ 4,698

$14,619
100P

$ 7,623
93P

UTi Worldwide, Inc. was acquired by DSV in January 2016.

For 2017, based on the advice of Semler Brossy, the Committee has decided to remove two companies (Hub

Group Inc. and Landstar Systems, Inc.) and add five companies (CSX Corp., FedEx Corp., Norfolk Southern
Corp., Union Pacific Corp. and United Parcel Service, Inc.). These actions were undertaken to ensure that the
size of companies in the peer group accurately reflected XPO Logistics’ significant increase in scale during 2016.
With these changes, XPO Logistics is now positioned at the 72nd percentile based on reported 2016 annual
revenue.

Other Compensation-Related Items

Equity Granting Policy
All equity grants to NEOs are approved by the Committee with a grant date determined at the time of the
approval. The Committee does not target a specific time during the year to make equity grants, but equity grant
dates are always on or after the date of Committee approval and in full compliance with applicable laws.

Benefits
Our NEOs are provided with benefits, including participation in the XPO Logistics, Inc. 401(k) Plan and

insurance benefit programs that are offered to other eligible employees. Our NEOs receive minimal perquisites,
as shown in the “All Other Compensation” table below.

Employment Agreements
We believe that it is in the best interests of our company to enter into multi-year employment agreements

with our executive officers because the agreements promote long-term retention while still allowing the
Committee to exercise discretion in designing incentive compensation programs. For further discussion of the
material compensation-related terms of these agreements, please see “Employment Agreements with Named
Executive Officers” on page 48 and the tables that follow this Compensation Discussion and Analysis. In
addition, each employment agreement has been filed with the SEC and is available on our website and on the
SEC’s website.

Effective February 9, 2016, the company entered into new employment agreements with each of the NEOs.

Each of these 2016 employment agreements has a term through February 9, 2020, and expires at the end of the
term without automatic renewal. The 2016 employment agreements contain comprehensive restrictive covenants,
a description of which is set forth under “Employment Agreements with Named Executive Officers—Restrictive
Covenants” on page 51.

Clawback Provisions

The Committee is focused on mitigating risk associated with the company’s compensation program for

NEOs and believes that clawback provisions are a useful tool. Each NEO’s employment agreement includes a
clawback provision under which the NEO may be required, upon certain triggering events, to repay all or a
portion of incentive compensation that was previously paid (including proceeds from previously-exercised and
vested equity-based awards), and to forfeit unvested equity-based awards. These clawback provisions are
generally triggered if: (i) the NEO has engaged in fraud or other willful misconduct that contributes materially to
any significant financial restatements or material loss to our company or any of our affiliates, (ii) the NEO is
terminated for Cause (as defined in the employment agreement), or (iii) the NEO breaches the restrictive
covenants that are applicable under his employment agreement. To the extent that the rules adopted by the SEC
under the Dodd-Frank Wall Street Reform and Consumer Protection Act are broader than the clawback
provisions contained in the employment agreements that are applicable to our NEOs, our NEOs will be subject to
additional clawback provisions pursuant to such rules. For more information, please see “Employment
Agreements with Named Executive Officers—Clawbacks” on page 50.

Equity Ownership Requirements

We believe that maintaining equity ownership in our company will help align our NEOs’ interests with the

interests of our stockholders and will mitigate a number of risks, including risks related to executive retention
and undue risk-taking. In 2016, our Board adopted stock ownership guidelines and stock retention requirements
that apply to the company’s executive officers and non-employee directors. The following guidelines for equity
ownership are expressed as a multiple of each executive’s annual base salary:

NEOs

CEO

Other Executive Officers

Stock Ownership Requirement
(as a multiple of annual base salary)

To determine compliance with these guidelines, generally, common shares held directly or indirectly and
unvested restricted stock units subject solely to time-based vesting count towards meeting the stock ownership
guidelines. Stock options, whether vested or unvested, and equity-based awards subject to performance-based
vesting conditions are not counted towards meeting the stock ownership guidelines. Until the guidelines are met,
70% of the net shares (after tax withholding) received upon vesting of equity-based awards are required to be
retained by the executive officer. As of March 24, 2016, each of our NEOs was in compliance with our stock
ownership guidelines and, in particular, Mr. Jacobs exceeded the stock ownership requirement by a very
significant degree thereby closely aligning the interests of our NEOs with the interests of our stockholders. In
addition, each NEO has agreed to resale restrictions prohibiting the sale or transfer prior to September 2, 2018, of
any shares of the company’s common stock (on an after-tax basis) acquired upon exercise or settlement of any
equity grant received from the company, including equity grants made under each NEO’s employment
agreement.

Tax Considerations

When consistent with the company’s executive compensation goals, we generally try to structure our
compensation programs to maximize the deductibility of compensation under Section 162(m) of the Code.
However, the Committee and our Board will take into consideration a multitude of factors in making executive
compensation decisions and do, in certain circumstances, approve and authorize executive compensation that is
not tax deductible.

Compensation Committee Report

The following statement made by our Compensation Committee does not constitute soliciting material and

should not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent that we specifically incorporate such statement by reference.

The Committee has reviewed and discussed with management the Compensation Discussion and Analysis

required by Item 402(b) of Regulation S-K as set forth above. Based on such review and discussions, the
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included
in this Proxy Statement and incorporated by reference into the company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2016.

Compensation Committee:

Adrian P. Kingshott (Committee Chair since March 2016)
Michael G. Jesselson
Jason D. Papastavrou
Oren G. Shaffer (served on the Compensation Committee until March 2016)

Compensation Tables

Summary Compensation Table

The following table sets forth information concerning the total compensation awarded to, earned by, or paid to our

named executive officers (NEOs) for the year ended December 31, 2016. For the PRSUs granted in 2016, the table
below:

• Assumes Financial Targets Achieved: the amounts reflected below assume the achievement of the

applicable performance goals at the target level—there is no payout under these awards if the relevant annual
financial target is not met and no additional bonus amounts if the target is exceeded;

• Reflects Full Vesting of 4-Year Award: only 25% of each PRSU award will vest annually if the relevant

adjusted cash flow per share goal in each year of the four-year vesting period is achieved; and

• Uses a Fixed Stock Price: the amount of the PRSU payout in each year is dependent on the company’s stock

price at the time the award is settled and may be higher or lower than the amount reflected below.

Name and Principal Position Year Salary ($)

Bonus(1)(2)
($)

Stock
Awards(3)
($)

Option
Awards(3)
($)

Non-Equity
Incentive Plan
Compensation
($)

All Other
Compensation(4)
($)

Bradley S. Jacobs(5)

Chief Executive Officer
and Chairman

2016 $607,000 $1,375,000 $19,999,992(6) —
—
2015 $495,000
—
2014 $495,000

— $ 2,948,108
— $ 2,802,536

Troy A. Cooper

Chief Operating Officer

John J. Hardig

Chief Financial Officer

2016 $511,539 $1,075,000 $ 4,499,998(6) —
—
2015 $350,000
—
2014 $308,462

— $
491,361
— $ 1,019,349

2016 $498,385 $ 915,000 $ 3,999,998(6) —
—
2015 $395,000 $ 200,000 $
—
— $
2014 $395,000

491,361
834,789

Gordon E. Devens(8)

Former Chief Legal
Officer

Scott B. Malat

Chief Strategy Officer

2016 $472,308 $ 500,000 $ 3,999,998(6) —
—
2015 $300,000
—
2014 $300,000

491,361
894,434

— $
— $

2016 $472,308 $ 500,000 $ 3,999,998(6) —
—
2015 $300,000 $ 200,000 $
—
2014 $300,000

491,361
— $ 1,173,310

—
$2,325,000
$ 585,000

—
$1,850,000
$ 475,000

—
$1,650,000
$ 435,000

—
$1,650,000
$ 475,000

$ 2,456
$ 3,614
$ 2,105

$ 2,337
$ 3,760
$ 2,105

$ 2,512
$32,982
$27,453

$ 2,288
$ 3,916
$ 2,105

$ 2,317
$ 3,916
$ 2,105

Total ($)

$21,984,448(7)
$ 5,771,722
$ 3,884,641

$ 6,088,874(7)
$ 2,695,121
$ 1,804,916

$ 5,415,895(7)
$ 2,769,343
$ 1,692,242

$ 4,974,594(7)
$ 2,445,277
$ 1,671,539

$ 4,974,623(7)
$ 2,645,277
$ 1,950,415

(1)

(2)

(3)

(4)

The amounts reflected in this column for 2015 represent a $200,000 one-time discretionary cash incentive award
paid on June 30, 2015, to each of Messrs. Hardig and Malat in recognition of their contributions in connection
with the company’s acquisition of Norbert Dentressangle SA and the related financing transactions.
The amounts reflected in this column for 2016 represent an annual cash bonus award earned in respect of 2016,
which is described in more detail under the heading “Compensation Discussion and Analysis—Annual Cash
Incentive Bonuses.”
The amounts reflected in this column represent the aggregate grant date fair value of the awards made during each
respective year, as computed in accordance with ASC 718. For a further discussion of the assumptions used in the
calculation of the grant date fair values for each year, please see “Notes to Consolidated Financial Statements—
Note 12. Stock-Based Compensation” of our company’s Annual Report on Form 10-K for the year ended
December 31, 2016. For further discussion of grants made in 2016, see the accompanying “Grants of Plan-Based
Awards” table, as well as “Compensation Discussion and Analysis—2016 Executive Compensation Outcomes—
Long-Term Incentive Program”.
The components of “All Other Compensation” for 2016 are detailed below in the “All Other Compensation” table.

(5) Mr. Jacobs did not receive any additional compensation for his services as a director.
(6)

This amount:
• reflects the aggregate grant date fair value of the PRSUs granted in 2016—the amount of the PRSU payout in

each year is dependent on the company’s stock price at the time the award is settled;

• assumes the achievement of the applicable performance goals at the target level—there is no payout under these

awards if the relevant annual financial target is not met; and

• reflects full vesting of the four-year award—only 25% of each PRSU award will vest annually if the relevant

adjusted cash flow per share goal in each year of the four-year vesting period is achieved.

(7)

In respect of the PRSUs granted in 2016, this amount:
• reflects the aggregate grant date fair value of the PRSUs—the amount of the PRSU payout in each year is

dependent on the company’s stock price at the time the award is settled;

• assumes the achievement of the applicable performance goals at the target level—there is no payout under these

awards if the relevant annual financial target is not met; and

• reflects full vesting of the four-year award—only 25% of each PRSU award will vest annually if the relevant

adjusted cash flow per share goal in each year of the four-year vesting period is achieved.

(8) Mr. Devens resigned from the Company effective as of February 15, 2017.

We compensate our NEOs pursuant to the terms of their respective employment agreements, and the information
reported in the “Summary Compensation” table reflects the terms of such agreements. For more information about our
NEOs’ employment agreements, see the discussion in this proxy statement under the heading “Employment
Agreements with Named Executive Officers.”

All Other Compensation Table

The following table outlines the amounts included in the “All Other Compensation” column in the “Summary

Compensation” table for our NEOs in 2016:

Name

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig

Gordon E. Devens

Scott B. Malat

Matching
Contributions to
401(k) Plan ($)(1)

Company-Paid
Life Insurance
Premiums ($)(2)

Perquisites and
Other Personal
Benefits ($)

$2,028

$1,909

$2,085

$1,920

$1,890

$428

$368

$428

—

Total ($)

$2,456

$2,337

$2,512

$2,288

$2,317

(1) Amounts in this column represent matching contributions made by XPO Logistics to the company’s 401(k) plan.

Only amounts contributed directly by our NEOs are eligible for matching contributions, and our NEOs are eligible
for matching contributions on the same basis as all other eligible employees of our company.

(2) Amounts in this column represent the company-paid premiums for basic life insurance and accidental death and

dismemberment (AD&D) insurance.

Grants of Plan-Based Awards

The following table provides additional detail regarding grants of equity and non-equity plan-based awards under

our 2011 Plan. For the PRSUs granted in 2016, the table below:

• Assumes Financial Targets Achieved: the amounts reflected below assume the achievement of the

applicable performance goals at the target level—there is no payout under these awards if the relevant annual
financial target is not met and no additional bonus amounts if the target is exceeded;

• Reflects Full Vesting of 4-Year Award: only 25% of each PRSU award will vest annually if the relevant

adjusted cash flow per share goal in each year of the four-year vesting period is achieved; and

• Uses a Fixed Stock Price: the amount of the PRSU payout in each year is dependent on the company’s stock

price at the time the award is settled and may be higher or lower than the amount reflected below.

Name and Principal Position

Grant
Date

Approval
Date

Threshold
($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)

Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

Exercise
or Base
Price of
Option
Awards
($/Sh)

Grant Date
Fair
Value of
Stock and
Option
Awards(3)

Bradley S. Jacobs

2/09/2016 2/07/2016 — 625,000 —

— 872,600 —

—

— $19,999,992(4)

Chief Executive Officer
and Chairman

Troy A. Cooper

2/09/2016 2/07/2016 — 537,500 —

— 196,335 —

Chief Operating Officer

John J. Hardig

2/09/2016 2/07/2016 — 515,000 —

— 174,520 —

Chief Financial Officer

Gordon E. Devens

2/09/2016 2/07/2016 — 500,000 —

— 174,520 —

—

— $ 4,499,998(4)

— $ 3,999,998(4)

Former Chief Legal
Officer

Scott B. Malat

2/09/2016 2/07/2016 — 500,000 —

— 174,520 —

—

— $ 3,999,998(4)

Chief Strategy Officer

(1) Amounts represent the target award for each NEO. For actual payout information, see “Compensation Discussion and

Analysis—Annual Cash Incentive Bonuses” on pages 34-35.

(2) Awards in these columns consist of PRSUs. The PRSUs vest on each of the first four anniversaries of the date of grant, subject

to the NEO’s continued employment through the applicable anniversary and upon achievement of the following performance
goals for each applicable tranche: for the tranche scheduled to vest on the first, second, third, and fourth anniversaries of the
date of grant, the company’s adjusted cash flow per share must be at least $2.93 for fiscal 2016; $3.96 for fiscal 2017; $5.38 for
fiscal 2018; and $6.39 for fiscal 2019, respectively.

(3) Amounts represent the grant date fair value of equity awards granted in 2016, as computed in accordance with ASC 718. For
information on the valuation assumptions for the 2016 grants, see “Notes to Consolidated Financial Statements—Note 12,
Stock-Based Compensation” of our company’s Annual Report on Form 10-K for the year ended December 31, 2016.
This amount:
• reflects the aggregate grant date fair value of the PRSUs granted in 2016—the amount of the PRSU payout in each year is

(4)

dependent on the company’s stock price at the time the award is settled;

• assumes the achievement of the applicable performance goals at the target level—there is no payout under these awards if the

relevant annual financial target is not met; and

• reflects full vesting of the four-year award—only 25% of each PRSU award will vest annually if the relevant adjusted cash

flow per share goal in each year of the four-year vesting period is achieved.

For additional information relevant to the awards that are shown in the above table (including a discussion of the

performance criteria established and the actual payouts, if applicable, under such awards), see the discussions in this
proxy statement under the headings “Compensation Discussion and Analysis—Annual Cash Incentive Bonuses,”
“Compensation Discussion and Analysis—Long-Term Incentive Program” and “Employment Agreements with Named
Executive Officers.” Also, the vesting of awards set forth in the above table may, in certain instances, be accelerated
upon certain events. See the discussions in this proxy statement under the headings “Compensation Discussion and
Analysis” and “Employment Agreements with Named Executive Officers” for the principal terms of our NEOs’
employment agreements.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth the outstanding equity awards held by our NEOs as of December 31, 2016. For the

PRSUs granted in 2016, the table below:

• Assumes Financial Targets Achieved: the amounts reflected below assume the achievement of the

applicable performance goals at the target level—there is no payout under these awards if the relevant annual
financial target is not met and no additional bonus amounts if the target is exceeded;

• Reflects Full Vesting of 4-Year Award: only 25% of each PRSU award will vest annually if the relevant

adjusted cash flow per share goal in each year of the four-year vesting period is achieved; and

• Uses a Fixed Stock Price: the amount of the PRSU payout in each year is dependent on the company’s stock

price at the time the award is settled and may be higher or lower than the amount reflected below.

The amount of the PRSU payout calculated below is assuming a stock price of $43.16, the closing price of our

common stock on December 30, 2016, the last business day of our fiscal year 2016 as required by applicable SEC
regulations. The actual price of our common stock may vary at the time the actual PRSU payout is calculated at each of
the specified settlement dates.

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

Option Awards

Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)

Option
Exercise
Price ($)

Option
Expiration
Date

Stock Awards

Number of
Shares or
Units of Stock
That Have
Not Vested
(#)

Market Value
of Shares of
Units of
Stock That
Have Not
Vested ($)(1)

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)

Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($)(1)

Name

Bradley S. Jacobs

250,000

—

$ 9.28 11/21/2021

218,150(2) $9,415,354(3) 907,479(4)

$39,166,794(3)

Chief Executive Officer and
Chairman

Troy A. Cooper

Chief Operating Officer

John J. Hardig

Chief Financial Officer

25,000

50,000

Gordon E. Devens

125,000

Former Chief Legal Officer

Scott B. Malat

Chief Strategy Officer

48,000

—

$11.46

1/16/2022

59,084(5) $2,550,065(3) 229,375(6)

$ 9,899,825(3)

$14.09

2/13/2022

43,630(7) $1,883,071(3) 192,820(8)

$ 8,322,111(3)

$ 9.79 11/14/2021

66,487(9) $2,869,579(3) 196,025(10)

$ 8,460,439(3)

$10.65 10/21/2021
3/5/2022
$18.07

55,058(11) $2,376,303(3) 205,637(12)

$ 8,875,293(3)

Note: Vesting of all outstanding equity awards is subject to continued employment by the NEO on the applicable vesting date, subject to certain
exceptions in connection with a qualifying termination of employment.

(1) Amounts in this column have been calculated using an assumed stock price of $43.16, the closing price of our common stock on December 30,

2016, the last business day of our fiscal year 2016.

(2) Consists of 218,150 cash-settled PRSUs, which vested on February 9, 2017, upon Committee certification of the achievement of the applicable

(3)

performance criteria.
In respect of the PRSUs granted in 2016, this amount:
• reflects the aggregate grant date fair value of the PRSUs—the amount of the PRSU payout in each year is dependent on the company’s stock

price at the time the award is settled;

• assumes the achievement of the applicable performance goals at the target level—there is no payout under these awards if the relevant annual

financial target is not met; and

• reflects full vesting of the four-year award—only 25% of each PRSU award will vest annually if the relevant adjusted cash flow per share

goal in each year of the four-year vesting period is achieved.

(4) Consists of 253,029 PRSUs, which will vest on April 2, 2018, subject to achievement of certain performance criteria and 654,450 cash-settled

PRSUs which will vest in three installments on February 9, 2018, February 9, 2019, and February 9, 2020, subject to achievement of certain
performance criteria. PRSUs are reflected at the target level, which is also the threshold and maximum level.

(5) Consists of 10,000 PRSUs, of which 5,000 vested on February 15, 2017 and 5,000 will vest on February 15, 2018; and 49,084 cash-settled

PRSUs, which vested on February 9, 2017, upon Committee certification of achievement of the applicable performance criteria.

(6) Consists of 82,124 PRSUs, which will vest on April 2, 2018, subject to achievement of certain performance criteria and 147,251 cash-settled
PRSUs which will vest in three installments on February 9, 2018, February 9, 2019, and February 9, 2020, subject to achievement of certain
performance criteria. PRSUs are reflected at the target level, which is also the threshold and maximum level.

(7) Consists of 43,630 cash-settled PRSUs, which vested on February 9, 2017, upon Committee certification of the achievement of the applicable

performance criteria.

(8) Consists of 61,930 PRSUs, which will vest on April 2, 2018, subject to achievement of certain performance criteria and 130,890 cash-

settled PRSUs which will vest in three installments on February 9, 2018, February 9, 2019, and February 9, 2020, subject to achievement
of certain performance criteria. PRSUs are reflected at the target level, which is also the threshold and maximum level.

(9) Consists of 22,857 PRSUs, of which 11,429 vested on February 15, 2017 and 11,428 will vest on February 15, 2018; and 43,630 cash-
settled PRSUs, which vested on February 9, 2017, upon Committee certification of the achievement of the applicable performance
criteria.

(10) Consists of 65,135 PRSUs, which will vest on April 2, 2018, subject to achievement of certain performance criteria and 130,890 cash-

(11) Consists of 11,428 PRSUs, of which 5,714 vested on February 15, 2017 and 5,714 will vest on February 15, 2018; and 43,630 cash-

settled PRSUs, which vested on February 9, 2017, upon Committee certification of the achievement of the applicable performance
criteria.

(12) Consists of 74,747 PRSUs, which will vest on April 2, 2018, subject to achievement of certain performance criteria and 130,890 cash-

The following table sets forth the restricted stock units that vested for our NEOs during 2016. There were no

stock option exercises by our NEOs during 2016.

Option Exercises and Stock Vested

Name

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig

Gordon E. Devens

Scott B. Malat

Option Awards

Stock Awards

Number of Shares
Acquired on
Exercise (#)

Value Realized on
Exercise ($)

Number of Shares
Acquired on
Vesting (#)

Value Realized on
Vesting ($)(1)

—

42,000

15,000

27,000

34,286

37,834

1,502,760

536,700

966,060

1,226,753

1,353,701

(1)

The aggregate dollar amount realized upon the vesting of RSUs and PRSUs is calculated based on the
closing price on the date of vesting.

Potential Payments Upon Termination or Change of Control

The following table reflects the amounts of compensation that would be due to each of our NEOs pursuant
to their respective employment agreements upon termination without Cause or for Good Reason (as defined in
their respective employment agreements), termination for Cause, voluntary termination without Good Reason,
termination due to disability or death of the executive, a Change of Control (as defined in their respective
employment agreements), termination following a Change of Control, in each case, as if each such event had
occurred on December 31, 2016. The amounts shown below are estimates of the payments that each NEO would
receive in certain instances. The actual amounts payable will only be determined upon the actual occurrence of
any such event.

Event

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig Gordon E. Devens

Scott B. Malat

Termination without Cause or for Good

Reason:

Cash severance(1)(2)(3)

312,500

268,750

257,500

250,000

RSUs

PRSUs

Options

—

$15,535,075

$ 4,676,965

$ 3,458,942

$ 4,541,064

$ 4,334,543

—

Acceleration of equity-based awards(4)

$15,535,075

$ 4,676,965

$ 3,458,942

$ 4,541,064

$ 4,334,543

Continuation of medical / dental benefits(5)

9,199

6,523

9,199

Total

$15,856,774

$ 4,952,238

$ 3,725,641

$ 4,800,263

$ 4,593,742

Event

Bradley S. Jacobs

Troy A. Cooper

John J. Hardig Gordon E. Devens

Scott B. Malat

Termination without Cause or for Good

Reason, Fully Extended Non-Compete(6):

Cash severance(1)(2)(3)

937,500

806,250

772,500

750,000

RSUs

PRSUs

Options

—

$15,535,075

$ 4,676,965

$ 3,458,942

$ 4,541,064

$ 4,334,543

—

Acceleration of equity-based awards(4)

$15,535,075

$ 4,676,965

$ 3,458,942

$ 4,541,064

$ 4,334,543

Continuation of medical / dental benefits(5)

9,199

6,523

9,199

Total

$16,481,774

$ 5,489,738

$ 4,240,641

$ 5,300,263

$ 5,093,742

Termination for Cause or Voluntary

Termination without Good Reason:

Cash severance(1)(2)

Acceleration of equity-based awards

Continuation of medical / dental benefits

Total

Disability:

Cash severance(1)(2)

Acceleration of equity-based awards(4)

Continuation of medical / dental benefits

Total

Death:

Cash severance(2)

—

431,600

—

431,600

—

986,508

—

986,508

493,232

—

493,232

—

Acceleration of equity-based awards(4)

$48,582,148

$12,449,890

$10,205,182

$11,330,018

$11,251,596

Continuation of medical / dental benefits

—

Total

$48,582,148

$12,449,890

$10,205,182

$11,330,018

$11,251,596

Change of Control and No Termination:

Cash severance(2)

—

Acceleration of equity-based awards(4)

$48,582,148

$12,449,890

$10,205,182

$11,330,018

$11,251,596

Continuation of medical / dental benefits

—

Total

$48,582,148

$12,449,890

$10,205,182

$11,330,018

$11,251,596

Change of Control and Termination without

Cause or for Good Reason:

Cash severance(2)

$ 3,125,000

$ 2,687,500

$ 2,575,000

$ 2,500,000

Acceleration of equity-based awards(4)

$48,582,148

$12,449,890

$10,205,182

$11,330,018

$11,251,596

Continuation of medical / dental benefits(5)

36,796

26,092

36,796

Total

$51,743,944

$15,163,482

$12,816,978

$13,866,814

$13,788,392

(1) Upon a termination of employment for any reason (other than death), whether with or without Cause, within two years after the payment
date, a portion of the NEO’s 2015 and 2016 cash bonuses must be reimbursed to the company. This repayment obligation is not reflected
in the amounts shown in this table. The repayment obligation does not apply after a Change of Control.

(2) Amounts shown do not include any payments for accrued and unpaid salary, bonuses or vacation.
(3)

In the event of a termination by our company without Cause or by any NEO for Good Reason prior to a Change of Control, cash
severance payable to the NEO will be reduced, dollar for dollar, by other income earned by such NEO. The calculations of severance pay
in the above table use the NEO’s base salary effective as of December 31, 2016.

(4) Amounts shown were calculated using a stock price of $43.16 per share, our company’s stock price as of December 30, 2016, the last

(5)

trading day in our 2016 fiscal year. The amounts shown for PRSUs have been estimated assuming that the applicable performance goals
are met at target levels. Although the PRSUs would no longer be subject to a continued service requirement upon the occurrence of a
termination by our company without Cause or by the NEO for Good Reason, payment of such award would remain subject to the actual
achievement of the applicable performance goals. As of December 31, 2016, none of the NEOs had any unvested RSUs or stock options.
The amounts of continued medical and dental benefits shown in the table (i) have been calculated based upon our current actual costs of
providing the benefits through COBRA and (ii) have not been discounted for the time value of money. Our current annual cost of
providing medical and dental benefits to each of our eligible NEOs is $18,398 for Messrs. Jacobs, Hardig, Devens, and Malat and
$13,046 for Mr. Cooper. In the case of our NEOs, in the event of a termination without Cause, continued medical and dental benefits will
cease when the NEO commences employment with a new employer.

(6)

In the event of a termination for any reason, our company has the right to extend the period during which such NEO is bound by the
non-competition covenant in his employment agreement for up to 12 additional months. During the period the non-compete is extended,
the NEO would be entitled to receive cash compensation equal to his monthly base salary as in effect on the date his employment
terminated. Amounts included in the respective columns assume that the non-compete is extended for 12 months for each NEO, such that
the NEO will not be permitted to compete with our company for three years following his termination and will receive monthly base
salary continuation during such 12-month extension period.

Each NEO’s employment agreement, which is described in detail in this proxy statement under the heading

“Employment Agreements with Named Executive Officers,” generally provides that, in the event of a
termination without Cause (as defined below) either prior to a Change of Control (as defined below) or more than
two years following a Change of Control, cash severance payments and continued benefits will be made ratably
over the six-month period following the executive’s termination (subject to any delays required pursuant to
Section 409A of the Code). The employment agreements generally do not provide for payments other than
accrued benefits if employment is terminated due to death or disability. Generally, in the event of a termination
upon or within two years following a Change of Control, cash severance payments will be made in one lump sum
(subject to any delays required pursuant to Section 409A of the Code). The equity-based awards granted to our
NEOs will generally accelerate vesting in the event of a termination due to disability or death or upon a Change
of Control, except that the 2014 and 2015 PRSU award agreements do not specifically address vesting in the
event that the termination of employment is due to disability and for purposes of these calculations we have
assumed no accelerated vesting. The severance payments set forth in the table are generally subject to and
conditioned upon the NEO signing an irrevocable waiver and release and continued compliance with certain
restrictive covenants.

For more information regarding the payments and benefits to which our NEOs are entitled upon certain
termination events or upon a Change of Control, see the discussion in this proxy statement under the heading
“Employment Agreements with Named Executive Officers.”

Employment Agreements with Named Executive Officers

Effective as of February 9, 2016, we entered into employment agreements with each of the NEOs (the “2016

Employment Agreements”), which replace and supersede the prior employment agreements with our NEOs that
were originally scheduled to expire on September 2, 2016. The primary purposes of the 2016 Employment
Agreements are to: (i) incentivize the NEOs to be aligned with our corporate goals and shareholders’ interests,
(ii) provide financial incentives for the NEOs to increase shareholder value and focus on the integration of recent
acquisitions, and (iii) strengthen the linkage between pay and performance in our executive compensation
program.

Term. Each 2016 Employment Agreement provides for the NEO’s employment from the effective date of
February 9, 2016, until February 9, 2020.

Lock-up Restrictions. Pursuant to the 2016 Employment Agreements, any shares of our common stock issued to
an NEO upon exercise or vesting of any equity compensation award (whether before, on or after the date of the
2016 Employment Agreement) will be subject to a lock-up until the earliest of September 2, 2018, a Change of
Control or the NEO’s death. Under the prior employment agreements, such shares were subject to lock-up until
September 2, 2016.

Benefits and Business Expense Reimbursement. Under the 2016 Employment Agreements, each of our NEOs is
eligible to participate in our benefit plans and programs that are generally available to other members of our
senior executive team and is eligible for reimbursement of all reasonable and necessary business expenses
incurred in the performance of his duties during the term of his 2016 Employment Agreement.

Termination Events. The severance payments pursuant to the 2016 Employment Agreements described below are
generally subject to and conditioned upon the NEO signing an irrevocable waiver and general release and also
complying with the restrictive covenants contained in his or her 2016 Employment Agreement (as described
below).

In the event that any of our NEOs dies during the term of his 2016 Employment Agreement, or if we
terminate the NEO’s employment without Cause, either prior to a Change of Control or more than two years
following a Change of Control, such NEO will be entitled to:

• Accrued and unpaid salary, vacation benefits and unreimbursed business expenses;

•

Solely in the case of a termination by the company without Cause: six (6) months’ base salary, at the
level in effect on the date of termination, which will be paid in equal installments over the 6 months
following the date of termination (subject to any delay required by Section 409A of the Code), and
which generally will be reduced, dollar-for-dollar, by other earned income; and

Solely in the case of a termination by the company without Cause: medical and dental coverage for a
period of six (6) months from the date of termination, or, if earlier, until the NEO secures other
employment.

The 2016 Employment Agreements do not provide for accelerated vesting of equity, equity-based or other
long term incentive compensation awards other than as set for the in the applicable award agreements. The 2016
Employment Agreements modified the terms of PRSUs granted to the NEOs during 2014 and 2015. Specifically,
the 2016 Employment Agreements provide that, notwithstanding the original award agreements for PRSUs
granted during 2014 and 2015, in the event an NEO is terminated without Cause, a prorated portion of the PRSU
award will vest only if the applicable performance goal is achieved. The original award agreements with respect
to PRSUs granted during 2014 and 2015 to the NEOs provided that, upon a termination without Cause prior to
April 2, 2018, such PRSUs would vest on a prorated basis without regard to whether the applicable performance
goal was satisfied.

Pursuant to the terms of the 2016 Employment Agreements and a subsequent modification, all PRSUs
granted to NEOs in 2014 and 2015 were modified so that such PRSUs will vest if the following conditions occur:
(i) the company’s common stock trades at or above $60.00 per share for 20 consecutive trading days prior to
April 2, 2018 and the company’s fiscal year 2017 adjusted cash earnings per share is at least $2.75, or (ii) if such
performance goals are not met, the company’s common stock trades at or above $86.00 per share for 20
consecutive trading days prior to September 2, 2020 and the company’s fiscal year 2019 adjusted cash earnings
per share is at least $4.30.

Definitions of Cause and Good Reason

“Cause,” for purposes of the 2016 Employment Agreements, generally means the NEO’s:

• Gross negligence or willful failure to perform his or her duties;

• Abuse or dependency on alcohol or drugs that adversely affects the NEO’s performance of duties;

• Commission of any fraud, embezzlement, theft or dishonesty, or any deliberate misappropriation of

money or other assets of our company;

• Breach of any term of the NEO’s 2016 Employment Agreement or any agreement governing any

equity-based awards or breach of his or her fiduciary duties;

• Any willful act, or failure to act, in bad faith to the detriment of our company;

• Willful failure to cooperate in good faith with a governmental or internal investigation if such

cooperation is requested;

•

Failure to follow our company’s code of conduct or ethics policies; and

• Conviction of, or plea of nolo contendere to, a felony or any serious crime;

provided that, in cases where cure is possible, the NEO has a cure period of 15 days before he or she can be
terminated for Cause.

The 2016 Employment Agreements allow a NEO to terminate employment for Good Reason only upon or

during the two-year period following a Change of Control. “Good Reason,” for purposes of the 2016
Employment Agreements, generally means, without first obtaining the NEO’s written consent:

• Our material breach of the terms of the NEO’s 2016 Employment Agreement or a reduction in base

salary or target bonus;

• Our material diminishment of the NEO’s title, duties, authorities, reporting relationships,

responsibilities or position;

• Our requirement that the NEO to be based in a location that is more than 50 miles from his initial work

location immediately prior to the Change of Control; or

• With regard to Mr. Jacobs, our requirement that he no longer reports directly to the Board; and with
regard to each of Messrs. Cooper, Hardig, Devens and Malat, our requirement that he reports to
someone other than the Chief Executive Officer.

In each case, the NEO’s Good Reason right is subject to our company’s 30-day cure period.

Change of Control. In the event that, upon or within two years following a Change of Control, Messrs. Jacobs’,
Cooper’s, Hardig’s, Devens’ or Malat’s employment is terminated by our company without Cause or such NEO
resigns for Good Reason, he will receive:

• Accrued and unpaid salary, vacation benefits and unreimbursed business expenses;

• A lump-sum cash payment equal to two times the sum of his annual base salary and target annual
bonus each at the level in effect on the date of termination (subject to any delay required by
Section 409A of the Code);

• A prorated target bonus for the year of termination; and

• Medical and dental coverage for a period of 24 months from the date of termination.

In the event that any amounts payable to the NEO in connection with a Change of Control constitute
“parachute payments” within the meaning of Section 280G of the Code, then any such amounts will be reduced
to avoid triggering the excise tax imposed by Section 4999 of the Code, if it would be more favorable to the NEO
on a net after-tax basis. The NEO is not entitled to a gross-up payment for excise taxes imposed by Section 4999
of the Code on “excess parachute payments,” as defined in Section 280G of the Code.

Clawbacks. Under the 2016 Employment Agreements, each of our NEOs is subject to equity and annual bonus
clawback provisions in the event of: (1) a breach of the restrictive covenants, (2) termination of his employment
by our company for Cause, or (3) his engagement in fraud or willful misconduct that contributes materially to
any financial restatement or material loss to our company or its affiliates. If any such event occurs, we generally
may terminate or cancel any awards granted to such NEO by our company (whether vested or unvested), and
require him to forfeit or remit to our company any amount payable (or the net after-tax amount paid or received
by such NEO) in respect of any such awards. Furthermore, under the 2016 Employment Agreements, in the event
that an NEO engages in fraud or other willful misconduct that contributes materially to any financial restatement
or material loss to our company, our company may generally require such NEO to repay any annual bonus (net of
any taxes paid by him) previously paid to him, cancel any earned but unpaid annual bonus or adjust any future
compensation such that he will only retain the amount that would have been payable to him after giving effect to
the financial restatement or material loss. In addition, in the event that the NEO breaches any restrictive
covenant, such NEO will be required, upon written notice from us, to forfeit or repay to our company his
severance payments. In certain circumstances, the breach or fraudulent conduct must have occurred within a
certain period in order for us to be able to clawback the equity-based awards, annual bonus or severance
payments. In addition, the NEO shall be subject to any other clawback or recoupment policy of the company as
may be in effect from time to time or any clawback or recoupment as may be required by applicable law.

Restrictive Covenants. Under the 2016 Employment Agreements, each of our NEOs is generally subject to the
following restrictive covenants: employee and customer non-solicitation during his employment and for a period
of three years thereafter; confidentiality and non-disparagement during his employment and thereafter; and
non-competition during his employment and for a period of two years following his termination for any reason.
In addition, we have the option to extend the non-competition period for up to an additional year following a
termination for any reason, provided that we continue to pay the NEO’s base salary as in effect on the date of
termination during the extended non-competition period.

EQUITY COMPENSATION PLAN INFORMATION

The following table gives information as of December 31, 2016, with respect to the Company’s

compensation plans under which equity securities are authorized for issuance.

Plan Category

Equity compensation plans approved

by security holders

Equity compensation plans not
approved by security holders

Total

Number of
Securities to be
Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(a)

Weighted-Average Exercise
Price of Outstanding
Options, Warrants and
Rights(1)
(b)

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)

4,429,177(2)

50,000(4)

4,479,177

$13.29

$14.09

$13.32

3,319,710(3)

3,319,710

(1) The weighted average exercise price is based solely on the outstanding options.
(2)

Includes 906,755 stock options outstanding under the XPO Logistics, Inc. Amended and Restated 2011
Omnibus Incentive Compensation Plan, 60,062 stock options outstanding under the Segmentz, Inc. 2001
Stock Option Plan, and 63,737 stock options outstanding under the Con-way Inc. 2006 Equity and Incentive
Plan. Also includes an aggregate of 80,290 performance-based restricted stock units granted under the XPO
Logistics, Inc. 2016 Omnibus Incentive Compensation Plan, 2,847,946 restricted stock units and
performance-based restricted stock units granted under the XPO Logistics, Inc. Amended and Restated 2011
Omnibus Incentive Compensation Plan and 470,387 restricted stock units and performance-based restricted
stock units granted under the Con-way Inc. 2012 Equity and Incentive Plan.
Includes 3,319,710 securities available for issuance under the XPO Logistics, Inc. 2016 Omnibus Incentive
Compensation Plan.

(3)

(4) These securities were granted to our Chief Financial Officer in February 2012 outside the security holder-

approved plan as employee inducement grants. These securities represent 50,000 stock options.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more

than ten percent of a registered class of our equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten-percent stockholders are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies
of such forms furnished to us, or written representations from our directors and executive officers, we believe
that during 2016, our executive officers, directors and greater than ten-percent beneficial owners complied with
all applicable Section 16(a) filing requirements.

AUDIT-RELATED MATTERS

Report of the Audit Committee

The following statement made by our Audit Committee does not constitute soliciting material and should not
be deemed filed or incorporated by reference into any filing under the Securities Act or the Exchange Act, except
to the extent that we specifically incorporate such statement by reference.

The Audit Committee (“we” in this Report of the Audit Committee) currently consists of Mr. Shaffer

(Chair), Mr. Kingshott and Dr. Papastavrou. Until March 2016, the Audit Committee consisted of
Dr. Papastavrou (Chair), Mr. Jesselson and Mr. Kingshott.

The Board of Directors has determined that each current member of the Audit Committee has the requisite
independence and other qualifications for audit committee membership under SEC rules, the listing standards of
NYSE, our Audit Committee Charter, and the independence standards set forth in the XPO Logistics, Inc.
Corporate Governance Guidelines. The Board of Directors has also determined that Dr. Papastavrou and
Mr. Shaffer each qualify as an “audit committee financial expert” as defined under Item 407(d)(5) of Regulation
S-K under the Exchange Act. As more fully described below, in carrying out its responsibilities, the Audit
Committee relies on management and XPO’s independent registered public accounting firm (the “outside
auditors”). The Audit Committee members are not professionally engaged in the practice of accounting or
auditing. The Audit Committee operates under a written charter that is reviewed annually and is available at
www.xpo.com.

In accordance with our charter, the Audit Committee assists the Board of Directors in fulfilling its
responsibilities in a number of areas. These responsibilities include, among others, oversight of: (i) XPO’s
accounting and financial reporting processes, including XPO’s systems of internal controls over financial
reporting and disclosure controls, (ii) the integrity of XPO’s financial statements, (iii) XPO’s compliance with
legal and regulatory requirements, (iv) the qualifications and independence of XPO’s outside auditors, and
(v) the performance of XPO’s outside auditors and internal audit function. Management is responsible for XPO’s
financial statements and the financial reporting process, including the system of internal control over financial
reporting. XPO’s outside auditors, KPMG, are accountable to us and are responsible for expressing an opinion as
to whether the consolidated financial statements present fairly, in all material respects, the financial position,
results of operations, and cash flows of XPO in conformity with generally accepted accounting principles in the
United States. We are solely responsible for selecting and reviewing the performance of XPO’s outside auditors
and, if we deem appropriate in our sole discretion, terminating and replacing the outside auditors. We also are
responsible for reviewing and approving the terms of the annual engagement of XPO’s outside auditors,
including the scope of audit and non-audit services to be provided by the outside auditors and the fees to be paid
for such services, and discussing with the outside auditors any relationships or services that may impact the
objectivity and independence of the outside auditors.

In fulfilling our oversight role, we met and held discussions, both together and separately, with the
company’s management and KPMG. Management advised us that the company’s consolidated financial
statements were prepared in accordance with generally accepted accounting principles, and we reviewed and
discussed the consolidated financial statements and key accounting and reporting issues with management and
KPMG, both together and separately, in advance of the public release of operating results and filing of annual
and quarterly reports with the SEC. We discussed with KPMG matters deemed significant by KPMG, including
those matters required to be discussed pursuant to Public Company Accounting Oversight Board Auditing
Standard No. 16, Communications with Audit Committees, and reviewed a letter from KPMG disclosing such
matters.

KPMG also provided us with the written disclosures required by applicable requirements of the Public

Company Accounting Oversight Board regarding the outside auditors’ communications with the Audit
Committee concerning independence, and we discussed with KPMG matters relating to their independence and

considered whether their provision of certain non-audit services is compatible with maintaining their
independence. KPMG has confirmed its independence, and we determined that KPMG’s provision of non-audit
services to XPO is compatible with maintaining its independence. We also reviewed a report by KPMG
describing the firm’s internal quality-control procedures and any material issues raised in the most recent internal
quality-control review or external peer review or inspection performed by the Public Company Accounting
Oversight Board.

Based on our review with management and KPMG of XPO’s audited consolidated financial statements and

KPMG’s report on such financial statements, and based on the discussions and written disclosures described
above and our business judgment, we recommended to the Board of Directors, and the Board approved, that the
audited consolidated financial statements be included in XPO’s Annual Report on Form 10-K for the year ended
December 31, 2016, for filing with the SEC.

Audit Committee:

Oren G. Shaffer (Committee Chair; member since March 2016)
Jason D. Papastavrou (Committee Chair until March 2016)
Adrian P. Kingshott
Michael G. Jesselson (served on Audit Committee until March 2016)

Policy Regarding Pre-Approval of Services Provided by the Outside Auditors

The Audit Committee’s charter requires review and pre-approval by the Audit Committee of all audit
services provided by our outside auditors and, subject to the de minimis exception under applicable SEC rules, all
permissible non-audit services provided by our outside auditors. The Audit Committee has delegated to its chair
the authority to approve, within guidelines and limits established by the Audit Committee, specific services to be
provided by our outside auditors and the fees to be paid. Any such approval must be reported to the Audit
Committee at the next scheduled meeting. As required by Section 10A of the Exchange Act, the Audit
Committee pre-approved all audit and non-audit services provided by our outside auditors during 2016 and 2015,
and the fees paid for such services.

Services Provided by the Outside Auditors

As described above, the Audit Committee is responsible for the appointment, compensation, oversight,
evaluation and termination of our outside auditors. Accordingly, the Audit Committee retained KPMG to serve as
our independent registered public accounting firm for fiscal year 2016 on March 25, 2016.

The following table shows the fees for audit and other services provided by KPMG for fiscal years 2016 and

2015.

Fee Category

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

Total Fees

2016

2015

$7,300,000

$6,500,000

400,000

200,000

—

2,700,000

300,000

—

$7,900,000

$9,500,000

Audit Fees. This category includes fees for professional services rendered by KPMG for 2016 and 2015 for
the audits of our financial statements included in our Annual Report on Form 10-K, and reviews of the financial
statements included in our Quarterly Reports on Form 10-Q. Also included within the 2016 and 2015 audit fees
are fees for services rendered for the audits of the opening balance sheets of acquisitions during 2015 and fees for
services that are normally provided by the independent registered public accounting firm in connection with
statutory or regulatory filings or engagements, including comfort letters and consents issued in connection with
SEC filings.

Audit-Related Fees. This category includes fees billed for professional services rendered by the outside

auditor for assurance and related services related to the performance of the audit or review of the financial
statements that are not disclosed as Audit Fees. The 2016 and 2015 fees include financial due diligence services
provided by KPMG in connection with acquisitions and dispositions during 2016 and 2015.

Tax Fees. This category includes fees billed for professional services rendered by KPMG in connection with

tax due diligence and tax services in 2016 and 2015, respectively.

All Other Fees. This category represents fees for all other services or products provided that are not covered

by the categories above. There were no such fees for 2016 and 2015.

PROPOSALS TO BE PRESENTED AT THE ANNUAL MEETING

PROPOSAL 1: ELECTION OF DIRECTORS

After consultation with JPE in view of its rights under the Investment Agreement (as described under
“Board of Directors and Corporate Governance—Directors” on page 10, our Board of Directors has nominated
for election at the annual meeting each of the following persons to serve until the 2018 annual meeting of
stockholders or until their successors are duly elected and qualified:

Bradley S. Jacobs;
Gena L. Ashe;
Louis DeJoy;
Michael G. Jesselson;
Adrian P. Kingshott;
Jason D. Papastavrou; and
Oren G. Shaffer.

Each of the above nominees for director is currently serving as a member of our Board of Directors.

Information about the nominees is set forth above under the heading “Board of Directors and Corporate
Governance—Directors.”

In the event that any of these nominees is unable or declines to serve as a director at the time of the annual
meeting, the proxies voting for his or her election will be voted for any nominee who shall be designated by the
Board of Directors to fill the vacancy. As of the date of this proxy statement, we are not aware that any of the
nominees is unable or will decline to serve as a director if elected.

Required Vote

The election of the seven (7) director nominees named in this proxy statement requires the affirmative vote
of a majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of
shares voted “against” such nominee) by holders of shares of our common stock (including those that would be
issued if all of our outstanding Series A Preferred Stock had converted into shares of our common stock as of the
Record Date). If any incumbent director standing for election receives a greater number of votes “against” his or
her election than votes “for” such election, our bylaws require that such person must promptly tender his or her
resignation to the Board of Directors.

Recommendation

Our Board of Directors recommends a vote “FOR” the election of each of the nominees listed above to

our Board of Directors.

PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF KPMG LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017

The Audit Committee of our Board of Directors has appointed KPMG LLP to serve as our independent
registered public accounting firm for the year ending December 31, 2017. KPMG has served in this capacity
since June 20, 2011.

We are asking our stockholders to ratify the appointment of KPMG as our independent registered public

accounting firm. Although ratification is not required by our bylaws or otherwise, our Board of Directors is
submitting the appointment of KPMG to our stockholders for ratification as a matter of good corporate
governance. If our stockholders fail to ratify the appointment of KPMG, the Audit Committee will consider
whether it is appropriate and advisable to appoint a different independent registered public accounting firm. Even
if our stockholders ratify the appointment of KPMG, the Audit Committee in its discretion may appoint a
different registered public accounting firm at any time if it determines that such a change would be in the best
interests of our company and our stockholders.

Representatives of KPMG are expected to be present at the annual meeting and will have an opportunity to

make a statement and to respond to appropriate questions.

Required Vote

Ratification of the appointment of KPMG as our independent registered public accounting firm for the year
ending December 31, 2017, requires the affirmative vote of a majority of the votes cast (meaning the number of
shares voted “for” such proposal must exceed the number of shares voted “against” such proposal) by holders of
shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock
had converted into shares of our common stock as of the Record Date) at the annual meeting at which a quorum
is present.

Recommendation

Our Board of Directors recommends a vote “FOR” the ratification of the appointment of KPMG as

our independent registered public accounting firm for the year ending December 31, 2017.

PROPOSAL 3: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we

provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the
compensation of our named executive officers as disclosed in this proxy statement in accordance with the
compensation disclosure rules of the SEC. Accordingly, we are asking our stockholders to approve the following
advisory resolution:

“RESOLVED, that the stockholders of XPO Logistics, Inc. (the “Company”) hereby approve, on an
advisory basis, the compensation of the Company’s named executive officers, as disclosed pursuant to
Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and
narrative discussion set forth in the Proxy Statement for the Company’s 2017 Annual Meeting of
Stockholders.”

We encourage stockholders to review the Compensation Discussion and Analysis, the compensation tables

and the related narrative disclosures included in this proxy statement. As described in detail under the heading
“Executive Compensation—Compensation Discussion and Analysis,” we believe that our compensation
programs appropriately reward executive performance and align the interests of our named executive officers and
key employees with the long-term interests of our stockholders, while also enabling us to attract and retain
talented executives.

This resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on our Board of
Directors. Although non-binding, our Board of Directors and the Compensation Committee will review and
consider the voting results when making future decisions regarding our executive compensation program.

At the 2012 annual meeting of stockholders, our stockholders voted to approve an annual holding of the
advisory vote on executive compensation. Accordingly, as previously disclosed by the company, we will hold
future, non-binding, advisory votes on executive compensation on an annual basis; this will continue until the
next required non-binding, advisory vote is held on the frequency of advisory votes on executive compensation.

Required Vote

Approval of this resolution, commonly referred to as a “say-on-pay” resolution, requires the affirmative vote
of a majority of the votes cast (meaning the number of shares voted “for” such proposal must exceed the number
of shares voted “against” such proposal) by holders of shares of our common stock (including those that would
be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the
Record Date) at the annual meeting at which a quorum is present.

Recommendation

Our Board of Directors recommends a vote “FOR” approval of the advisory resolution to approve

executive compensation set forth above.

PROPOSAL 4: STOCKHOLDER PROPOSAL REGARDING AN ANNUAL SUSTAINABILITY REPORT

We have been notified that the International Brotherhood of Teamsters General Fund, 25 Louisiana Avenue,
NW, Washington, DC 20001 expects to introduce and support the following proposal at the annual meeting. This
stockholder proponent has provided certification indicating that, as of November 28, 2016, it was the beneficial
owner of 160 shares of the Company’s common stock, or approximately 0.0001%, and that it intends to maintain
such ownership through the date of the annual meeting.

Proposal

RESOLVED: Shareholders request XPO Logistics, Inc. (“XPO”), issue an annual sustainability report
describing the Company’s responses to Environmental, Social and Governance (“ESG”) related issues affecting
the Company. The report should be prepared at reasonable cost, omitting proprietary information, and be
available to shareholders by December 2017.

It should address relevant policies, practices, and metrics on topic, such as human capital management and
greenhouse gas emissions, and provide objective quantitative indicators and goals relating to each issue, where
feasible.

We recommend using the Global Reporting Initiative’s Sustainability Reporting Guidelines to prepare the

report. The Guidelines cover environmental impacts, human rights and labor practices and provide a flexible
reporting system that allows omission of content irrelevant to company operations.

SUPPORTING STATEMENT:

A global, third-party logistics company providing transportation and logistics services, XPO’s ESG

exposure involves a complex set of processes and relationships, including:

• Meeting the ESG expectations of its clients, which market major consumer brands; many of whom are

increasingly concerned with the social and environmental performance of their supply chains.

• Monitoring the ESG performance of its supply chain partners, which provide many of the trucking and
freight services XPO offers, including approximately 10,000 trucks contracted via independent owner
operators and more than 1 million brokered trucks.

• Managing the ESG performance of its own operations, which include, as of November 2016; 16,000

tractors, 39,500 trailers, 86,000 employees, and 748 contract logistics facilities.

In its Sustainability Yearbook 2016, RobecoSAM highlights climate change, human capital and

occupational health and safety as among the sustainability issues facing transportation companies.
(http://yearbook.robecosam.com/industry/transportation-and-transportation-infrastructure.html).

Following the political and media firestorm over allegations of sweatshop-like conditions at an XPO facility

operated on behalf of e-commerce fashion retailer ASOS in Barnsley, England, we believe human capital
management is of critical importance to shareholders. (http://www.bbc.com/news/business-37483334).

According to the 2016 Third-Party Logistics Study by C. John Langley, Jr., Ph.D., and Capgemini Consulting, the

sector faces unprecedented labor shortages, bringing challenges and opportunities to human capital management.
(http://www.3plstudy.com/). How companies handle human capital management issues, including media and
regulatory attention on the classification of independent owner-operators, will help determine competitiveness in the
industry, as the Sustainable Accounting Standards Board concluded in its 2014 Air Freight & Logistics Industry Brief.
(http://www.sasb.org/wp-content/uploads/2014/09/TR0202_AirFreightLogistics_Industry_Brief.pdf).

XPO’s sustainability practices are particularly important to shareholders in light of its rapid expansion.

From FY-end 2013 to FY-end 2015, XPO spent over $6.5 billion on acquisitions and witnessed a ten-fold
increase in revenue.

Although XPO’s website provides some information related to ESG, reporting falls short of a

comprehensive sustainability report. Competitors, such as Deutsche Post/DHL and UPS, provide disclosure of
strategies, goals and performance around human capital and climate change initiatives.

STATEMENT IN OPPOSITION BY OUR BOARD OF DIRECTORS

XPO is committed to sustainability principles and proactively provides disclosure regarding various
environmental, social and governance-related matters. However, the XPO Board of Directors believes that the
preparation of an overly prescribed sustainability report would be a premature and time-consuming exercise that
is not warranted at this time. In light of XPO’s existing focus on these topics and the information already
available on our website, in our Global Compact annual reports, in our filings with the SEC and in our Code of
Business Ethics as outlined below, XPO’s Board of Directors recommends that stockholders vote AGAINST this
stockholder proposal.

We are committed to operating our business in a way that demonstrates high regard for all of our

stakeholders and the environment. In particular, we are committed to using our resources to help our
customers achieve their objectives, including their environmental and sustainability objectives, and we are
committed to achieving ours as well. We have set up common general principles, policies and standards in
human resources management to ensure that we respect each of our employees and the rules and regulations of
the communities in which we operate. A few recent awards and recognitions further highlight our commitment to
innovative sustainability practices:

• XPO signed the Sustainable Urban Logistics Charter of the City of Paris pledging to help reduce the
environmental impact of our goods transportation, including by using natural gas trucks for the road
transport portion of France’s first intermodal urban rail shuttle (2016);

• The French Ministry of the Environment and the French Environment and Energy agency awarded our
company the label “Objectif CO2” for the outstanding environmental performance of our transport
operations in Europe (2016);

•

Inbound Logistics named our company a Top 75 Green Supply Chain Partner (2016);

SmartWay honored our company for excellence in environmental improvement in North America
(2015); and

• XPO Logistics Europe introduced the first LNG-powered tractors in Europe in 2015 and we believe

that our European operations have one of the most modern and environmental-friendly fleets in Europe.

We recognize the value in providing public disclosure regarding our sustainability focus. For example,

we have created a special sustainability section on our corporate website to discuss our responses and actions
with respect to sustainability, especially with respect to supply chain matters that are emphasized by the
proponent. These public disclosures describe just some of our activities aimed at reducing our environmental
impact, including implementing efficiencies like electronic waybills and documentation, maintaining office
recycling polices, educating our carriers on sustainable practices, evaluating our leased buildings for energy
considerations, monitoring the fuel emissions of the forklifts in our facilities, designing our packaging to ensure
that the optimal carton size is used for each product, purchasing recycled packaging materials when feasible and
designing and manufacturing reusable kitting tools for the installation of parts in our clients’ manufacturing
operations.

XPO Logistics Europe currently produces reports on an annual basis on its compliance with the
United Nations Global Compact. We expect to continue to evaluate the extent to which our European practices

and disclosure approaches can also be deployed in other parts of our organization. Our 2016 Global Compact
Report, available on europe.xpo.com at the Global Compact link under company information, communicates our
implementation systems and tools and key 2015 outcomes with respect to environmental, human rights, labor and
anti-corruption issues. XPO Logistics Europe has introduced a Corporate Social Responsibility independent audit
procedure, which includes a review of the ethical and human resources practices of various of our branches, and
received a score of 98.4% compliance in 2015. XPO Logistics Europe has been a partner of the French
Environment and Energy Management Agency (“ADEME”) for the past ten years and has been committed to
cutting its carbon dioxide emissions under the CO2 Charter since 2008. In fact, in 2009, XPO Logistics Europe
introduced its own CO2 calculator, which allows us to calculate carbon footprints for each customer and for each
transport operation. In 2014, XPO Logistics Europe once again collaborated with the ADEME to draw up a new
standard to certify transporters’ performance with a “CO2 Label.”

Our Code of Business Ethics, available on our website, reflects our commitment to doing business the

right way and describes our additional policies on environmental, social and governance (“ESG”) issues.
We expect our employees to uphold the standards set forth in our Code of Business Ethics every day. Our
employees are trained in anti-bribery and anti-corruption best practices and we take extensive measures to ensure
compliance with local laws and regulations. We do not tolerate any conduct that contributes to, encourages or
facilitates human trafficking, child labor, forced compulsory labor or any other human rights abuses.

Our filings with the SEC provide information on the regulations governing and risks affecting our
business operations. In addition to voluntary disclosures, we comply with the law by disclosing matters that are
material to XPO. Our disclosures in our filings specifically highlight regulations and risks relating to
environmental issues, classifications of independent contractors and labor management.

The stockholder proponent requests that we prepare an annual report describing responses to ESG issues

affecting the company, addressing “relevant policies, practices, and metrics on topic, such as human capital
management and greenhouse gas emissions” and providing “objective quantitative indicators and goals relating
to each issue, where feasible.”

Our Board of Directors believes that the preparation of such an overly prescribed report would be a
premature, expensive and time-consuming exercise that is not warranted at this time, especially in light of
our continued focus on these topics and the information already available on our website, in our Global
Compact annual reports, in our filings with the SEC and in our Code of Business Ethics. We are also
concerned that the cost of annually preparing such a formal report, both in dollars and in employee time, would
outweigh the potential benefits of such a report.

Nevertheless, our Board of Directors and management will continue to monitor developments and

practices with respect to ESG matters, including approaches and methodologies for evaluating,
prioritizing, tracking and disclosing sustainability-related matters. Continued study by our Board and
management provides a more effective approach to managing the environmental and social impacts of our
operations than a one-time stockholder vote on a mandated, overly prescribed report of the kind contemplated by
the stockholder proposal. We also provide disclosure in our proxy statement as to our approach for overseeing
and managing risks related to our business, including relevant ESG risks. Significant or emerging risks, including
as to ESG-related items, are periodically reviewed at the Board and management-level and our business,
strategies, operations, policies, controls and prospects are regularly discussed by our Board and management
team. More generally, the landscape of risks and opportunities as they relate to ESG issues is a rapidly evolving
space. The scope, metrics, topics of interest to investors and other stakeholders, the legal and regulatory
landscape and best and emerging practices in the United States and internationally are currently in a significant
state of flux and evolution. Our system of risk oversight, which was designed specifically for our complex, global
operations, in combination with continued study of ESG-related issues by our Board and management team, is,
we believe, the best approach to staying at the forefront of these important issues.

Given our ongoing environmental and sustainability practices and our efforts to keep stockholders and the

public informed of our practices through the use of our website, annual Global Compact reports and other public
disclosures and filings, our Board of Directors believes that this proposal is not beneficial to our stockholders.
Therefore, our Board of Directors recommends that our stockholders vote against this proposal.

Recommendation

Our Board of Directors recommends a vote “AGAINST” this stockholder proposal.

OTHER MATTERS

We do not expect that any matter other than the foregoing proposals will be brought before the 2017 annual

meeting. If, however, such a matter is properly presented at the annual meeting or any adjournment or
postponement of the annual meeting, the persons appointed as proxies will vote as recommended by our Board of
Directors or, if no recommendation is given, in accordance with their judgment.

AVAILABILITY OF ANNUAL REPORT AND PROXY STATEMENT

If you would like to receive a copy of our 2016 Annual Report or this proxy statement, please contact
us at: Investor Relations, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831 or by
telephone at (855) 976-6951, and we will send a copy to you without charge.

A Note about Our Website

Although we include references to our website (www.xpo.com) throughout this proxy statement,
information that is included on our website is not incorporated by reference into, and is not a part of, this
proxy statement. Our website address is included as an inactive textual reference only.

We use our website as one means of disclosing material non-public information and for complying with
our disclosure obligations under the SEC’s Regulation FD. Such disclosures typically will be included within
the Investor Relations section of our website. Accordingly, investors should monitor such section of our
website, in addition to following our press releases, SEC filings and public conference calls and webcasts.

[THIS PAGE INTENTIONALLY LEFT BLANK]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the Fiscal Year Ended December 31, 2016

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the transition period from to

Commission File Number: 001-32172

XPO Logistics, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

03-0450326
(I.R.S. Employer
Identification No.)

Five American Lane
Greenwich, Connecticut 06831
(Address of principal executive offices)

(855) 976-6951
(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Act:

Title of Each Class:
Common Stock, par value $.001 per share

Name of Each Exchange on Which Registered:
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None
__________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Exchange Act. Yes

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any,
every Interactive Data File required to be submitted and posted 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

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 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” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company)

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes

The aggregate market value of the registrant’s common stock, par value $0.001 per share, held by non-affiliates of the
registrant was $2,850,700,780 as of June 30, 2016, the last business day of the registrant’s most recently completed second
fiscal quarter, based upon the closing price of $26.26 per share on the NYSE on that date.

As of February 21, 2017, there were 111,456,669 shares of the registrant’s common stock, par value $0.001 per share,

outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Specified portions of the registrant’s proxy statement, which will be filed with the Securities and Exchange Commission

pursuant to Regulation 14A in connection with the registrant’s 2017 Annual Meeting of Stockholders (the “Proxy Statement”),
are incorporated by reference into Part III of this Annual Report on Form 10-K. Except with respect to information specifically
incorporated by reference in this Annual Report, the Proxy Statement is not deemed to be filed as part hereof.

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XPO LOGISTICS, INC.
FORM 10-K—FOR THE YEAR ENDED DECEMBER 31, 2016

TABLE OF CONTENTS

PART I

Item 1 Business
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2
Item 3
Item 4 Mine Safety Disclosures

Properties
Legal Proceedings

Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

PART II

Securities
Selected Financial Data

Item 6
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
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A Controls and Procedures
Item 9B Other Information

Financial Statements and Supplementary Data

PART III

Item 10 Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13 Certain Relationships and Related Transactions, and Director Independence
Item 14 Principal Accounting Fees and Services

Item 15 Exhibits, Financial Statement Schedules
Signatures

PART IV

Cautionary Statement Regarding Forward-Looking Statements

PART I

This Annual Report on Form 10-K and other written reports and oral statements we make from time to time contain forward-
looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of
historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be
identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,”
“may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,”
“guidance,” “outlook,” “effort,” “target” or the negative of these terms or other comparable terms. However, the absence of
these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain
assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current
conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. These
forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual
results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute
to a material difference include, but are not limited to, those discussed below and the risks discussed in the Company’s other
filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements set forth in this Annual
Report are qualified by these cautionary statements and there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or
effects on the Company or its business or operations. The following discussion should be read in conjunction with the
Company’s audited Consolidated Financial Statements and related Notes thereto included elsewhere in this Annual Report.
Forward-looking statements set forth in this Annual Report speak only as of the date hereof, and we do not undertake any
obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the
occurrence of unanticipated events, except as required by law.

ITEM 1.

BUSINESS

Company Overview

XPO Logistics, Inc., a Delaware corporation together with its subsidiaries (“XPO,” the “Company,” “we” or “our”), is a top ten
global provider of cutting-edge supply chain solutions to the most successful companies in the world. The Company operates as
a highly integrated network of people, technology and physical assets. We use our network to help customers manage their
goods more efficiently throughout their supply chains. As of December 31, 2016, we served more than 50,000 customers and
operated with over 87,000 employees and 1,425 locations in 34 countries.

We run our business on a global basis, with two segments: Transportation and Logistics. Within each segment, we have built
robust service offerings that are positioned to capitalize on fast-growing areas of customer demand. Substantially all of our
businesses operate under the single brand of XPO Logistics.

In our Transportation segment, we are the second largest freight brokerage provider globally, and we hold industry-leading
positions in both North America and Europe. In North America, we are the largest provider of last mile logistics for heavy
goods; the largest manager of expedite shipments; the second largest provider of less-than-truckload (LTL) transportation; the
third largest provider of intermodal services; and a global freight forwarder with a growing network. In Europe, we have the
largest owned road transportation fleet. We offer full truckload, freight brokerage and last mile services, and are the leading
LTL provider in Western Europe. Our total lane density in Europe covers the regions that produce approximately 90% of the
eurozone’s GDP.

Our Transportation segment uses a blended model of owned, contracted and brokered capacity. This gives us the flexibility to
offer solutions that best serve the interests of our customers and the Company. As of December 31, 2016, globally, we had more
than 10,000 independent owner operators under contract to provide drayage, expedite, last mile and LTL services to our
customers, and more than 50,000 independent brokered carriers representing approximately 1,000,000 trucks on the road.

We employ professional drivers who transport goods for customers using our owned and leased trucks and trailers. This
includes a global fleet of approximately 16,000 tractors and 39,500 trailers primarily related to our LTL and full truckload
operations. These assets also provide capacity for our freight brokerage operations. Our company overall is asset-light, with
assets accounting for just under a third of our revenue.

In our Logistics segment, we provide a range of contract logistics services, including highly engineered and customized
solutions, value-added warehousing and distribution, cold chain solutions and other inventory management solutions. We
perform e-commerce fulfillment, order personalization, warehousing, reverse logistics, storage, factory support, aftermarket
support, manufacturing, distribution, packaging and labeling, as well as supply chain optimization services such as consulting
and production flow management.

XPO operates approximately 157.5 million square feet (14.6 million square meters) of contract logistics facility space globally,
with about 81.6 million square feet (7.6 million square meters) of that capacity in the United States, making us the second
largest contract logistics provider globally.

Our global logistics footprint makes XPO particularly attractive to multinational customers. Once we secure a contract, the
average tenure is approximately five years, and these relationships can lead to a wider use of our services, such as inbound and
outbound logistics. Our logistics customers include the preeminent names in aerospace, retail and e-tail, technology,
manufacturing, food and beverage, wireless, chemical, agribusiness, life sciences and healthcare.

Our contract logistics operations also benefit from a strong presence in the high-growth e-commerce sector. E-commerce is
predicted to continue to grow globally at a double-digit rate through at least 2020 and, increasingly, order fulfillment is
being outsourced. We are the largest outsourced e-fulfillment provider in Europe, and we have a major platform for e-
fulfillment in North America where we provide highly customized solutions that include reverse logistics and omni-channel
services.

We believe that our ability to provide customers with integrated, end-to-end supply chain solutions gives us a competitive
advantage. Many customers, particularly large companies, are increasingly turning to multi-modal providers to handle their
supply chain requirements. We have built XPO to capitalize on this trend, as well as the trend toward outsourcing in both
transportation and logistics, the boom in e-commerce, and the adoption of just-in-time inventory practices.

Our customers are served by well-trained XPO employees who understand the importance of world-class service, and who use
our leading-edge, proprietary technology to perform their jobs. We have a global team of approximately 1,600 IT professionals
who drive innovation for the benefit of our customers. Our annual investment in technology is among the highest in our
industry because we see the ongoing development of our technology as being critical to our ability to continually improve
customer service and leverage our scale.

Transportation Services

The Company’s Transportation segment includes five service lines: freight brokerage, last mile, LTL, full truckload and global
forwarding.

Freight Brokerage

Our freight brokerage operations encompass truck brokerage globally, as well as intermodal, drayage and expedite services in
North America.

Our truck brokerage operations are non-asset-based: we place shippers’ freight with qualified carriers, primarily trucking
companies. Customers offer loads to us via telephone, fax, email, electronic data interchange and the internet on a daily basis.
These services are priced on either a spot market or contract basis for shippers. We collect payments from our customers and
pay the carriers on a spot market basis for transporting customer loads.

Our intermodal operations are asset-light: we provide container capacity - some of which utilizes our 9,900 leased or owned 53-
ft. containers and 8,000 chassis - rail brokerage, drayage transportation via independent contractors, and on-site operational
services. We contract with railroads to provide the long-haul portion of the shipment of freight in containers, and we contract
with trucking companies for the local pickup and delivery legs of the intermodal freight movement. We also provide
customized electronic tracking and analysis of market prices and negotiated rail, truck and intermodal rates, in order to
determine the optimal transportation routes.

We offer our door-to-door intermodal services to a wide range of customers in North America, including large industrial and
retail shippers, transportation intermediaries such as intermodal marketing companies, and steamship lines. As of December 31,
2016, XPO was the third largest provider of intermodal services in North America, with one of the largest U.S. drayage
networks, and a leading provider of intermodal services in the cross-border Mexico sector.

Our expedite operations are predominantly non-asset-based: substantially all of the ground transportation equipment is provided
by independent owner-operators who own one truck or van, or by independent fleet owners of multiple trucks or vans who
employ multiple drivers. We are focused on developing strong, long-term relationships with our independent owner-operators
and fleet owners, and incentivizing them to furnish their capacity to us on an exclusive basis. Expedite air charter service is
arranged using the Company's relationships with third-party air carriers through our proprietary, web-based platform.

Our expedite services can be characterized as time-critical, time-sensitive or high priority freight shipments, many of which
have special handling needs. This urgency typically arises due to tight tolerances in a customer’s supply chain, or an
interruption or a failure elsewhere in the supply chain.

Expedite customers most often request our services on a per-load transactional basis through our offices or via our expedite
transportation management portal, with only a small percentage of loads scheduled for future delivery dates. We operate an ISO

9001:2008-certified call center that gives our customers on-demand status updates relating to their expedited shipments. As of
December 31, 2016, XPO was the largest manager of expedited freight shipments in North America.

Last Mile

Our last mile services are predominantly asset-light: we utilize independent contractors to perform transportation and over-the-
threshold services. Last mile comprises the final stage of the delivery from a local distribution center or retail store to the end-
consumer’s home or business, where more services may be required. Last mile is a fast-growing industry sector that serves blue
chip retailers, e-commerce companies and smaller retailers with limited in-house capabilities. Important aspects of last mile
service are responsiveness to seasonal demand, economies of scale, and an ability to maintain a consistently high quality of
customer experience.

In addition, the last mile process often requires incremental services such as pre-scheduled delivery times, unpacking, assembly,
utility connection and installation, as well as removal of an old product. These additional services are commonly referred to as
white-glove services. We use our proprietary technology platforms to collect customer feedback, monitor carrier performance,
manage capacity, and communicate during narrow windows of service to ensure a consumer experience that protects the brands
of our retail customers.

Our last mile operations in North America and Europe specialize in heavy goods, including appliances, furniture, large
electronics and other goods that are larger-than-parcel. As of December 31, 2016, XPO was the largest provider of last mile
services for heavy goods in North America.

Less-Than-Truckload (LTL)

In North America, our LTL operations are asset-based: we utilize employee drivers, our own fleet of tractors and trailers for
line-haul, pick-up and delivery, and a network of terminals. We provide our customers with day-definite regional, inter-regional
and transcontinental LTL freight services. As of December 31, 2016, XPO was the second largest provider of LTL services in
North America, offering more next-day and two-day lanes than any other LTL network. Our coverage area in North America
encompasses approximately 99% of all U.S. zip codes, with service in Canada.

In Europe, our LTL operations utilize a blended asset-based and asset-light model of Company fleet and contracted carrier
capacity, with a network of terminals. We provide LTL services domestically in France, the United Kingdom and Spain. We also
offer international LTL distribution across Europe.

Full Truckload

Our full truckload operations are asset-based: we provide customers in Europe with dedicated contract carrier services by
utilizing our fleet of tractors and trailers. In addition, we provide transactional transportation of packaged goods, high cube
products, and bulk goods. We provide full truckload services domestically in France, the United Kingdom, Spain, Poland,
Romania, Italy, Portugal and Slovakia, and internationally across Europe. As of December 31, 2016, XPO was a leading
provider of full truckload transportation in Europe.

Global Forwarding

Our global forwarding operations are asset-light: we provide logistics services for domestic, cross-border and international
shipments through our relationships with ground, air and ocean carriers and a network of Company and agent-owned offices.
Our forwarding capabilities are not restricted by size, weight, mode or location, and therefore are potentially attractive to a wide
market base.

As part of our global forwarding network, we operate a subsidiary as a non-vessel operating common carrier (“NVOCC”) to
transport our customers’ freight by contracting with vessel operators. We are also a customs broker, licensed by the U.S.
Customs and Border Protection Service. This enables us to provide customs brokerage services to direct domestic importers,
other freight forwarders, NVOCCs and vessel operating common carriers.

Logistics Services

The Company’s Logistics segment, which we also refer to as supply chain, encompasses a range of contract logistics services,
including highly engineered and customized solutions, as well as managed transportation services. As of December 31, 2016,
XPO was the second largest global provider of contract logistics based on square footage, with one of the largest e-fulfillment
platforms in Europe.

We provide our logistics customers with integrated services such as dedicated and shared warehousing, e-fulfillment order
processing and personalization, reverse logistics, storage, factory support, aftermarket support, manufacturing, packaging,
labeling and distribution. In addition, we utilize our technology and expertise to solve complex supply chain challenges and
create transformative solutions for our customers, while reducing their operating costs and improving production flow
management.

Our logistics customers primarily operate in industries with high-growth outsourcing opportunities, such as high tech, e-
commerce, telecommunications, aerospace and defense, healthcare, medical equipment, agriculture, food and beverage, and
select areas of manufacturing. These customers have demanding requirements for quality standards, real-time data visibility,
special handling, security, the management of large numbers of stock keeping units (“SKUs”), time-assured deliveries and high
transaction volumes, with seasonal surges in the case of retail goods.

The Company is a top five global provider of managed transportation based on the value of freight under management. Our
managed transportation offering includes a range of services provided to shippers who want to outsource some or all of their
transportation modes, together with associated activities. These activities can include freight handling such as consolidation and
deconsolidation, labor planning, inbound and outbound shipment facilitation, documentation and customs management, claims
processing, and third party logistics, or 3PL, supplier management, as well as other services.

Our Strategy

Our strategy is to use our highly integrated network of people, technology and physical assets to help customers manage their
goods more efficiently throughout their supply chains. We deliver value to customers in the form of cost and risk reductions,
process efficiencies, consistently reliable outcomes, technological innovations and customer service that is both highly
responsive and proactive.

We continue to optimize our existing operations by growing our sales force, implementing advanced information technology,
cross-selling our services and leveraging our Company-wide capacity. In addition, we maintain a disciplined and
comprehensive set of processes related to the recruiting, training and mentoring of employees, and for marketing to the
hundreds of thousands of prospective customers that can use our services. Most important to our growth, we have instilled a
culture of collaboration that focuses our efforts on delivering the results that matter to our customers and Company.

We will continue to grow the business in a disciplined manner, and with a compelling value proposition - integrated, innovative
solutions for any company, of any size, with any combination of supply chain needs.

Management’s growth and optimization strategy for the Transportation segment is to:

Provide world-class service and solutions that satisfy our customers’ transportation-related supply chain goals;

• Market our diversified, multi-modal offering to customers of all sizes, both new and existing accounts;
• Cross-sell our Transportation segment solutions to customers of our Logistics segment;
•
• Recruit and retain quality drivers, and best utilize our transportation assets;
• Attract and retain quality independent owner-operators and independent brokered carriers for our carrier network;
• Recruit and retain quality sales and customer service representatives, and continuously improve employee productivity

with state-of-the-art training and technology;

• Continue to develop cutting-edge transportation applications for our proprietary technology platform; and
•

Integrate industry best practices with a focus on utilizing our advantages of scale to serve our customers and lower our
administrative overhead.

Management’s growth and optimization strategy for the Logistics segment is to:

• Develop additional business in verticals where the Company already has deep logistics expertise and a strong track

record of successful relationships;

• Capture more share of spend with existing customers that potentially could use XPO for more of their logistics and/or

broader supply chain needs;

• Expand our relationships with existing customers that have business interests in both North America, Europe and Asia;
• Cross-sell contract logistics and managed transportation solutions to customers of our Transportation segment;
• Market the advantages of XPO’s proprietary technology and global network of logistics facilities;
•
•

Provide world-class service and solutions that satisfy our customers’ logistics-related supply chain goals; and
Integrate industry best practices with a focus on utilizing our advantages of scale to serve our customers and lower our
administrative overhead.

Information Systems and Intellectual Property

One of the ways in which we empower our employees to deliver world-class service is through our information technology
(“IT”). We believe that technology is a compelling differentiator in our industry. Technology represents one of the Company’s
largest categories of investment within our annual capital expenditure budget, reflecting our belief that the continual
enhancement of our cloud-based platform is critical to our success. We have an IT team of approximately 1,600 talented
professionals who focus on driving innovation and advancing the effectiveness of our software.

In our Transportation segment, our proprietary Freight Optimizer software for truck brokerage provides actionable pricing
information, as well as cost effective, timely and reliable access to carrier capacity. We believe that these capabilities give us a

competitive advantage. In 2015, we launched our proprietary Rail Optimizer software that optimizes all aspects of intermodal
operations, including shipment management, capacity flow and asset management, market-based pricing, and shipment
execution with rail providers.

In last mile logistics, our proprietary software provides real-time workflow visibility and customer experience management
with superior consumer satisfaction ratings. For expedite, we utilize satellite tracking and communication units on the
independently contracted vehicles that transport goods for our customers, thus enabling real-time electronic updates. A large
component of our expedite operations is our proprietary bidding platform, which awards loads electronically based on carriers’
online bids and manages the transportation process almost entirely through technology.

In 2016, in our LTL operations, we introduced proprietary pricing systems and deployed new handheld and tablet devices to
improve the efficiency of dock workers and drivers. New software releases planned in 2017 include line-haul efficiency
measures, dock engineering standards, and pickup and delivery optimization, among other developments.

In our Logistics segment, we have developed proprietary technology for the design and implementation of sophisticated
contract logistics solutions for our customers. These solutions are most often utilized by large, multi-national and medium-sized
corporations and by government agencies with complex supply chain requirements. The warehouses we run are becoming high-
tech hubs, with a combination of automated systems and robotics that have led to important new efficiencies for our customers.
Our software supports services such as omni-channel distribution, reverse logistics, transportation management, freight bill
audit and payment, lean manufacturing support, aftermarket support and supply chain optimization.

XPO relies on a combination of trademarks, copyrights, trade secrets, nondisclosure agreements and non-competition
agreements to establish and protect its intellectual property and proprietary technology. We have numerous registered
trademarks, trade names and logos in the United States and international jurisdictions.

Customers, Sales and Marketing

Our Company provides services to a variety of customers ranging in size from small, entrepreneurial organizations to multi-
national industry leaders. We have a diversified customer base that minimizes our concentration risk: in 2016, approximately
8% of our revenue was attributable to our top five clients, with our largest customer accounting for approximately 3% of
revenue.

Our customers are engaged in a wide range of industries, including high tech, retail, e-commerce, manufacturing,
telecommunications, aerospace and defense, life sciences, healthcare, medical equipment, agriculture, and food and beverage.
In 2016, retail and e-commerce accounted for the largest portion of our global revenue at 26%, followed by food and beverage
at 14%.

XPO is not reliant on the economy of any one country, region or industry. Our transportation services are primarily marketed in
North America and Europe, whereas our logistics and global forwarding networks serve global markets with concentrations in
North America, Europe and Asia. Based on where orders originated, approximately 60% of our 2016 revenue was generated in
the United States, 13% in France, 12% in the United Kingdom, and 15% in other countries.

Competition

The transportation and logistics industry is highly competitive, with thousands of companies competing in domestic and
international markets. XPO competes on service, reliability, scope and scale of operations, technological capabilities and price.
Our competitors include local, regional, national and international companies that offer the same services we provide - some
with larger customer bases, significantly more resources and more experience than we have. In some cases, our customers also
have internal resources to provide some of the same transportation and logistics services we provide to them. Due in part to the
fragmented nature of the industry, we must strive daily to retain existing business relationships and forge new relationships.

The health of the transportation and logistics industry will continue to be a function of domestic and global economic growth.
However, we believe that we have structured the Company to derive additional benefits from the growth of e-commerce, and
from a long-term outsourcing trend that should continue to help a number of our service sectors grow faster than the macro-
environment.

Regulation

Our operations are regulated and licensed by various governmental agencies in the United States and in the other countries
where we operate. Such regulations impact us directly and indirectly by regulating third-party transportation providers we use
to transport freight for our customers.

Regulation affecting Motor Carriers, Owner Operators and Transportation Brokers. In the United States, our subsidiaries that
operate as motor carriers have licenses to operate as motor carriers from the Federal Motor Carrier Safety Administration
(“FMCSA”) of the U.S. Department of Transportation (“DOT”). In addition, our subsidiaries acting as property brokers have
property broker licenses from the FMCSA. Our motor carrier subsidiaries and the third-party motor carriers we engage in the

United States must comply with the safety and fitness regulations of the DOT, including those relating to drug- and alcohol-
testing, hours-of-service, records retention, vehicle inspection, driver qualification and minimum insurance requirements.
Weight and equipment dimensions also are subject to government regulations. We also may become subject to new or more
restrictive regulations relating to emissions, drivers’ hours-of-service, independent contractor eligibility requirements, onboard
reporting of operations, air cargo security and other matters affecting safety or operating methods. Other agencies, such as the
U.S. Environmental Protection Agency (“EPA”), the Food and Drug Administration (“FDA”), the California Air Resources
Board, and the U.S. Department of Homeland Security (“DHS”), also regulate our equipment, operations and independent
contractor drivers. We and the third-party carriers we use are also subject to a variety of vehicle registration and licensing
requirements of the state or other local jurisdictions in which they operate. In other foreign jurisdictions in which we operate,
our operations are regulated, where necessary, by the appropriate governmental authority.

In 2010, the FMCSA introduced the Compliance Safety Accountability program (“CSA”), which uses a Safety Management
System (“SMS”) to rank motor carriers on seven categories of safety-related data, known as Behavioral Analysis and Safety
Improvement Categories, or “BASICs,” which data, it is anticipated, will eventually be used for determining a carrier’s DOT
safety rating under revisions to existing Safety Fitness Determination (“SFD”) regulations. In December 2015, the Fixing
America’s Surface Transportation Act (“FAST Act”) was signed into law, which requires the FMCSA to review the CSA
program to ensure that it provides the most reliable analysis possible. During this review period, the FAST Act requires the
FMCSA to remove a property carrier’s CSA scores from public view. The FMCSA has since announced an SFD Notice of
Proposed Rulemaking (“NPRM”) that would revamp the current three-tier federal rating system for federally regulated
commercial motor carriers.

Although the CSA scores are not currently publicly available, this development is likely to be temporary. As a result, once the
program has been revamped, our fleet could be ranked worse or better than our competitors, and the safety ratings of our motor
carrier operations could be impacted. Our network of third-party transportation providers may experience a similar result. A
reduction in safety and fitness ratings may result in difficulty attracting and retaining qualified independent contractors and
could cause our customers to direct their business away from XPO and to carriers with more favorable CSA scores, which
would adversely affect our results of operations.

In the past, the subsidiaries through which we operate our expedited and intermodal drayage operations have exceeded the
established intervention threshold in certain of the BASICs, and we may exceed those thresholds in the future. Depending on
our ratings, we may be prioritized for an intervention action or roadside inspection, either of which could adversely affect our
results of operations, or customers may be less likely to assign loads to us. We cannot predict the extent to which CSA
requirements or safety and fitness ratings under SMS or SFD could adversely affect our business, operations or ability to retain
compliant drivers, or those of our subsidiaries, independent contractors or third-party transportation providers.

The FMCSA has proposed new rules that would require nearly all carriers, including XPO, to install and use electronic logging
devices (“ELDs”). The proposed regulations would require ELDs to be installed and in use two years after publication of the
final regulations. ELD installation will increase costs for, and may not be well-received by, independent contractors.

Our operations providing certain services in California are also subject to various regulatory initiatives such as the Ports of Los
Angeles and Long Beach clean truck program effective in 2009, California Air Resources Board (“CARB”) truck regulation
effective in 2010, and the Port of Oakland truck ban effective in 2010, each of which banned trucks that did not meet certain
emission standards. To comply with these requirements, our motor carrier subsidiaries providing certain services in California
have implemented programs to source truck capacity from independent owner-operators that meet these emissions
requirements. Furthermore, the State of California has required diesel tractors, as well as 53-foot-long and certain other trailers
operated in the state, to comply with designated fuel efficiency and other performance requirements by target dates occurring
between 2011 and 2023. Compliance with California state and port regulations has increased rates payable to owner-operators
operating in California, as well as new tractor costs; might increase the cost of new trailers operated in California; might require
the retrofitting of pre-2011 model year trailers operated in California; and could diminish equipment productivity and increase
operating expenses.

Regulations affecting our Subsidiaries Providing Ocean and Air Transportation. XPO Customs Clearance Solutions, Inc.
(“XCCS”) and XPO GF America, Inc. (“XGFA”), two of the Company’s subsidiaries, are licensed as customs brokers by U.S.
Customs and Border Protection (“CBP”) of DHS in each United States customs district in which they do business. All United
States customs brokers are required to maintain prescribed records and are subject to periodic audits by CBP. In other
jurisdictions in which we perform customs brokerage services, our operations are licensed, where necessary, by the appropriate
governmental authority.

Our subsidiaries offering expedited air charter transportation are subject to regulation by the Transportation Security
Administration (“TSA”) of DHS regarding air cargo security for all loads, regardless of origin and destination. XPO Global
Forwarding, Inc. (“XGF”), XGFA and XPO Air Charter also are regulated as “indirect air carriers” by the DHS and TSA. These
agencies provide requirements, guidance and, in some cases, administer licensing requirements and processes applicable to the
freight forwarding industry. We must actively monitor our compliance with such agency requirements to ensure that we have

satisfactorily completed the security requirements and qualifications and implemented the required policies and procedures.
These agencies generally require companies to fulfill these qualifications prior to transacting various types of business. Failure
to do so could result in penalties and fines. The air cargo industry is also subject to regulatory and legislative actions that could
affect economic conditions within the industry by requiring changes to operating practices or by influencing the demand for and
the costs of providing services to customers. We cannot predict the extent to which any such regulatory or legislative actions
could adversely affect our business, but we strive to comply with all agency requirements.

For our international operations, XGF, XGFA and XCCS are members of the International Air Transportation Association
(“IATA”), a voluntary association of airlines and freight forwarders that outlines operating procedures for forwarders acting as
agents or third-party intermediaries for IATA members. A substantial portion of XPO’s international air freight business is
transacted with other IATA members.

Additionally, XGF, XGFA and XPO Ocean Lines, Inc. (“XOL”), are each registered as an Ocean Transportation Intermediary
(“OTI”) by the U.S. Federal Maritime Commission (“FMC”), which establishes the qualifications, regulations and bonding
requirements to operate as an OTI for businesses originating and terminating in the United States. XGL and XOL are also
licensed NVOCCs and ocean freight forwarders.

Our international freight forwarding operations make us subject to regulations of the U.S. Department of State, U.S.
Department of Commerce and the U.S. Department of Treasury and to various laws and regulations of the other countries where
we operate. These regulations cover matters such as what commodities may be shipped to what destinations and to what end-
users, unfair international trade practices, and limitations on entities with which we may conduct business.

Other Regulations. The Company is subject to a variety of other U.S. and foreign laws and regulations, including but not
limited to, the Foreign Corrupt Practices Act and other similar anti-bribery and anti-corruption statutes.

Classification of Independent Contractors. Tax and other federal and state regulatory authorities, as well as private litigants,
continue to assert that independent contractor drivers in the trucking industry are employees rather than independent
contractors. Federal legislators have introduced legislation in the past to make it easier for tax and other authorities to reclassify
independent contractors as employees, including legislation to increase the recordkeeping requirements for employers of
independent contractors and to heighten the penalties for employers who misclassify their employees and are found to have
violated employees’ overtime and/or wage requirements. Additionally, federal legislators have sought to abolish the current safe
harbor allowing taxpayers that meet certain criteria to treat individuals as independent contractors if they are following a
longstanding, recognized practice. Federal legislators also sought to expand the Fair Labor Standards Act to cover “non-
employees” who perform labor or services for businesses, even if the “non-employees” are properly classified as independent
contractors; require taxpayers to provide written notice to workers based upon their classification as either an “employee” or a
“non-employee”; and impose penalties and fines for violations of the notice requirements or “employee” or “non-employee”
misclassifications. Some states have put initiatives in place to increase their revenues from items such as unemployment,
workers’ compensation and income taxes, and a reclassification of independent contractors as employees would help states with
this initiative. Taxing and other regulatory authorities and courts apply a variety of standards in their determination of
independent contractor status. If XPO’s independent contractor drivers are determined to be employees, we would incur
additional exposure under some or all of the following: federal and state tax, workers’ compensation, unemployment benefits,
and labor, employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax
withholdings.

Environmental Regulations. Our facilities and operations and our independent contractors are subject to various environmental
laws and regulations dealing with the hauling, handling and disposal of hazardous materials, emissions from vehicles, engine-
idling, fuel tanks and related fuel spillage and seepage, discharge and retention of storm water, and other environmental matters
that involve inherent environmental risks. Similar laws and regulations may apply in many of the foreign jurisdictions in which
we operate. We have instituted programs to monitor and control environmental risks and maintain compliance with applicable
environmental laws and regulations. We may be responsible for the cleanup of any spill or other incident involving hazardous
materials caused by our operations or business. In the past, we have been responsible for the costs of cleanup of diesel fuel
spills caused by traffic accidents or other events, and none of these incidents materially affected our business or operations. We
generally transport only hazardous materials rated as low-to-medium-risk, and a small percentage of our total shipments contain
hazardous materials. We believe that our operations are in substantial compliance with current laws and regulations and we do
not know of any existing environmental condition that reasonably would be expected to have a material adverse effect on our
business or operating results. We also do not expect to incur material capital expenditures for environmental controls in 2017.
Future changes in environmental regulations or liabilities from newly discovered environmental conditions or violations (and
any associated fines and penalties) could have a material adverse effect on our business, competitive position, results of
operations, financial condition or cash flows. U.S. federal and state governments, as well as governments in certain foreign
jurisdictions where we operate, have also proposed environmental legislation that could, among other things, potentially limit
carbon, exhaust and greenhouse gas emissions. If enacted, such legislation could result in higher new tractor and trailer costs,
reduced productivity and efficiency, and increased operating expenses, all of which could adversely affect our results of
operations.

Risk Management and Insurance

The Company maintains insurance for commercial automobile liability, truckers’ commercial automobile liability, commercial
general liability, cargo/warehouse legal liability, workers’ compensation and employers’ liability, and umbrella and excess
umbrella liability, with coverage limits, deductibles and self-insured retention levels that we believe are reasonable given the
varying historical frequency, severity and timing of claims. Certain actuarial assumptions and management judgments are made
for accruals for insurance reserves and are subject to a high degree of variability.

Seasonality

XPO’s revenue and profitability are typically lower for the first quarter of the calendar year relative to the other quarters. The
Company believes this is due in part to the post-holiday reduction in demand experienced by many XPO customers, which
leads to more capacity in the non-expedited and service-critical markets and, in turn, less demand for expedited and premium
shipping services. In addition, the productivity of the Company’s fleet of tractors and trailers, independent contractors and
transportation providers generally decreases during the winter season because inclement weather impedes operations. It is not
possible to predict whether the Company’s historical revenue and profitability trends will occur in future periods.

Employees

As of December 31, 2016, the Company had approximately 87,000 full-time and part-time employees. Our employee base is
one of our most critical resources, and we view the recruitment, training and retention of qualified employees as being essential
to our ongoing success. We believe that we have good relations with our employees, with strong programs in place for
communication and professional development.

Executive Officers of the Registrant

We provide below information regarding each of our executive officers.

Name
Bradley S. Jacobs
Troy A. Cooper
John J. Hardig
Scott B. Malat
Mario A. Harik

Age
60
47
52
40
36

Position

Chairman of the Board and Chief Executive Officer
Chief Operating Officer and Chief Executive Officer - Europe
Chief Financial Officer
Chief Strategy Officer
Chief Information Officer

Bradley Jacobs has served as XPO’s chief executive officer and chairman of the board of directors since September 2011.
Mr. Jacobs is also the managing director of Jacobs Private Equity, LLC, which is the Company’s second largest stockholder. He
has led two public companies: United Rentals, Inc. (NYSE: URI), which he co-founded in 1997, and United Waste Systems,
Inc., which he founded in 1989. Mr. Jacobs served as chairman and chief executive officer of United Rentals for its first six
years, and as executive chairman for an additional four years. With United Waste Systems, he served eight years as chairman
and chief executive officer. Previously, Mr. Jacobs founded Hamilton Resources (UK) Ltd. and served as its chairman and chief
operating officer. This followed the co-founding of his first venture, Amerex Oil Associates, Inc., where he was chief executive
officer.

Troy Cooper has served as XPO’s chief operating officer since May 2014, and additionally as chief executive officer and
chairman of XPO Logistics Europe since September 2015. He joined the Company in September 2011 as vice president of
finance. Prior to XPO, he served as vice president-group controller with United Rentals, Inc., where he was responsible for field
finance functions and helped to integrate over 200 acquisitions in the United States, Canada and Mexico. Earlier, he held
controller positions with United Waste Systems, Inc. and OSI Specialties, Inc. (formerly a division of Union Carbide, Inc.).
Mr. Cooper began his career in public accounting with Arthur Andersen and Co. and has a degree in accounting from Marietta
College.

John Hardig has served as XPO’s chief financial officer since February 2012. Prior to XPO, Mr. Hardig served as managing
director for the Transportation & Logistics investment banking group of Stifel Nicolaus Weisel from 2003 to 2012. Previously,
Mr. Hardig was an investment banker in the Transportation and Telecom groups at Alex. Brown & Sons (now Deutsche Bank),
and earlier worked as a design engineer with Ford Motor Company. Mr. Hardig holds a master of business administration
degree from the University of Michigan Business School and a bachelor’s degree from the U.S. Naval Academy.

Scott Malat has served as XPO’s chief strategy officer since July 2012, after joining the Company in October 2011 as senior
vice president of strategic planning. Prior to XPO, Mr. Malat was a senior equity research analyst covering the air, rail, trucking
and shipping sectors for Goldman Sachs Group, Inc. Earlier, he served as an equity research analyst with UBS and a strategy
manager with JPMorgan Chase & Co. Mr. Malat is a CFA® charterholder and has a degree in statistics with a concentration in
business management from Cornell University.

Mario Harik has served as XPO’s chief information officer since November 2011 with responsibility for the Company’s global
technology ecosystem. Mr. Harik has built comprehensive IT organizations, overseen the implementation of extensive
proprietary platforms, and consulted Fortune 100 companies. His prior positions include chief information officer and senior
vice president of research and development with Oakleaf Waste Management; chief technology officer with Tallan, Inc.; co-
founder of G3 Analyst, where he served as chief architect of web and voice applications; and architect and consultant with Adea
Solutions. Mr. Harik holds a master of engineering degree in information technology from Massachusetts Institute of
Technology, and a degree in engineering, computer and communications from the American University of Beirut, Lebanon.

Corporate Information and Availability of Reports

XPO Logistics, Inc. was incorporated in Delaware on May 8, 2000. Our executive office is located in the United States at Five
American Lane, Greenwich, Connecticut 06831. Our telephone number is (855) 976-6951. Our stock is listed on the New York
Stock Exchange (“NYSE”) under the symbol XPO.

Our corporate website is www.xpo.com. We make available on this website, free of charge, access to our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A and
amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as soon as reasonably practicable after we electronically submit such material to the SEC. We
also make available on our website copies of materials regarding our corporate governance policies and practices, including the
XPO Logistics, Inc. Corporate Governance Guidelines, Code of Business Ethics and the charters relating to the committees of
our board of directors. You also may obtain a printed copy of the foregoing materials by sending a written request to: Investor
Relations, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831. The public may read and copy any
materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. In
addition, the SEC’s website is www.sec.gov. The SEC makes available on this website, free of charge, reports, proxy and
information statements and other information regarding issuers, such as us, that file electronically with the SEC. Information on
our website or the SEC’s website is not part of this document. We are currently classified as a “large accelerated filer” for
purposes of filings with the SEC.

Item 1A.

Risk Factors

The following are important factors that could affect our financial performance and could cause actual results for future periods
to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking
statements made in this Annual Report on Form 10-K or our other filings with the SEC or in oral presentations such as
telephone conferences and webcasts open to the public. You should carefully consider the following factors and consider these
in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and
our Consolidated Financial Statements and related Notes in Item 8.

Economic recessions and other factors that reduce freight volumes, both in North America and Europe, could have a
material adverse impact on our business.

The transportation industry in North America and Europe historically has experienced cyclical fluctuations in financial results
due to economic recession, downturns in the business cycles of our customers, increases in the prices charged by third-party
carriers, interest rate fluctuations and other U.S. and global economic factors beyond our control. During economic downturns,
reduced overall demand for transportation services will likely reduce demand for our services and exert downward pressures on
our rates and margins. In periods of strong economic growth, demand for limited transportation resources can result in
increased network congestion and operating inefficiencies. In addition, any deterioration in the economic environment subjects
our business to various risks that may have a material impact on our operating results and future prospects. These risks may
include the following:

• A reduction in overall freight volumes reduces our opportunities for growth. In addition, if a downturn in our

•

customers’ business cycles causes a reduction in the volume of freight shipped by those customers, our operating
results could be adversely affected.
Some of our customers may face economic difficulties and may not be able to pay us, and some may go out of
business. In addition, some customers may not pay us as quickly as they have in the past, causing our working capital
needs to increase.

• A significant number of our transportation providers may go out of business and we may be unable to secure sufficient

equipment or other transportation services to meet our commitments to our customers.

• We may not be able to appropriately adjust our expenses to changing market demands. In order to maintain high

variability in our business model, it is necessary to adjust staffing levels to changing market demands. In periods of
rapid change, it is more difficult to match our staffing levels to our business needs. In addition, we have other primarily
variable expenses that are fixed for a period of time and certain significant fixed expenses, and we may not be able to
adequately adjust them in a period of rapid change in market demand.

We operate in a highly competitive industry and, if we are unable to adequately address factors that may adversely affect our
revenue and costs, our business could suffer.

Competition in the transportation services industry is intense. Increased competition may lead to a reduction in revenues,
reduced profit margins, or a loss of market share, any one of which could harm our business. There are many factors that could
impair our profitability, including the following:

• Competition from other transportation services companies, some of which offer different services or have a broader

coverage network, more fully developed information technology systems and greater capital resources than we do.

• A reduction in the rates charged by our competitors to gain business, especially during times of declining economic

growth. Such reductions may limit our ability to maintain or increase our rates, maintain our operating margins or
achieve significant growth in our business.

•

Shippers soliciting bids from multiple transportation providers for their shipping needs, which may result in the
depression of freight rates or loss of business to competitors.

• The establishment by our competitors of cooperative relationships to increase their ability to address shipper needs.

• Our current or prospective customers may decide to develop or expand internal capabilities for some of the services

that we provide.

• The development of new technologies or business models, which could result in our disintermediation in certain

businesses, such as freight brokerage.

Our profitability may be materially adversely impacted if our investments in equipment, service centers and warehouses do
not match customer demand for these resources or if there is a decline in the availability of funding sources for these
investments.

Our LTL and full truckload operations require significant investments in equipment and freight service centers. The amount and
timing of our capital investments depend on various factors, including anticipated freight volume levels and the price and
availability of appropriate property for service centers and newly-manufactured tractors. If our anticipated service center and/or
fleet requirements differ materially from actual usage, our capital-intensive business units, specifically LTL and full truckload,
may have too much or too little capacity. We attempt to mitigate the risk associated with too much or too little capacity by
adjusting our capital expenditures and by utilizing short-term equipment rentals and sub-contracted operators in order to match
capacity with business volumes. Our investments in equipment and service centers depend on our ability to generate cash flow
from operations and our access to credit, debt and equity capital markets. A decline in the availability of these funding sources
could adversely affect us.

Our contract logistics operations can require a significant commitment of capital in the form of shelving, racking and other
warehousing systems that may be required to implement warehouse-management services for our customers. In the event that
we are not able to fully amortize the associated cost of capital across the term of the related customer agreement, or to the
extent that the customer defaults on its obligations under the agreement, we could be forced to take a significant loss on the
unrecovered portion of this capital cost.

Anticipated synergies from any acquisitions that we have undertaken may not materialize in the expected timeframe or at
all.

Our 2017 and mid-term financial targets are dependent on our ability to realize significant ongoing synergies with respect to our
acquisitions, in particular the Norbert Dentressangle SA (“ND”) and Con-way Inc. (“Con-way”) acquisitions we completed in
2015. We may not realize all synergies we anticipate from the acquisitions we undertook. Among the synergies that we
currently expect are cross-selling opportunities to our existing customers, network synergies and other operational synergies.
Our estimated synergies from the acquisitions that we have undertaken are subject to a number of assumptions about the timing,
execution and costs associated with realizing such synergies. Such assumptions are inherently uncertain and are subject to a
wide variety of significant business, economic and competition risks and uncertainties. There can be no assurance that such
assumptions turn out to be correct and, as a result, the amount of synergies that we will actually realize and/or the timing of any
such realization may differ significantly (and may be significantly lower) from the ones that we currently estimate and we may
incur significant costs in reaching the estimated synergies.

We may not successfully manage our growth.

We have grown rapidly and substantially over prior years, including by expanding our internal resources, making acquisitions,
in particular in 2015, and entering into new markets, and we intend to continue to focus on rapid growth, primarily organically
in 2017. We may experience difficulties and higher-than-expected expenses in executing this strategy as a result of unfamiliarity
with new markets, changes in revenue and business models and entering into new geographic areas.

Our growth will place a significant strain on our management, operational and financial resources. We will need to continually
improve existing procedures and controls as well as implement new transaction processing, operational and financial systems,

and procedures and controls to expand, train and manage our employee base. Our working capital needs will continue to
increase as our operations grow. Failure to manage our growth effectively, or obtain necessary working capital, could have a
material adverse effect on our business, results of operations, cash flows, stock price and financial condition.

Our business will be seriously harmed if we fail to develop, implement, maintain, upgrade, enhance, protect and integrate
our information technology systems.

We rely heavily on our information technology systems to efficiently run our business, and they are a key component of our
growth strategy. In general, we expect our customers to continue to demand more sophisticated, fully integrated information
systems from their transportation providers. To keep pace with changing technologies and customer demands, we must
correctly interpret and address market trends and enhance the features and functionality of our proprietary technology platform
in response to these trends. This process of continuous enhancement may lead to significant ongoing software development
costs. In addition, we may fail to accurately determine the needs of our customers or the trends in the transportation services
industry or we may fail to design and implement the appropriate responsive features and functionality for our technology
platform in a timely and cost-effective manner. Any such failures could result in decreased demand for our services and a
corresponding decrease in our revenues.

Despite testing, external and internal risks, such as malware, insecure coding, “Acts of God,” data leakage and human error
pose a direct threat to the stability or effectiveness of our information technology systems and operations. We may also be
subject to cybersecurity attacks and other intentional hacking. Any failure to identify and address such defects or errors or
prevent a cyber-attack could result in service interruptions, operational difficulties, loss of revenues or market share, liability to
our customers or others, the diversion of corporate resources, injury to our reputation and increased service and maintenance
costs. Addressing such issues could prove to be impossible or very costly and responding to resulting claims or liability could
similarly involve substantial cost. In addition, recently, there has also been heightened regulatory and enforcement focus on
data protection in the U.S. and abroad (particularly in the European Union), and failure to comply with applicable U.S. or
foreign data protection regulations or other data protection standards may expose us to litigation, fines, sanctions or other
penalties, which could harm our reputation and adversely impact our business, results of operations and financial condition.

We must maintain and enhance the reliability and speed of our information technology systems to remain competitive and
effectively handle higher volumes of freight through our network and the various service modes we offer. If our information
technology systems are unable to manage additional volume for our operations as our business grows, or if such systems are not
suited to manage the various service modes we offer, our service levels and operating efficiency could decline. In addition, if
we fail to hire and retain qualified personnel to implement, protect and maintain our information technology systems or if we
fail to upgrade our systems to meet our customers’ demands, our business and results of operations could be seriously harmed.
This could result in a loss of customers or a decline in the volume of freight we receive from customers.

We are developing proprietary information technology for all of our business segments. Our technology may not be successful
or may not achieve the desired results and we may require additional training or different personnel to successfully implement
this technology. Our technology development process may be subject to cost overruns or delays in obtaining the expected
results, which may result in disruptions to our operations.

Our substantial indebtedness could adversely affect our financial condition.

We have substantial outstanding indebtedness, which could:

•

negatively affect our ability to pay principal and interest on our debt or dividends on our Series A Preferred Stock;

increase our vulnerability to general adverse economic and industry conditions;

limit our ability to fund future capital expenditures and working capital, to engage in future acquisitions or
development activities, or to otherwise realize the value of our assets and opportunities fully because of the need to
dedicate a substantial portion of our cash flow from operations to payments of interest and principal or to comply with
any restrictive terms of our debt;

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

impair our ability to obtain additional financing or to refinance our indebtedness in the future; and

place us at a competitive disadvantage compared to our competitors that may have proportionately less debt.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially
reasonable terms or at all, could materially and adversely affect our financial position and results of operations. Further, failure
to comply with the covenants under our indebtedness may have a material adverse impact on our operations. If we fail to
comply with the covenants under any of our indebtedness, and are unable to obtain a waiver or amendment, such failure may
result in an event of default under our indebtedness. We may not have sufficient liquidity to repay or refinance our indebtedness
if such indebtedness were accelerated upon an event of default.

Under the terms of our outstanding indebtedness, we may not be able to incur substantial additional indebtedness in the future,
which could further exacerbate the risks described above.

The execution of our strategy could depend on our ability to raise capital in the future, and our inability to do so could
prevent us from achieving our growth objectives.

We may in the future be required to raise capital through public or private financing or other arrangements in order to pursue
our growth strategy or operate our businesses. Such financing may not be available on acceptable terms, or at all, and our
failure to raise capital when needed could harm our business or ability to execute our strategy. Further debt financing may
involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be
able to grow our business or respond to competitive pressures.

We depend on third-parties in the operation of our business.

In our global forwarding, last mile and freight brokerage operations, we do not own or control the transportation assets that
deliver our customers’ freight, and we do not employ the people directly involved in delivering this freight. In addition, in our
freight brokerage businesses (particularly our last mile delivery logistics operations, our over-the-road expedite operations and
our intermodal drayage operations), we engage independent contractors who own and operate their own equipment.
Accordingly, we are dependent on third-parties to provide truck, rail, ocean, air and other transportation services and to report
certain events to us, including delivery information and cargo claims. This reliance on third-parties could cause delays in
reporting certain events, including our ability to recognize revenue and claims in a timely manner.

Our inability to maintain positive relationships with independent transportation providers could significantly limit our ability to
serve our customers on competitive terms. If we are unable to secure sufficient equipment or other transportation services to
meet our commitments to our customers or provide our services on competitive terms, our operating results could be materially
and adversely affected and our customers could shift their business to our competitors temporarily or permanently. Our ability
to secure sufficient equipment or other transportation services to meet our commitments to our customers or provide our
services on competitive terms is subject to inherent risks, many of which are beyond our control, including the following:

• Equipment shortages in the transportation industry, particularly among contracted truckload carriers and railroads;

•

Interruptions in service or stoppages in transportation as a result of labor disputes, seaport strikes, network congestion,
weather-related issues, “Acts of God,” or acts of terrorism;

• Changes in regulations impacting transportation;

•

Increases in operating expenses for carriers, such as fuel costs, insurance premiums and licensing expenses, that result
in a reduction in available carriers; and

• Changes in transportation rates.

Increases in driver compensation and difficulties attracting and retaining drivers could adversely affect our revenues and
profitability.

Our LTL and full truckload operations are conducted primarily with employee drivers. Recently, there has been intense
competition for qualified drivers in the transportation industry due to a shortage of drivers. The availability of qualified drivers
may be affected from time to time by changing workforce demographics, competition from other transportation companies and
industries for employees, the availability and affordability of driver training schools, changing industry regulations, and the
demand for drivers in the labor market. If the industry-wide shortage of qualified drivers continues, these business lines will
likely continue to experience difficulty in attracting and retaining enough qualified drivers to fully satisfy customer demands.
As a result of the current highly-competitive labor market for drivers, our LTL and full truckload operations may be required to
increase driver compensation and benefits in the future, or face difficulty meeting customer demands, all of which could
adversely affect our profitability. Additionally, a shortage of drivers could result in the underutilization of our truck fleet, lost
revenue, increased costs for purchased transportation or increased costs for driver recruitment.

Increases in independent contractor driver compensation or other difficulties attracting and retaining qualified independent
contractor drivers could adversely affect our profitability and ability to maintain or grow our independent contractor driver
fleet.

Our freight brokerage business operate through fleets of vehicles that are owned and operated by independent contractors. Our
last mile business also operates through a fleet of independent contract carriers that supply their own vehicles, drivers and
helpers. These independent contractors are responsible for maintaining and operating their own equipment and paying their own
fuel, insurance, licenses and other operating costs. Turnover and bankruptcy among independent contractor drivers often limit
the pool of qualified independent contractor drivers and increase competition for their services. In addition, regulations such as
the FMCSA Compliance Safety Accountability program may further reduce the pool of qualified independent contractor

drivers. Thus, our continued reliance on independent contractor drivers could limit our ability to grow our ground transportation
fleet.

We are currently experiencing, and expect to continue to experience from time to time in the future, difficulty in attracting and
retaining sufficient numbers of qualified independent contractor drivers. Additionally, our agreements with independent
contractor drivers are terminable by either party upon short notice and without penalty. Consequently, we regularly need to
recruit new qualified independent contractor drivers to replace those who have left our fleet. If we are unable to retain our
existing independent contractor drivers or recruit new independent contractor drivers, our business and results of operations
could be adversely affected.

The compensation we offer our independent contractor drivers is subject to market conditions and we may find it necessary to
continue to increase independent contractor drivers’ compensation in future periods. If we are unable to continue to attract and
retain a sufficient number of independent contractor drivers, we could be required to increase our mileage rates and accessorial
pay or operate with fewer trucks and face difficulty meeting shipper demands, all of which would adversely affect our
profitability and ability to maintain our size or to pursue our growth strategy.

Our business may be materially adversely affected by labor disputes.

Our business in the past has been and in the future could be adversely affected by strikes and labor renegotiations affecting
seaports, labor disputes between railroads and their union employees, or by a work stoppage at one or more railroads or local
trucking companies servicing rail or port terminals, including work disruptions involving owner operators under contract with
our local trucking operations. Port shutdowns and similar disruptions to major points in national or international transportation
networks, most of which are beyond our control, could result in terminal embargoes, disrupt equipment and freight flows,
depress volumes and revenues, increase costs and have other negative effects on our operations and financial results.

Labor disputes involving our customers could affect our operations. If our customers are unable to negotiate new labor
contracts and our clients’ plants experience slowdowns or closures as a result, our revenue and profitability could be negatively
impacted. In particular, our Logistics segment derives a substantial portion of its revenue from the operation and management
of operating facilities, which are often located in close proximity to a client’s manufacturing plant and are integrated into the
client’s production line process. We may experience significant revenue loss and shut-down costs, including costs related to
early termination of leases, causing our business to suffer if clients suffer strikes or other labor disputes, close their plants or
significantly modify their capacity or supply chains at a plant that our Logistics segment services.

XPO Logistics Europe’s business activities require a significant amount of labor, which represents one of its most significant
costs, and it is essential that we maintain good relations with employees, trade unions and other staff representative institutions.
A deteriorating economic environment may result in tensions in industrial relations, which may lead to industrial action within
our European operations that could have a direct impact on customer services. Generally, any deterioration in industrial
relations in our European operations could have an adverse effect on our revenues, earnings, financial position, and outlook.

Efforts by labor organizations to organize employees at certain locations in North America, if successful, may result in
increased costs and decreased efficiencies at those locations.

Since 2014, in the United States, the International Brotherhood of Teamsters (“Teamsters”) has attempted to organize
employees at several LTL locations and one supply chain location that have become part of the Company’s operations through
acquisitions. Additionally, the International Association of Machinists (“Machinists”) has attempted to organize a small number
of mechanics at two LTL maintenance shops. The majority of employees involved in those organizing efforts rejected union
representation. As of January 31, 2017, approximately 124 employees at two LTL locations and approximately 125 employees
at one supply chain location have voted for Teamsters representation, and the results of those three elections have been certified
by the National Labor Relations Board. At one LTL location, the parties have been in negotiations for an initial contract since
February 2015. At the remaining locations, the parties will soon start negotiations. In addition, as of January 31, 2017, an
aggregate of approximately 225 employees at three additional LTL locations voted for Teamsters representation, and
approximately 11 employees at one LTL location voted for Machinists representation. We are contesting the results of these
four elections. We cannot predict with certainty whether further organizing efforts may result in the unionization of any
additional locations domestically. If successful, these efforts may result in increased costs and decreased efficiencies at the
specific locations where representation is elected. We do not expect the impact, if any, to extend to our larger organization or
the service of our customer base.

Certain of our businesses rely on owner-operators and contract carriers to conduct their operations, and the status of these
parties as independent contractors, rather than employees, is being challenged.

We are involved in numerous lawsuits, including putative class action lawsuits, multi-plaintiff and individual lawsuits, and state
tax and other administrative proceedings that claim that our contract carriers or owner-operators or their drivers should be
treated as our employees, rather than independent contractors, or that certain of our drivers were not paid for all compensable

time or were not provided with required meal or rest breaks. These lawsuits and proceedings may seek substantial monetary
damages (including claims for unpaid wages, overtime, failure to provide meal and rest periods, unreimbursed business
expenses and other items), injunctive relief, or both. In addition, we incur certain costs, including legal fees, in defending the
status of these parties as independent contractors.

While we believe that our contract carriers and owner-operators and their drivers are properly classified as independent
contractors rather than as employees, adverse decisions have been rendered recently in certain cases pending against us,
including with respect to class certification of certain contract carriers and determinations that certain of our contract carriers
and owner-operators are improperly classified. Certain of these decisions are subject to appeal, but we cannot provide assurance
that we will determine to pursue any appeal or that any such appeal will be successful. Adverse final outcomes in these matters
could, among other things, entitle certain of our contract carriers and owner-operators and their drivers to reimbursement with
respect to certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit
liability for us, and could result in changes to the independent contractor status of our contract carriers and owner-operators.
Changes to state laws governing the definition of independent contractors could also impact the status of our contract carriers
and owner-operators. Adverse final outcomes in these matters or changes to state laws could cause us to change our business
model, which could have a material adverse effect on our business strategies, financial condition, results of operations or cash
flows. These claims involve potentially significant classes that could involve thousands of claimants and, accordingly,
significant potential damages and litigation costs, and could lead others to bring similar claims.

The results of these matters cannot be predicted with certainty and an unfavorable resolution of one or more of these matters, or
our failure to recover, in full or in part, under the indemnity provisions noted above, could have a material adverse effect on our
financial condition, results of operations or cash flows.

Our overseas operations subject us to various operational and financial risks which could adversely affect our business.

The services we provide outside of the United States subject us to risks resulting from changes in tariffs, trade restrictions, trade
agreements, tax policies, difficulties in managing or overseeing foreign operations and agents, different liability standards,
issues related to compliance with anti-corruption laws such as the Foreign Corrupt Practices Act and the U.K. Bribery Act, data
protection, trade compliance, and intellectual property laws of countries which do not protect our rights in our intellectual
property, including our proprietary information systems, to the same extent as the laws of the United States. The occurrence or
consequences of any of these factors may restrict our ability to operate in the affected region and/or decrease the profitability of
our operations in that region. As we expand our business in foreign countries, we will also be exposed to increased risk of loss
from foreign currency fluctuations and exchange controls.

Our European business heavily relies on subcontracting and we use a large number of temporary employees in these
operations. Any failure to properly manage our subcontractors or temporary employees in Europe could have a material
adverse impact on XPO Logistics Europe’s revenues, earnings, financial position and outlook.

We operate in Europe through our majority-owned subsidiary, XPO Logistics Europe SA. Subcontracting plays a key role in
our European operations and we subcontract approximately 40% of our transport operations in the region. As a result, we are
exposed to various risks related to managing our subcontractors, such as the risk that they do not fulfill their assignments in a
satisfactory manner or within the specified deadlines. Such failures could compromise our ability to fulfill our commitments to
our customers, comply with applicable regulations or otherwise meet our customers’ expectations. In some situations, the poor
execution of services by our subcontractors could result in a customer terminating a contract. Such failures by our
subcontractors could harm our reputation and ability to win new business and could lead to our being liable for contractual
damages. Furthermore, in the event of a failure by our subcontractors to fulfill their assignments in a satisfactory manner, we
could be required to perform unplanned work or additional services in line with the contracted service, without receiving any
additional compensation. Lastly, some of our subcontractors in Europe may not be insured, or may not have sufficient resources
available to handle any claims from customers resulting from potential damage and losses relating to their performance of
services on our behalf. As a result, the non-compliance by our subcontractors with their contractual or legal obligations may
have a material adverse effect on our business and financial condition.

XPO Logistics Europe also makes significant use of temporary staff. We cannot guarantee that temporary employees are as
well-trained as our other employees. Specifically, we may be exposed to the risk that temporary employees may not perform
their assignments in a satisfactory manner or may not comply with our safety rules in an appropriate manner, whether as a result
of their lack of experience or otherwise. If such risks materialize, they could have a material adverse effect on our business and
financial condition.

We are involved in multiple lawsuits and are subject to various claims that could result in significant expenditures and
impact our operations.

The nature of our business exposes us to the potential for various types of claims and litigation. In addition to the matters
described in the risk factor “Certain of our businesses rely on owner-operators and contract carriers to conduct their operations,

and the status of these parties as independent contractors, rather than employees, is being challenged,” we are subject to claims
and litigation related to labor and employment, personal injury, traffic accidents, cargo and other property damage, business
practices, environmental liability and other matters, including with respect to claims asserted under various theories of agency
and employer liability notwithstanding our independent contractor relationships with our transportation providers. Claims
against us may exceed the amount of insurance coverage that we have, or may not be covered by insurance at all. Businesses
that we acquire also increase our exposure to litigation. A material increase in the frequency or severity of accidents, liability
claims, or workers’ compensation claims, or the unfavorable resolution of claims, or our failure to recover, in full or in part,
under indemnity provisions with transportation providers could materially and adversely affect our operating results. In
addition, significant increases in insurance costs or the inability to purchase insurance as a result of these claims could reduce
our profitability.

An increase in the number and/or severity of self-insured claims or an increase in insurance premiums could have an
adverse effect on us.

We use a combination of self-insurance programs and large-deductible purchased insurance to provide for the costs of employee
medical, vehicular, cargo and workers' compensation claims. Our estimated liability for self-retained insurance claims reflects
certain actuarial assumptions and judgments, which are subject to a high degree of variability. We periodically evaluate the
level of insurance coverage and adjust insurance levels based on targeted risk tolerance and premium expense. An increase in
the number and/or severity of self-insured claims or an increase in insurance premiums could have an adverse effect on us.

We expect costs associated with providing benefits under employee medical plans and postretirement medical plans to increase
due to health care reform legislation. Changes made to the design of our medical plans have the potential to mitigate some of
the cost impact of the provisions included in the legislation. Ultimately, the cost of providing benefits under our medical plans
is dependent on a variety of factors, including governmental laws and regulations, health care cost trends, claims experience
and health care decisions by plan participants. As a result, we are unable to predict how the cost of providing benefits under
medical plans will affect our financial condition, results of operations or cash flows.

We are subject to risks associated with defined benefit plans for our current and former employees, which could have a
material adverse effect on our earnings and financial position.

Following our acquisitions of ND and Con-way, we now maintain defined benefit pension plans and a postretirement medical
plan. Our defined benefit pension plans include funded and unfunded plans in the United States and the United Kingdom. A
decline in interest rates and/or lower returns on funded plan assets may cause increases in the expense and funding requirements
for these defined benefit pension plans and for our postretirement medical plan. Despite past amendments that froze our defined
benefit pension plans to new participants and curtailed benefits, these pension plans remain subject to volatility associated with
interest rates, inflation, returns on plan assets, other actuarial assumptions and statutory funding requirements. In addition to
being subject to volatility associated with interest rates, our postretirement medical plan remains subject to volatility associated
with actuarial assumptions and trends in healthcare costs. Any of the aforementioned factors could lead to a significant increase
in the expense of these plans and a deterioration in the solvency of these plans, which could significantly increase the
Company’s contribution requirements. As a result, we are unable to predict the effect on our financial statements associated
with our defined benefit pension plans and our postretirement medical plan.

Because of our floating rate credit facilities, we may be adversely affected by interest rate changes.

Both the Second Amended and Restated Revolving Loan Credit Agreement (the “ABL Facility”) and the senior secured term
loan credit agreement (the “Term Loan Facility”) provide for an interest rate based on LIBOR or a Base Rate, as defined in the
agreements, plus an applicable margin. Our financial position may be affected by fluctuations in interest rates since the ABL
Facility and Term Loan Facility are subject to floating interest rates. Refer to Item 7A. Quantitative and Qualitative
Disclosures about Market Risk for the impact on interest expense of a hypothetical 100-basis-point increase in the interest
rate. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international
economic and political conditions and other factors beyond our control. A significant increase in interest rates could have an
adverse effect on our financial position and results of operations.

We are exposed to currency exchange rate fluctuations because a significant proportion of our assets, liabilities and
earnings are denominated in foreign currencies.

We present our financial statements in U.S. dollars but we have a significant proportion of our net assets and income in non-
U.S. dollar currencies, primarily the euro and pounds sterling (“GBP”). Consequently, a depreciation of non-U.S. dollar
currencies relative to the U.S. dollar could have an adverse impact on our financial results as further discussed below under
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

The economic uncertainties relating to eurozone monetary policies may cause the value of the euro to fluctuate against other
currencies. Currency volatility contributes to variations in our sales of products and services in impacted jurisdictions. For
example, in the event that one or more European countries were to replace the euro with another currency, our sales into such

countries, or in Europe generally, would likely be adversely affected until stable exchange rates are established. Accordingly,
fluctuations in currency exchange rates could adversely affect our business and financial condition and the business of the
combined company.

The United Kingdom’s expected exit from the European Union could have a material adverse effect on our business and
results of operations.

Following a referendum in June 2016 in which voters in the United Kingdom (“U.K.”) approved an exit from the European
Union (“EU”), it is expected that the U.K. government will initiate a process to leave the EU (often referred to as “Brexit”) and
begin negotiating the terms of the U.K.’s future relationship with the EU. The likely exit of the U.K. from the EU will have
uncertain impacts on our transportation and logistics operations in Europe. In 2016, we derived approximately 36% of our
revenue in Europe, including 12% in the U.K. Any adverse consequences of Brexit, such as a deterioration in the U.K.'s and/or
EU's economic condition, currency exchange rates, bilateral trade agreements or regulation of trade, including the potential
imposition of tariffs, could reduce demand for our services in the U.K. and/or the EU, or otherwise have a negative impact on
our operations, financial condition and results of operations.

We may not be able to successfully execute our growth strategy through acquisitions.

We may continue to expand through acquisitions to take advantage of market opportunities we perceive in the transportation
and logistics markets, as well as new markets that we may enter. However, if we choose to make acquisitions in the future, we
may experience delays or be unable to make the acquisitions we desire for a number of reasons. Suitable acquisition candidates
may not be available at purchase prices that are attractive to us or on terms that are acceptable to us. In pursuing acquisition
opportunities, we will compete with other companies, some of which have greater financial and other resources than we do.

We are unable to predict the size, timing and number of acquisitions we may complete. In addition, we may incur expenses
associated with sourcing, evaluating and negotiating acquisitions (including those that are not completed), and we also may pay
fees and expenses associated with obtaining financing for acquisitions and with investment banks and others finding
acquisitions for us. Any of these amounts may be substantial, and together with the size, timing and number of acquisitions we
pursue, may negatively impact us and cause significant volatility in our financial results.

Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our
common stock.

We may fund any future acquisitions or our capital requirements from time to time, in whole or part, through sales or issuances
of our common stock or equity-based securities, subject to prevailing market conditions and our financing needs. Future equity
financing will dilute the interests of our then-existing stockholders, and future sales or issuances of a substantial number of
shares of our common stock or other equity-related securities may adversely affect the market price of our common stock.

We do not own, and may not acquire, all of the outstanding shares of XPO Logistics Europe SA, the majority-owned
subsidiary through which we conduct our European operations.

We currently own 86.25% of the outstanding shares of XPO Logistics Europe, the majority-owned subsidiary through which we
conduct our European operations. We may not acquire the remaining shares of XPO Logistics Europe. French law only permits
“squeeze out” mergers when a holder owns more than 95% of the outstanding shares. If we do not wholly-own XPO Logistics
Europe, we will not have access to all of its cash flow to service our debt, as we will only receive a prorated portion of any
dividend based on our ownership percentage. In addition, we will be subject to limitations on our ability to enter into
transactions with XPO Logistics Europe that are not on arms-length terms, which could limit synergies that we could otherwise
achieve between our North American and European operations. We also may not be able to consolidate XPO Logistics Europe
for tax purposes, and XPO Logistics Europe would be forced to continue as a listed public company in France, thereby
incurring certain recurring costs.

Volatility in fuel prices impacts our fuel surcharge revenues and may impact our profitability.

We are subject to risks associated with the availability and price of fuel, which are subject to political, economic and market
factors that are outside of our control.

Fuel expense constitutes one of the greatest costs to our LTL and full truckload carrier operations, as well as to our fleet of
independent contractor drivers and third-party transportation providers who complete the physical movement of freight
arranged by our other business operations. Accordingly, we may be adversely affected by the timing and degree of fluctuations
and volatility in fuel prices. As is customary in our industry, most of our customer contracts include fuel-surcharge revenue
programs or cost-recovery mechanisms to mitigate the effect of the fuel price increase over base amounts established in the
contract. However, these fuel surcharge mechanisms may not capture the entire amount of the increase in fuel prices, and they
also feature a lag between the payment for fuel and collection of the surcharge revenue. Market pressures may limit our ability
to assess fuel surcharges in the future. The extent to which we are able to recover in full for fuel cost changes may also vary

depending on the degree to which we are not compensated due to empty and out-of-route miles or from engine idling during
cold or warm weather.

Decreases in fuel prices reduce the cost of transportation services and accordingly, will reduce our revenues and may reduce
margins for certain lines of business. Significant changes in the price or availability of fuel in future periods, or significant
changes in our ability to mitigate fuel price increases through the use of fuel surcharges, could have a material adverse impact
on our operations, fleet capacity and ability to generate both revenues and profits.

Issues related to the intellectual property rights on which our business depends, whether related to our failure to enforce our
own rights or infringement claims brought by others, could have a material adverse effect on our business, financial
condition and results of operations.

We use both internally developed and purchased technology in conducting our business. Whether internally developed or
purchased, it is possible that the user of these technologies could be claimed to infringe upon or violate the intellectual property
rights of third parties. In the event that a claim is made against us by a third party for the infringement of intellectual property
rights, any settlement or adverse judgment against us either in the form of increased costs of licensing or a cease and desist
order in using the technology could have an adverse effect on us and our results of operation.

We also rely on a combination of intellectual property rights, including copyrights, trademarks, domain names, trade secrets,
intellectual property licenses and other contractual rights, to establish and protect our intellectual property and technology. Any
of our owned or licensed intellectual property rights could be challenged, invalidated, circumvented, infringed or
misappropriated; our trade secrets and other confidential information could be disclosed in an unauthorized manner to third-
parties or we may fail to secure the rights to intellectual property developed by our employees, contractors and others. Efforts to
enforce our intellectual property rights may be time consuming and costly, distract management’s attention and resources and
ultimately be unsuccessful. Moreover, our failure to develop and properly manage new intellectual property could adversely
affect our market positions and business opportunities.

Our failure to obtain, maintain and enforce our intellectual property rights could therefore have a material adverse effect on our
business, financial condition and results of operations.

We are subject to regulation, which could negatively impact our business.

Our operations are regulated and licensed by various governmental agencies in the United States and in foreign countries in
which we operate. These regulatory agencies have authority and oversight of domestic and international transportation services
and related activities, licensure, motor carrier operations, safety and security and other matters. We must comply with various
insurance and surety bond requirements to act in the capacities for which we are licensed. Our subsidiaries and independent
contractors must also comply with applicable regulations and requirements of various agencies. Through our subsidiaries and
business units, we hold various licenses required to carry out our domestic and international services. These licenses permit us
to provide services as a motor carrier, property broker, indirect air carrier, OTI, NVOCC, freight forwarder, air freight
forwarder, and ocean freight forwarder. We also are subject to regulations and requirements promulgated by, among others, the
DOT, FMCSA, DHS, CBP, TSA, FMC, IATA, the Canada Border Services Agency and various other international, domestic,
state, and local agencies and port authorities. Certain of our businesses engage in the transportation of hazardous materials,
which subjects us to regulations with respect to transportation of such materials and environmental regulations in the case of
any accidents that occur during the transportation of materials and result in discharge of such materials. Our failure to maintain
our required licenses, or to comply with applicable regulations, could have a material adverse impact on our business and
results of operations. See the “Regulation” section of this Annual Report on Form 10-K under the caption entitled “Business”
for more information.

Future laws and regulations may be more stringent and require changes in our operating practices that influence the demand for
transportation services or require us to incur significant additional costs. We are unable to predict the impact that recently
enacted and future regulations may have on our businesses. Higher costs incurred by us, or incurred by our independent
contractors or third-party transportation providers who pass the increased costs on to us, as a result of future new regulations
could adversely affect our results of operations to the extent we are unable to obtain a corresponding increase in price from our
customers.

Failure to comply with trade compliance laws and regulations applicable to our operations may subject us to liability and
result in mandatory or voluntary disclosures to government agencies of transactions or dealings involving sanctioned
countries, entities or individuals.

As a result of our acquisition activities, we acquired companies with business operations outside the U.S., some of which were
not previously subject to certain U.S. laws and regulations, including trade sanctions administered by the U.S. Department of
Treasury, Office of Foreign Assets Control (“OFAC”). In the course of implementing our compliance processes with respect to
the operations of these acquired companies, we have identified a number of transactions or dealings involving countries and
entities that are subject to U.S. economic sanctions. As disclosed in our Quarterly Reports on Form 10-Q for the periods ended

June 30, 2016, and September 30, 2016, we filed initial voluntary disclosure of such matters with OFAC in August 2016. We
are continuing to investigate and intend to cooperate with regulatory authorities regarding these matters and to file a full report
with OFAC when our investigation is complete. As we investigate, we may identify additional transactions or dealings
involving sanctioned countries, entities, or individuals. The transactions or dealings that we have identified to date, or other
transactions or dealings that we may identify in the future, could result in negative consequences to us, including government
investigations, penalties and reputational harm.

Our Chairman and Chief Executive Officer controls a large portion of our stock and has substantial control over us, which
could limit other stockholders’ ability to influence the outcome of key transactions, including changes of control.

Under applicable SEC rules, our Chairman and Chief Executive Officer, Mr. Bradley S. Jacobs, beneficially owns
approximately 15% of our outstanding common stock as of December 31, 2016. This concentration of share ownership may
adversely affect the trading price for our common stock because investors may perceive disadvantages in owning stock in
companies with concentrated stockholders. Our preferred stock votes together with our common stock on an “as-converted”
basis on all matters, except as otherwise required by law, and separately as a class with respect to certain matters implicating the
rights of holders of shares of the preferred stock. Accordingly, Mr. Jacobs can exert substantial influence over our management
and affairs and matters requiring stockholder approval, including the election of directors and the approval of significant
corporate transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently, this
concentration of ownership may have the effect of delaying or preventing a change of control, including a merger,
consolidation, or other business combination involving us, or discouraging a potential acquirer from making a tender offer or
otherwise attempting to obtain control, even if that change of control would benefit our other stockholders. Additionally,
significant fluctuations in the levels of ownership of our largest stockholders, including shares beneficially owned by Mr.
Jacobs, could impact the volume of trading, liquidity and market price of our common stock.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

As of December 31, 2016, XPO and its subsidiaries operated approximately 1,425 locations, primarily in North America and
Europe, including approximately 200 locations owned or leased by our customers. These facilities are located in all 48 states of
the contiguous United States as well as globally.

We lease our current executive office located in Greenwich, Connecticut, as well as our national operations center in Charlotte,
North Carolina. As of December 31, 2016, we owned a shared-services center in Portland, Oregon and the facility at which we
conduct a portion of our expedited transportation operations in Buchanan, Michigan. In addition, we owned 142 freight service
centers for our LTL business and 42 properties throughout Europe. We believe that our facilities are sufficient for our current
needs and are in good condition in all material respects.

ITEM 3.

LEGAL PROCEEDINGS

We are involved, and will continue to be involved, in numerous legal proceedings arising out of the conduct of our business.
These proceedings may include, among other matters, claims for property damage or personal injury incurred in connection
with the transportation of freight, claims regarding anti-competitive practices, and employment-related claims, including claims
involving asserted breaches of employee restrictive covenants and tortious interference with contract. These proceedings also
include numerous purported class-action lawsuits, multi-plaintiff and individual lawsuits and state tax and other administrative
proceedings that claim either that our owner operators or contract carriers should be treated as employees, rather than
independent contractors, or that certain of our drivers were not paid for all compensable time or were not provided with
required meal or rest breaks. We are currently engaged in several alleged independent contractor misclassification claims or
other wage and hour claims involving certain companies that we have acquired in our last mile, LTL, and intermodal
businesses. These lawsuits and proceedings may seek substantial monetary damages (including claims for unpaid wages,
overtime, failure to provide meal and rest periods, unreimbursed business expenses and other items), injunctive relief, or both.
For additional information about these matters, please refer to Note 5—Commitments and Contingencies of Item 8,
“Financial Statements and Supplementary Data.”

We do not believe that the ultimate resolution of any matters to which we are presently party will have a material adverse effect
on our results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with
certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our financial
condition, results of operations or cash flows.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.
ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

Price Range of Common Stock

Our common stock is listed on the NYSE under the symbol “XPO.” The table below provides the high and low closing sales
prices for our common stock for the quarters included within 2016 and 2015.

High

Low

High

Low

2016

First

Second

Third

Fourth

32.01

33.89

37.22

19.56

23.30

24.43

49.35

32.17

2015

First

Second

Third

Fourth

47.26

50.56

46.74

35.57

41.58

21.62

33.50

25.04

As of February 21, 2017, there were approximately 219 record holders of our common stock, based upon data available to us
from our transfer agent. We have never paid, and have no immediate plans to pay, cash dividends on our common stock. We
currently plan to retain future earnings, if any, for use in the development of our business and to enhance stockholder value
through growth and continued focus on improving profitability. In addition, our current credit agreement imposes, and we
expect that any future credit agreement we enter into will impose, restrictions on our ability to pay cash dividends on our
common stock. Accordingly, we do not anticipate paying any cash dividends on our common stock in the near future.

The graph below compares the cumulative 5-year total return of holders of our common stock with the cumulative total returns
of the Russell 2000 Index and the Dow Jones Transportation Average Index. The graph tracks the performance of a $100
investment in our common stock and in each index from December 31, 2011 to December 31, 2016.

XPO Logistics, Inc.
Russell 2000
Dow Jones Transportation Average

12/31/11

12/31/12

12/31/13

12/31/14

12/31/15

12/31/16

$
$
$

100
100
100

$
$
$

141
115
106

$
$
$

213
157
147

$
$
$

331
163
182

$
$
$

221
153
150

$
$
$

349
183
180

Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended December 31, 2016, the Company issued an aggregate of 2,734 shares of its common stock, par value
$0.001 per share, to certain holders of the Company’s 4.50% Convertible Senior Notes due October 1, 2017 (the “Convertible
Senior Notes”) in connection with the conversion of $45,000 aggregate principal amount of the Convertible Senior Notes. The
number of shares of our common stock issued in the foregoing transactions equals the number of shares of our common stock
presently issuable to holders of the Convertible Senior Notes upon conversion under the original terms of the Convertible
Senior Notes. During the quarter ended December 31, 2016, pursuant to the Investment Agreement dated as of June 13, 2011
(the “Investment Agreement”), by and among Jacobs Private Equity, LLC (“JPE”), and the other investors party thereto
(collectively with JPE, the “Investors”), the Company issued 96,468 unregistered shares of its common stock as a result of the
cashless exercise of warrants by a shareholder. The issuance of these shares was exempt from the registration requirements of
the Securities Act of 1933, as amended, in accordance with Section 4(a)(2) thereof, as a transaction by an issuer not involving
any public offering. The Company did not receive any proceeds from the above transactions.

ITEM 6.

SELECTED FINANCIAL DATA

This table includes selected financial data for the last five years. This financial data should be read together with our
Consolidated Financial Statements and related notes, Management’s Discussion and Analysis of Financial Condition and
Results of Operations, and other financial data appearing elsewhere in this Annual Report.

(In millions, except per share data)
Operating Results:
Revenue

Operating income (loss)

Income (loss) before income taxes

Net income (loss)

Net income (loss) attributable to common
shareholders
Per Share Data:

Basic earnings (loss) per share

Diluted earnings (loss) per share

Weighted-average common shares outstanding

Basic

Diluted

Financial Position:
Property and equipment, net

Total assets

Long-term debt, less current portion
Preferred stock

Total equity

2016

2015

2014

2013

2012

Year Ended December 31,

$ 14,619.4

488.1

106.8

84.5

7,623.2
(28.6)
(282.5)
(191.6)

2,356.6
(40.9)
(89.7)
(63.6)

702.3
(52.3)
(71.0)
(48.5)

278.6
(28.0)
(31.5)
(20.3)

63.1

(245.9)

(107.4)

(51.5)

(23.3)

0.57

0.53

(2.65) $
(2.65) $

(2.00) $
(2.00)

(2.26) $
(2.26)

(1.49)
(1.49)

110.2

122.8

92.8

53.6

2,537.4

2,852.2

$ 11,698.4

$ 12,643.2

$
$

4,731.5
41.6

3,037.6

$
$

5,272.6
42.0

3,060.8

$
$

221.9

2,749.4

580.3
42.2

1,655.1

$
$

22.8

56.6

777.1

178.6
42.7

455.9

$
$

15.7

13.1

409.3

105.1
42.8

245.1

Net income (loss) attributable to XPO for the years ended December 31, 2015 and December 31, 2014 reflect beneficial
conversion charges of $52.0 million on the Series C Preferred Stock and $40.9 million on the Series B Preferred Stock,
respectively, that were recorded as deemed distributions during the third quarter of 2015 and the fourth quarter of 2014,
respectively.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The Company is organized into two reportable segments: Transportation and Logistics. The Transportation segment provides
freight brokerage, last mile, LTL, full truckload, and global forwarding services. The Logistics segment provides a range of
contract logistics services, including highly engineered and customized solutions, value-added warehousing and distribution,
cold chain solutions and other inventory solutions.

The Company's Chief Executive Officer, who is the chief operating decision maker (“CODM”), regularly reviews financial
information at the reporting segment level in order to make decisions about resources to be allocated to the segments and to
assess their performance. Segment results that are reported to the CODM include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.

XPO Logistics, Inc.
Consolidated Summary Financial Table
For the Year Ended December 31,

(Dollars in millions)

Revenue

Cost of transportation and services

Direct operating expense

SG&A expense

Operating income (loss)

Other expense (income)

Foreign currency loss (gain)

Debt extinguishment loss

Interest expense

Income (loss) before income tax provision (benefit)

Income tax provision (benefit)

Net income (loss)

Consolidated Results

2016

2015

2014

2016

2015

2014

$ 14,619.4

$ 7,623.2

$ 2,356.6

100.0 %

Percent of Revenue

7,886.0

4,594.1

1,651.2

488.1

(9.2)

(40.3)

69.7

361.1

106.8

22.3

84.5

4,171.4

2,367.0

1,113.4

(28.6)

(7.6)

44.8

—

216.7

(282.5)

(90.9)

(191.6) $

1,701.8

273.2

422.5

(40.9)

0.4

—

48.0

(89.7)

(26.1)

(63.6)

53.9 %

31.4 %

11.3 %

3.4 %

(0.1)%

(0.3)%

0.5 %

2.5 %

0.8 %

0.2 %

0.6 %

54.7 %

31.0 %

14.6 %

(0.3)%

(0.1)%

0.6 %

— %

2.8 %

(3.6)%

(1.2)%

(2.4)%

72.2 %

11.6 %

17.9 %

(1.7)%

— %

2.0 %

(3.7)%

(1.1)%

(2.6)%

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Our consolidated revenue for 2016 increased 91.8% to $14,619.4 million from $7,623.2 million in 2015. This increase was
driven by the 2015 acquisitions of ND, Con-way, BTT and UX, as well as organic growth. On October 30, 2015, XPO acquired
Con-way Inc. (“Con-way”). Headquartered in Ann Arbor, Michigan, Con-way was a Fortune 500 company with a
transportation and logistics network of 582 locations and approximately 30,000 employees serving over 36,000 customers. On
June 8, 2015, XPO acquired a majority interest in Norbert Dentressangle SA (“ND”), a leading provider of transportation and
logistics services in Western Europe.

The increase in cost of transportation services of 89.0% from 2015 to 2016 was primarily the result of the acquisitions of ND,
Con-way and BTT. As a percentage of revenue, cost of transportation and services decreased to 53.9% in 2016 compared to
54.7% in 2015, primarily as a result of a shift in the mix of our business with a more significant component of our revenue
being attributable to the LTL and European transportation service offerings following the acquisitions of ND and Con-way. Cost
of transportation and services typically represents a lower percentage of revenue in these service offerings than in our legacy
asset-light transportation services. Cost of transportation and services is primarily attributable to the cost of providing or
procuring freight transportation services for XPO customers, salaries paid to employee drivers in our full truckload and LTL
businesses, and commissions paid to independent station owners in our global forwarding business.

Direct operating expense for 2016 was $4,594.1 million, or 31.4% as a percentage of revenue, compared to $2,367.0 million, or
31.0% as a percentage of revenue, for 2015. Direct operating expense increased primarily due to the acquisitions of ND and
Con-way and growth to support the last mile business. Direct operating expenses are both fixed and variable expenses and
consist of operating costs related to our contract logistics facilities, intermodal equipment lease expense, depreciation expense,
maintenance and repair costs, property taxes, operating costs of our local drayage and last mile warehousing facilities, the direct
costs related to the LTL service centers and European pallet network, such as direct labor, facilities and forklift trucks, and fixed
terminal and cargo handling expenses. Operating costs of our contract logistics facilities consist mainly of personnel costs,
facility and equipment expenses, materials and supplies, information technology expenses, depreciation expense and other
operating expenses related to our contract logistics facilities. Intermodal equipment maintenance and repair costs consist of the

costs related to the maintenance of the intermodal equipment fleet. Operating costs of our local drayage and last mile
warehousing facilities consist mainly of personnel costs, rent, maintenance, utilities and other facility related costs. Operating
costs of our LTL facilities consist mainly of personnel costs, rent and depreciation of service center equipment. Fixed terminal
and cargo handling costs primarily relate to the fixed rent and storage expense charged by terminal operators.

Sales, general and administrative expense (“SG&A”) increased to $1,651.2 million in 2016 from $1,113.4 million in 2015
primarily due to SG&A associated with acquisitions. SG&A as a percentage of revenue decreased to 11.3% in 2016 as
compared to 14.6% in 2015. The decrease is attributable to a reduction in acquisition-related costs, a change in the mix of the
Company's business operations resulting from the acquisition of Con-way, and the cost saving measures being implemented as
part of the integration of acquired businesses, particularly in our LTL service offering. SG&A consists of costs relating to
customer acquisition, carrier procurement, billing, customer service, salaries and related expenses of the executive and
administrative staff, acquisition-related costs, office expenses, technology services, professional fees and other purchased
services relating to the aforementioned functions, and depreciation and amortization expense.

Foreign currency gain was $40.3 million in 2016 compared to foreign currency loss of $44.8 million in 2015. The gain in 2016
was primarily due to a $39.7 million gain on unrealized foreign currency option and forward contracts. The loss in 2015 was
primarily due to $31.7 million foreign currency transaction and remeasurement losses on the cash held to purchase ND and a
$9.7 million loss on the forward contract related to the ND acquisition.

The debt extinguishment loss of $69.7 million in 2016 includes $35.2 million from the redemption of the Senior Notes due
2019, $18.0 million from the refinancing of the Term Loan, and $16.5 million from the repurchase of Term Loan debt.

Interest expense for 2016 increased 66.6% to $361.1 million from $216.7 million in 2015. The increase in interest expense was
primarily attributable to the increased indebtedness incurred by the Company in order to fund the 2015 acquisitions of Con-way
and ND. Average total indebtedness increased approximately 72% from 2015 to 2016, consistent with the increase in interest
expense.

Our effective income tax rates in 2016 and 2015 were 20.9% and 32.2%, respectively. The 2016 effective tax rate was lower
than the U.S. statutory tax rate primarily due to a revaluation of deferred tax liabilities resulting from an enacted tax law change
in France that lowers the statutory tax rate, a release of previously provided uncertain tax benefits due to a favorable non-U.S.
tax audit settlement, and the recognition of excess tax benefits in 2016. The 2015 effective tax rate was lower than the U.S.
statutory tax rate primarily due to a pretax book loss and changes in the geographic earnings mix. For both periods, the effective
income tax rates reflect the Company’s intention to permanently reinvest earnings of its foreign subsidiaries.

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Our consolidated revenue for 2015 increased 223.5% to $7,623.2 million from $2,356.6 million in 2014. This increase was
driven largely by the acquisitions ND, Con-way, BTT and UX and the inclusion of a full year of results from the 2014
acquisitions of New Breed Holding Company (“New Breed”) and Simply Logistics, Inc. d/b/a Atlantic Central Logistics
(“ACL”), as well as organic growth.

The increase in cost of transportation services of 145.1% from 2014 to 2015 was primarily the result of the acquisitions of ND,
Con-way and BTT. As a percentage of revenue, cost of transportation and services decreased to 54.7% in 2015 compared to
72.2% in 2014, primarily as a result of a shift in the mix of our business with a more significant component of our revenue
being attributable to our Logistics segment following the acquisitions of ND and Con-way. Cost of transportation and services
typically represents a substantially lower percentage of revenue in our Logistics segment than in our Transportation segment
due to the more limited proportional role of transportation services provided to our Logistics segment customers.

Direct operating expense for 2015 was $2,367.0 million, or 31.0% as a percentage of revenue, compared to $273.2 million, or
11.6% as a percentage of revenue, for 2014. Direct operating expense increased due to the acquisitions of ND and Con-way,
and the inclusion of a full year of New Breed’s results.

SG&A expense increased by $690.9 million in 2015 compared to 2014. As a percentage of revenue, SG&A expense decreased
to 14.6% in 2015 as compared to 17.9% in 2014. SG&A expense increased primarily due to SG&A expense associated with
new acquisitions and increased intangible amortization related to acquisitions.

Foreign currency loss increased to $44.8 million from $0.4 million in 2014. The increase was primarily due to $31.7 million
foreign currency transaction and remeasurement losses on the cash held to purchase ND and a $9.7 million loss on the forward
contract related to the ND acquisition.

Interest expense for 2015 increased 351.5% to $216.7 million from $48.0 million in 2014. The increase in interest expense was
primarily attributable to the increased indebtedness incurred by the Company in order to fund the 2015 acquisitions of Con-way
and ND.

Our effective income tax rates in 2015 and 2014 were 32.2% and 29.1%, respectively. The effective tax rates were influenced
by various non-deductible transaction costs and costs related to conversions of our convertible debt, the change in valuation

allowances, and the mix of income among the various jurisdictions in which the Company does business. For both periods, our
effective income tax rates reflect the Company’s intention and ability to permanently reinvest earnings of its foreign
subsidiaries.

(Dollars in millions)
Revenue

Cost of transportation and services

Direct operating expense

SG&A expense

Salaries & benefits

Other SG&A expense

Purchased services

Depreciation & amortization

Total SG&A expense

Operating income

Transportation
Summary Financial Table
For the Year Ended December 31,

2016

2015

2014

2016

2015

2014

$ 9,457.3

$ 4,924.4

$ 2,140.0

100.0%

Percent of Revenue

6,796.4

1,199.2

560.2

153.6

147.5

162.4

1,023.7

3,718.8

507.1

1,701.8

90.0

340.7

129.4

44.7

132.1

646.9

175.0

56.4

20.4

77.5

329.3

18.9

438.0

51.6

71.9%

12.7%

5.9%

1.6%

1.7%

10.8%

4.6%

75.5%

10.3%

6.9%

2.6%

0.9%

2.7%

13.1%

1.1%

79.5%

4.2%

8.2%

2.6%

1.0%

3.6%

15.4%

0.9%

Note: Total depreciation and amortization for the Transportation segment included in cost of transportation and services, direct
operating expense and SG&A was $449.1 million, $226.5 million and $79.5 million for the years ended December 31, 2016,
2015, and 2014, respectively.

Transportation

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Revenue in our Transportation segment increased by 92.0% to $9,457.3 million in 2016 compared to $4,924.4 million in 2015.
This increase was driven largely by the acquisitions of ND, Con-way, BTT and UX, as well as organic growth led by the last
mile business.

The increase in cost of transportation services of 82.8% from 2015 to 2016 was primarily the result of the acquisitions of ND,
Con-way and BTT. As a percentage of revenue, cost of transportation and services decreased to 71.9% in 2016 compared to
75.5% in 2015, primarily the result of lower relative cost of transportation and services within the total cost structure of the
acquired asset-based businesses.

Direct operating expense for 2016 was $1,199.2 million, or 12.7% as a percentage of revenue, compared to $507.1 million, or
10.3% as a percentage of revenue, for 2015. Direct operating expense and the related percentage of revenue increased primarily
due to the acquisitions of ND, Con-way, BTT and UX and growth to support the last mile business.

SG&A increased to $1,023.7 million in 2016 from $646.9 million in 2015. The increase in SG&A expense was primarily due to
the contribution of SG&A associated with new acquisitions and transaction and integration costs. As a percentage of revenue,
SG&A expense decreased to 10.8% in 2016 as compared to 13.1% in 2015 as a result of the cost saving measures being
implemented as part of the integration of acquired businesses, particularly in our LTL service offering.

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Revenue in our Transportation segment increased by 130.1% to $4,924.4 million in 2015 compared to $2,140.0 million in 2014.
This increase was driven largely by the acquisitions of ND, Con-way, BTT and UX, as well as organic growth.

The increase in cost of transportation services of 118.5% from 2014 to 2015 was primarily the result of the acquisitions of ND,
Con-way and BTT. As a percentage of revenue, cost of transportation and services decreased to 75.5% in 2015 compared to
79.5% in 2014, primarily the result of lower relative cost of transportation and services within the total cost structure of the
acquired asset-based businesses.

Direct operating expense for 2015 was $507.1 million, or 10.3% as a percentage of revenue, compared to $90.0 million, or
4.2% as a percentage of revenue, for 2014. Direct operating expense increased primarily due to the acquisitions of ND, Con-
way, BTT and UX.

SG&A expense increased by 96.4% to $646.9 million in 2015 from $329.3 million in 2014. As a percentage of revenue, SG&A
expense decreased to 13.1% in 2015 as compared to 15.4% in 2014. The increase in SG&A expense was primarily due to the
contribution of SG&A associated with new acquisitions and transaction and integration costs.

(Dollars in millions)
Revenue

Cost of transportation and services

Direct operating expense

SG&A expense

Salaries & benefits

Other SG&A expense

Purchased services

Depreciation & amortization

Total SG&A expense

Operating income

Logistics
Summary Financial Table
For the Year Ended December 31,

2016

2015

2014

2016

2015

$ 5,323.9

$ 2,768.4

216.6

100.0%

Percent of Revenue

1,246.8

3,395.5

521.6

1,859.5

—

183.2

23.4%

63.8%

230.2

165.1

76.3

79.4

86.2

34.3

39.3

67.0

472.1

305.7

209.5

81.6

6.3

1.8

1.1

6.6

15.8

17.6

4.3%

1.4%

1.5%

1.6%

8.8%

4.0%

18.8%

67.2%

6.0%

1.2%

1.4%

2.4%

11.0%

3.0%

2014
100.0%

—%

84.6%

2.9%

0.8%

0.5%

3.0%

7.2%

8.2%

Note: Total depreciation and amortization for the Logistics segment included in cost of transportation and services, direct
operating expense and SG&A was $192.3 million, $136.9 million and $16.3 million for the years ended December 31, 2016,
2015 and 2014, respectively.

Logistics

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Revenue in our Logistics segment increased by 92.3% to $5,323.9 million in 2016 compared to $2,768.4 million in 2015. This
increase was driven by the acquisitions of ND and Con-way.

The increase in cost of transportation services of 139.0% from 2015 to 2016 was primarily the result of the acquisitions of ND
and Con-way. As a percentage of revenue, cost of transportation and services increased to 23.4% in 2016 compared to 18.8% in
2015, primarily as a result of the higher relative cost of transportation and services within the acquired businesses, which
include managed transportation services that the Logistics segment did not previously provide.

Direct operating expense in 2016 was $3,395.5 million, or 63.8% as a percentage of revenue, compared to $1,859.5 million, or
67.2% as a percentage of revenue, in 2015. Direct operating expense increased due to the acquisitions of ND and Con-way,
while direct operating expense as a percentage of revenue declined due to cost saving measures being implemented as part of
the integration of acquired businesses.

SG&A increased to $472.1 million in 2016 from $305.7 million in 2015. The increase in SG&A was due to the contribution of
SG&A associated with the acquisitions of ND and Con-way. As a percentage of revenue, SG&A expense decreased to 8.8% in
2016 compared to 11.0% in 2015. The decrease is attributable to a change in the mix of the Company’s business operations
resulting from the acquisition of Con-way and the cost savings measures being implemented as part of the integration of
acquired businesses.

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Revenue in our Logistics segment increased by 1,178.1% to $2,768.4 million in 2015 compared to $216.6 million in 2014. This
increase was driven by the acquisitions of ND and Con-way, and the inclusion of a full year of New Breed’s results.

The increase in cost of transportation services from 2014 to 2015 was primarily the result of the acquisitions of ND and Con-
way. As a percentage of revenue, cost of transportation and services increased to 18.8% in 2015 compared to 0.0% in 2014, as a
result of the acquisitions of ND and Con-way. New Breed, acquired by XPO in 2014, did not have cost of transportation and
services.

Direct operating expense in 2015 was $1,859.5 million, or 67.2% as a percentage of revenue, compared to $183.2 million, or
84.6% as a percentage of revenue, in 2014. Direct operating expense increased due to the acquisitions of ND and Con-way, and
the inclusion of a full year of New Breed's results.

SG&A expense increased to $305.7 million in 2015 from $15.8 million in 2014. The increase in SG&A expense was due to the
contribution of SG&A associated with the acquisitions of ND and Con-way, and the inclusion of a full year of New Breed's
results. As a percentage of revenue, SG&A expense increased to 11.0% in 2015 compared to 7.2% in 2015.

Liquidity and Capital Resources

Refinancing of Existing Term Loan

On August 17, 2016, the Company completed the pricing of a $1.6 billion refinancing of its existing term loan agreement. The
term loan was issued at par with an interest rate of LIBOR plus 3.25%, with a 1.0% LIBOR floor, maturing on October 30,
2021. The proceeds were used to replace the Company's existing $1.6 billion term loan, which bore interest at LIBOR plus
4.5%, with a 1.0% LIBOR floor. The terms of the new term loan facility are otherwise substantially consistent with the term
loan that was replaced.

In addition, the Company borrowed an additional $400.0 million of Incremental Term B-1 Loans (the “Incremental Term B-1
Loans”) and an additional $50.0 million of Incremental Term B-2 Loans (the “Incremental Term B-2 Loans”). The New Term
Loans, Incremental Term B-1 Loans and Incremental Term B-2 Loans have identical terms, other than with respect to original
issue discount, and will mature on October 30, 2021.

Issuance of Senior Notes Due 2023

On August 25, 2016, the Company completed a private placement of $535.0 million in aggregate principal amount of 6.125%
senior notes due September 1, 2023 (“Senior Notes due 2023”). The Senior Notes due 2023 bear interest at a rate of 6.125% per
annum payable semiannually, in cash in arrears, on March 1 and September 1 of each year, commencing March 1, 2017 and
mature on September 1, 2023.

Redemption of Senior Notes due 2019

On September 12, 2016 (the “Redemption Date”), the Company redeemed all of its outstanding 7.875% Notes due 2019 (the
“2019 Notes”) issued under the Indenture, dated as of August 25, 2014, between XPO and The Bank of New York Mellon Trust
Company, N.A., as Trustee. The redemption price for the 2019 Notes was 103.938% of the principal amount of the 2019 Notes,
plus accrued and unpaid interest to, but excluding, the Redemption Date.

North American Truckload Operations

General

As of December 31, 2016, we had $342.0 million of working capital, including cash and cash equivalents of $373.4 million,
compared to working capital of $262.8 million, including cash and cash equivalents of $289.8 million, as of December 31,
2015. This increase of $79.2 million in working capital during the period was mainly due to an increase in cash and accounts
receivable, partially offset by an increase in accrued expenses.

We continually evaluate our liquidity requirements, capital needs and the availability of capital resources based on our
operating needs and our planned growth initiatives. In addition to using existing cash balances and net cash provided by
operating activities, in certain circumstances we may use debt financings and issuances of equity or equity-related securities to
fund our operating needs and growth initiatives. We believe that cash generated from operations, our existing cash balance, and
availability of capacity to draw down under our ABL Facility will be sufficient to support our existing operations over the next
12 months.

Cash Flow

During 2016, the Company generated $625.4 million of cash from operations compared to $90.8 million generated in 2015 and
$21.3 million used in 2014. Cash flows from operations increased in 2016 primarily due to the improvement in profitability. An
increase in the Company's accounts receivable reduced our cash from operations by $153.7 million in 2016 compared to $7.8
million of cash provided in 2015.

Investing activities provided $142.0 million of cash in 2016 compared to $4,085.4 million used in 2015 and $858.3 million used
in 2014. During 2016, the Company received $547.7 million from the sale of its North American Truckload operations, used
$483.4 million of cash to purchase fixed assets and received $68.9 million from the sale of assets. During 2015, the Company
used $3,887.0 million of cash in acquisitions, $249.0 million to purchase fixed assets and received $60.3 million from the sale
of assets. During 2014, the Company used $814.0 million of cash in acquisitions and $44.6 million to purchase fixed assets.

Financing activities used $680.8 million in 2016 compared to $3,644.9 million generated in 2015 and $1,502.2 million
generated in 2014. The primary use of cash in 2016 was the $1,889.2 million repurchase of debt and the $151.4 million
repayment of debt and capital leases. The main source of cash from financing activities in 2016 was the $1,352.0 million of net
proceeds from the issuance of long-term debt. In 2015, our primary source of cash was the $4,108.9 million of net proceeds
from the issuance of long-term debt and $1,228.1 million of net proceeds from the issuance of preferred and common stock.
The primary uses of cash from financing activities were the repayment of $1,215.6 million of debt and the purchase of the
noncontrolling interest in ND of $459.7 million. During 2014, the Company received $1,097.4 million of net proceeds from the
issuance of preferred and common stock and $489.6 million of net proceeds from the issuance of long-term debt.

Debt Facilities

On October 30, 2015, the Company entered into the Second Amended and Restated Revolving Loan Credit Agreement (the
“ABL Facility”) among XPO and certain of XPO’s U.S. and Canadian wholly owned subsidiaries (which include the U.S.
subsidiaries of the former Con-way), as borrowers, the other credit parties from time to time party thereto, the lenders party
thereto and Morgan Stanley Senior Funding, Inc., as agent for such lenders. The ABL Facility replaced XPO’s existing
Amended Credit Agreement, and, among other things, (i) increased the commitments under the ABL Facility to $1.0 billion,
(ii) permitted the acquisition of Con-way and the transactions relating thereto, (iii) reduced the margin on loans under the ABL
Facility by 0.25% from that contained in the existing Amended Credit Agreement and (iv) matures on October 30, 2020. Up to
$350 million of the ABL Facility is available for issuance of letters of credit, and up to $50 million of the ABL Facility is
available for swing line loans. At December 31, 2016, the Company had a borrowing base of $986.5 million and availability
under the ABL Facility of $717.4 million after considering outstanding advances of $30.0 million and outstanding letters of
credit of $239.1 million. As of December 31, 2016, the Company was in compliance with the ABL Facility’s financial
covenants.

Contractual Obligations

The following table reflects our contractual obligations as of December 31, 2016:

(Dollars in millions)

Contractual Obligations
Capital leases payable

Operating leases

Purchase commitments

Long-term debt

Interest on long-term debt

Payments Due by Period

Total

Less than 1
Year

1 to 3
Years

3 to 5
Years

More than 5
Years

101.9

18.3

34.5

18.2

2,144.3

158.6

5,044.2

1,640.3

542.1

59.0

121.7

275.3

737.3

70.8

333.2

515.4

385.6

28.8

2,055.6

484.0

30.9

479.3

—

2,533.7

365.6

Total contractual cash obligations

9,089.3

1,016.4

1,691.2

2,972.2

3,409.5

Actual amounts of contractual cash obligations may differ from estimated amounts due to changes in foreign currency exchange
rates. We do not have any other material commitments that have not been disclosed elsewhere.

Off-Balance Sheet Arrangements

The Company guarantees the lease payments of certain tractor and trailer equipment utilized by subcontract carriers. These
guarantees continue through the end of the lease of the equipment, which is typically four years. The maximum amount of the
guarantee is limited to the amount of unpaid principal and interest. As of December 31, 2016, the maximum amount of these
guarantees was approximately $20.8 million.

Critical Accounting Estimates

We prepare our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United
States of America. These principles require management to make estimates and assumptions that impact the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements
and the reported amounts of revenues and expenses during the reporting period.

We review our estimates for, including but not limited to: defined benefit pension plans, recoverability of long-lived assets,
income taxes, goodwill, and self-insurance accruals, on a regular basis and make adjustments based on historical experiences
and existing and expected future conditions. These evaluations are performed and adjustments are made as information is
available. Management believes that these estimates are reasonable and has discussed them with the audit committee of our
board of directors. However, actual results could differ from these estimates. Note 2 to our Consolidated Financial Statements
includes a summary of the significant accounting policies and methods used in the preparation of our Consolidated Financial
Statements. The following is a discussion of our critical accounting estimates.

Defined Benefit Pension Plans

Defined benefit pension plan benefits are calculated using various actuarial assumptions and methodologies. Assumptions
include discount rates, inflation rates, expected long-term rate of return on plan assets, mortality rates, and other factors. The
assumptions used in recording the projected benefit obligation and fair value of plan assets represent our best estimates based
on information available regarding historical experience and factors that may cause future expectations to differ from past
experiences. Differences in actual experience or changes in assumptions could materially impact our obligation and future
expense amounts.

Discount Rate

In determining the appropriate discount rate for the U.S. Plans (which consist of a primary qualified defined benefit pension
plan and another qualified defined benefit pension plan (the “U.S. Qualified Plans”)) and non-qualified defined benefit pension
plans (collectively, the “U.S. Non-Qualified Pension Plans” and together with the U.S. Qualified Plans, the “U.S. Plans”)), we
are assisted by actuaries who utilize a yield-curve model based on a universe of high-grade corporate bonds (rated AA or better
by Moody's or S&P rating services). The model determines a single equivalent discount rate by applying the yield curve to
expected future benefit payments.

In determining the appropriate discount rate for the UK Plan, we are assisted by consultants who utilize a yield-curve model
based on the iBoxx universe of high-grade corporate bonds (rated AA or better by Moody’s, S&P or Fitch rating services). The
model determines a single equivalent discount rate by applying the yield curve to expected future benefit payments.

The discount rates used in determining the benefit obligation are as follows:

U.S. Plans

UK Plan

Rate of Return on Plan Assets

2016

2015

4.35%

2.70%

4.65%

3.75%

For the U.S. Qualified Plans, we set the expected return on plan assets using current market expectations and historical returns.
The expected return on plan assets is based on estimates of long-term expected returns and considers the plans' anticipated asset
allocation over the course of the next year. The expected return includes the effect of actively managing the plan assets, and is
net of fees and expenses. The plan assets are managed pursuant to a long-term allocation strategy that seeks to mitigate the
plans' funded status volatility by increasing the plans' investment in fixed-income investments over time. This strategy was
developed by analyzing a variety of diversified asset-class combinations in conjunction with the projected liabilities of the
plans. For the year ended December 31, 2016, our expected return on plan assets was $88.4 million for U.S. Qualified Plans and
$58.4 million for the UK Plan, compared to the actual return on plan assets of $140.8 million for U.S. Qualified Plans and
$291.4 million for the UK Plan. The actual annualized return on plan assets for the U.S. Qualified Plans for the year
ended December 31, 2016 was approximately 9%, which was above the expected return on asset assumption for the year as a
result of strong performance of the fixed income portfolio, which made up approximately three-fourths of total plan assets. The
actual annualized return on plan assets for the UK Plan for the year ended December 31, 2016 was approximately 24%, which
was above the expected return on asset assumption for the year as a result of strong performance across all asset classes.

For the UK Plan, we set the expected return on plan assets using market expectations and historical returns. The expected return
on plan assets is based on estimates of long-term expected returns and considers the plans’ anticipated asset allocation over the
course of the next year. The expected return includes the effect of actively managing the plan assets and is net of fees and
expenses.

Actuarial Gains and Losses

Changes in the discount rate and/or differences between the expected and actual rate of return on plan assets results in
unrecognized actuarial gains or losses. For our defined benefit pension plans, accumulated unrecognized actuarial losses were
$35.8 million for the U.S. Plans and $28.9 million for the UK Plan at December 31, 2016. The portion of the unrecognized
actuarial gain/loss that exceeds 10% of the greater of the projected benefit obligation or the fair value of plan assets at the
beginning of the year is amortized and recognized as income/expense over the estimated average remaining life expectancy of
plan participants.

Effect on Operating Results

The effects of the defined benefit pension plans on our operating results consist primarily of the net effect of the interest cost on
plan obligations for the U.S. Plans and the UK Plan and the expected return on plan assets for the funded defined benefit
pension plans. We estimate that the defined benefit pension plans will result in annual income of $15.4 million for the U.S.
Plans and $26.0 million for the UK Plan in 2017. We recognized net periodic benefit income of $27.5 million in 2016 and $8.2
million in 2015.

Significant Assumption Sensitivity

The sensitivity analysis below shows the effect on 2017 estimated net periodic benefit income from a 25 basis point change in
the assumed discount rate:

(Dollars in millions)

Discount rate

25 Basis Point Increase

25 Basis Point Decrease

U.S. Plans

UK Plan

U.S. Plans

UK Plan

Effect on 2017 estimated net periodic benefit expense (income)

4.5

3.1

(4.5) $

(3.1)

The sensitivity analysis below shows the effect on 2017 estimated net periodic benefit income from a 25 basis point change in
the expected return on plan assets:

(Dollars in millions)

Expected return on plan assets

25 Basis Point Increase

25 Basis Point Decrease

U.S. Qualified
Plans

UK Plan

U.S. Qualified
Plans

UK Plan

Effect on 2017 estimated net periodic benefit expense (income)

(4.3) $

(3.0) $

4.3

3.0

Funding

In determining the amount and timing of pension contributions for the U.S. Plans, we consider our cash position, the funded
status as measured by the Pension Protection Act of 2006 (the “PPA”) and generally accepted accounting principles, and the tax
deductibility of contributions, among other factors. We made contributions of $5.4 million and $0.9 million to the U.S. Non-
Qualified Plans in 2016 and 2015, respectively. We estimate that we will make $5.4 million of contributions to the U.S. Non-
Qualified Plans in 2017. We made no contributions to the U.S. Qualified Plans in 2016 and 2015. We do not anticipate making
any contributions to the U.S. Qualified Plans in 2017.

For the UK Plan, the amount and timing of pension contributions is determined in accordance with UK pension codes and
trustee negotiations. We made contributions of $14.2 million and $10.3 million to the UK Plan in 2016 and 2015, respectively.
We estimate that we will make $12.7 million of contributions to the UK Plan in 2017.

The impact of plan amendments and actuarial gains and losses are recorded in accumulated other comprehensive income/loss,
and are generally amortized as a component of net periodic benefit cost over the remaining service period of the active
employees covered by the defined benefit pension plans. Unamortized gains and losses are amortized only to the extent they
exceed 10% of the higher of the fair value of plan assets or the projected benefit obligation of the respective plan. For additional
information, refer to Note 10—Employee Benefit Plans.

Recoverability of Long-Lived Assets

The depreciation or amortization of our capital assets over their estimated useful lives, and the determination of any salvage
values, requires management to make judgments about future events. Because we utilize many of our capital assets over
relatively long periods, we periodically evaluate whether adjustments to our estimated service lives or salvage values are
necessary to ensure these estimates properly match the economic use of the asset. This evaluation may result in changes in the
estimated lives and residual values used to depreciate our tractors, trailers and other equipment. These estimates affect the
amount of depreciation expense recognized in a period and, ultimately, the gain or loss on the disposal of the asset. Changes in
the estimated lives of assets will result in an increase or decrease in the amount of depreciation recognized in future periods and
could have a material impact on our results of operations. Historically, gains and losses on disposals of operating equipment
have not been material. However, such amounts may differ materially in the future due to changes in business levels,
technological obsolescence, accident frequency, regulatory changes and other factors beyond our control.

Income Taxes

Our annual effective tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the
various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and
respective governmental taxing authorities. Significant judgment is required in determining our tax expense and in evaluating
our tax positions, including evaluating uncertainties. We review our tax positions quarterly as new information becomes
available. Our income tax rate is affected by the mix of income between our domestic and foreign operations. In general,
deferred tax liabilities have not been recorded for foreign earnings because it is our practice and intention to reinvest the
earnings of our non-U.S. subsidiaries in those operations. Due to the uncertainty caused by various methods in which such
earnings could be repatriated, it is not practicable to estimate the amount of deferred tax liability related to investments in these
foreign subsidiaries.

Deferred income tax assets represent amounts available to reduce income taxes payable in future years. Such assets arise
because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net
operating loss and tax credit carryforwards. We evaluate the recoverability of these future tax deductions and credits by

assessing all available evidence, including the reversal of the deferred tax liabilities, carrybacks available and historical and
projected pre-tax profits generated by our operations. These sources of income rely heavily on estimates. The future settlement
of deferred tax liabilities, which will enable the Company to realize its existing deferred tax assets when they reverse, was the
most significant factor in our determination of the valuation allowance under the “more likely than not” criteria. To the extent
we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.

Evaluation of Goodwill Impairment

Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations. Goodwill is tested
for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been
incurred. Application of the goodwill impairment test requires judgment, including: the identification of reporting units;
assignment of assets and liabilities to reporting units; assignment of goodwill to reporting units; and a determination of the fair
value of each reporting unit.

We estimate the fair value of our reporting units using an income approach based on the present value of estimated future cash
flows. We review goodwill for impairment utilizing a two-step process. The first step of the impairment test requires a
comparison of the fair value of each of our reporting units' net assets to the respective carrying value of net assets. If the
carrying value of a reporting unit's net assets is less than its fair value, no indication of impairment exists and a second step is
not performed. If the carrying amount of a reporting unit's net assets is higher than its fair value, there is an indication that an
impairment may exist and a second step must be performed. In the second step, the impairment is calculated by comparing the
implied fair value of the reporting unit's goodwill (as if purchase accounting were performed on the testing date) with the
carrying amount of the goodwill. If the carrying amount of the reporting unit's goodwill is greater than the implied fair value of
its goodwill, an impairment loss must be recognized for the excess and charged to operations.

Inherent in our preparation of cash flow projections are assumptions and estimates derived from a review of our operating
results, business plans, expected growth rates, cost of capital and tax rates. We also make certain forecasts about future
economic conditions, interest rates and other market data. Many of the factors used in assessing fair value are outside the
control of management, and these assumptions and estimates may change in future periods. Changes in assumptions or
estimates could materially affect the estimate of the fair value of a reporting unit, and therefore could affect the likelihood and
amount of potential impairment.

We completed our goodwill impairment test for our identified reporting units as of August 31, 2016. Based on the analysis
prepared, the fair value of our reporting units substantially exceeded the carrying value at the testing date.

Self-Insurance Accruals

The Company uses a combination of self-insurance programs and large-deductible purchased insurance to provide for the costs
of medical, vehicular, cargo and workers' compensation claims. The long-term portion of self-insurance accruals relates
primarily to workers' compensation and vehicular claims that are expected to be payable over several years. The Company
periodically evaluates the level of insurance coverage and adjusts insurance levels based on risk tolerance and premium
expense. The measurement and classification of self-insured costs requires the consideration of historical cost experience,
demographic and severity factors, and judgments about the current and expected levels of cost per claim and retention levels.
These methods provide estimates of undiscounted liability associated with claims incurred as of the balance sheet date,
including estimates of claims incurred but not reported. The Company believes the actuarial methods are appropriate for
measuring these highly judgmental self-insurance accruals. However, based on the magnitude of claims and the length of time
from incurrence of the claims to ultimate settlement, the use of any estimation method is sensitive to the assumptions and
factors described above. Accordingly, changes in these assumptions and factors can materially affect the estimated liability and
those amounts may be different than the actual costs paid to settle the claims.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about our market risk disclosures involves forward-looking statements. Actual results could differ
materially from those projected in such forward-looking statements. We are exposed to market risk related to changes in interest
rates, foreign currency exchange rates and commodity price risk.

Interest Rate Risk

Term Loan Facility. At December 31, 2016, we had outstanding $1,481.9 million aggregate principal amount on our Term Loan
Facility. The interest rate fluctuates based on LIBOR or a Base Rate, as defined in the agreement, plus an applicable margin of
3.25%, in the case of LIBOR loans, and 2.25%, in the case of Base Rate loans. A hypothetical 100-basis-point increase in the
interest rate would increase our annual interest expense by $14.8 million.

ABL Facility. We have exposure to changes in interest rates on our ABL Facility. The interest rates on our ABL Facility
fluctuate based on LIBOR or a Base Rate plus an applicable margin. Assuming our $1.0 billion ABL Facility was fully drawn at

December 31, 2016, a hypothetical 100-basis-point change in the interest rate would have increased our annual interest expense
by $7.5 million.

Asset Financing. At December 31, 2016, we had outstanding $145.0 million aggregate principal amount of Asset Financing.
While most of the Asset Financing has floating interest rates that subjects us to risk resulting from changes in short-term
(primarily Euribor) interest rates, we use interest rate swaps (exchanging a variable rate for a fixed rate) to manage the fixed
and floating interest rate mix of our Asset Financing and limit our exposure to interest rate risk.

Foreign Currency Exchange Risk

We have a significant proportion of our net assets and income in non-U.S. dollar currencies, primarily the EUR and British
Pound Sterling (“GBP”). We are exposed to currency risk from the potential changes in functional currency values of our
foreign currency denominated assets, liabilities and cash flows. Consequently, a depreciation of the EUR and GBP relative to
the U.S. dollar could have an adverse impact on our financial results.

In connection with the issuance of the Senior Notes due 2022, we entered into certain cross-currency swap agreements to
partially manage the related foreign currency exchange risk by effectively converting a portion of the fixed-rate USD-
denominated Senior Notes due 2022, including the semi-annual interest payments, to fixed-rate, EUR-denominated debt. The
risk management objective is to manage a portion of the foreign currency risk relating to net investments in subsidiaries
denominated in foreign currencies. In addition to the cross-currency swaps, we use foreign currency denominated notes as
nonderivative hedging instruments of our net investments in foreign operations with the same risk management objective as the
cross-currency swaps.

In order to mitigate against the risk of a reduction in the value of foreign currency earnings before interest, taxes, depreciation
and amortization (“EBITDA”) from the Company’s international operations with the EUR and GBP as the functional currency,
the Company uses foreign currency option and forward contracts.

As of December 31, 2016, a uniform 10% strengthening in the value of the USD relative to the EUR would have resulted in a
decrease in net assets of approximately $34.1 million. As of December 31, 2016, a uniform 10% strengthening in the value of
the USD relative to the GBP would have resulted in a decrease in net assets of approximately $40.1 million. These theoretical
calculations assume that an instantaneous, parallel shift in exchange rates occurs, which is not consistent with our actual
experience in foreign currency transactions. Fluctuations in exchange rates also affect the volume of sales or the foreign
currency sales price as competitors' services become more or less attractive. The sensitivity analysis of the impact of changes in
foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

Commodity Price Risk

We are exposed to the impact of market fluctuations in the price of diesel fuel purchased for use in Company-owned vehicles.
During the year ended December 31, 2016, diesel prices varied by 24.5% in France, 24.7% in the United Kingdom, and 30.6%
in the United States. However, the Company includes price adjustment clauses or cost-recovery mechanisms in many of its
customer contracts in the event of a change in the fuel purchase price. The clauses mean that substantially all fluctuations in the
purchase price of diesel, except for short-term economic fluctuations, can be passed on to customers in the sales price.
Therefore, a hypothetical 10% change in the price of diesel would not be expected to materially alter our financial performance
over the long term.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements and supplementary data of the Company required by this Item are included at Part IV,
Item 15 of this Annual Report on Form 10-K and are incorporated herein by reference.

ITEM 9.
FINANCIAL DISCLOSURE

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

As of December 31, 2016, our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer
(“CFO”), have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on
that evaluation, our CEO and CFO concluded that our disclosure controls and procedures as of December 31, 2016 were
effective.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision and with the
participation of our management, including our principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2016 based on the framework
in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation, we concluded that our internal control over financial reporting was effective as of
December 31, 2016.

KPMG LLP, the independent registered public accounting firm that audited the financial statements included in this Annual
Report on Form 10-K, has issued an audit report, which is included elsewhere within this Form 10-K, on the effectiveness of
our internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

Except as described below, there have not been any changes in the Company’s internal control over financial reporting during
the quarter ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, its internal
control over financial reporting. During the quarter ended December 31, 2016, we completed the control integration for our
2015 acquisitions of UX Specialized Logistics, LLC, Bridge Terminal Transport Services, Inc., Norbert Dentressangle SA, and
Con-way Inc.

ITEM 9B.

OTHER INFORMATION

Not applicable.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 of Part III of Form 10-K (other than certain information required by Item 401 of
Regulation S-K with respect to our executive officers, which is provided under Item 1 of Part I of this Annual Report on Form
10-K) will be set forth in our definitive Proxy Statement for the 2017 Annual Meeting of Stockholders and is incorporated
herein by reference.

We have adopted a Code of Business Ethics (the “Code”), which is applicable to our principal executive officer, principal
financial officer, principal accounting officer and other senior officers. The Code is available on our website at www.xpo.com,
under the heading “Corporate Governance” within the “Investors” tab. In the event that we amend or waive any of the
provisions of the Code that relate to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K,
we intend to disclose the same on our website at the web address specified above.

ITEM 11.

EXECUTIVE COMPENSATION

The information required by Item 11 of Part III of Form 10-K will be set forth in our Proxy Statement for the 2017 Annual
Meeting of Stockholders and is incorporated herein by reference.

ITEM 12.
RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

The information required by Item 12 of Part III of Form 10-K, including information regarding security ownership of certain
beneficial owners and management and information regarding securities authorized for issuance under equity compensation
plans, will be set forth in our Proxy Statement for the 2017 Annual Meeting of Stockholders and is incorporated herein by
reference.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by Item 13 of Part III of Form 10-K will be set forth in our Proxy Statement for the 2017 Annual
Meeting of Stockholders and is incorporated herein by reference.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 of Part III of Form 10-K will be set forth in our Proxy Statement for the 2017 Annual
Meeting of Stockholders and is incorporated herein by reference.

PART IV

Item 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Financial Statements and Financial Statement Schedules

The list of Consolidated Financial Statements provided in the accompanying Index to Consolidated Financial Statements is
incorporated herein by reference. Such Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K.
All financial statement schedules are omitted because the required information is not applicable, or because the information
required is included in the Consolidated Financial Statements and notes thereto.

Exhibits

The exhibits listed on the accompanying Exhibit Index starting on page 85 of this Annual Report on Form 10-K are filed or
incorporated by reference as part of this Annual Report on Form 10-K and such Exhibit Index is incorporated herein by
reference.

Pursuant to the requirements of Section 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.

SIGNATURES

February 28, 2017

XPO LOGISTICS, INC.

By:

/s/ Bradley S. Jacobs
Bradley S. Jacobs

(Chairman of the Board of Directors and Chief Executive Officer)

/s/ John J. Hardig
John J. Hardig

(Chief Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities on the dates indicated.

Signature

Title

Chairman of the Board of Directors and
Chief Executive Officer (Principal
Executive Officer)

Date

February 28, 2017

/s/ Bradley S. Jacobs

Bradley S. Jacobs

/s/ John J. Hardig

John J. Hardig

/s/ Lance A. Robinson

Lance A. Robinson

/s/ Gena L. Ashe

Gena L. Ashe

/s/ Louis DeJoy

Louis DeJoy

/s/ Michael G. Jesselson

Michael G. Jesselson

/s/ Adrian P. Kingshott

Adrian P. Kingshott

/s/ Jason D. Papastavrou

Jason D. Papastavrou

/s/ Oren G. Shaffer

Oren G. Shaffer

Chief Financial Officer (Principal
Financial Officer)

February 28, 2017

Global Chief Accounting Officer
(Principal Accounting Officer)

February 28, 2017

Director

February 28, 2017

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2016 and 2015

Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015 and 2014

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2016, 2015 and 2014

Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014

Consolidated Statements of Changes in Equity for the Years Ended December 31, 2016, 2015 and 2014

Notes to Consolidated Financial Statements

Page
No.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
XPO Logistics, Inc.:

We have audited the accompanying consolidated balance sheets of XPO Logistics, Inc. and subsidiaries as of December 31, 2016
and 2015, and the related consolidated statements of operations, comprehensive loss, cash flows and changes in equity for each
of the years in the three-year period ended December 31, 2016. We also have audited XPO Logistics, Inc.’s internal control over
financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). XPO Logistics, Inc.’s management
is responsible for these consolidated financial statements, 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
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated
financial statements and an opinion on XPO Logistics, Inc.’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.

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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of XPO Logistics, Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows
for each of the years in the three-year period ended December 31, 2016, in conformity with U.S. generally accepted accounting
principles. Also in our opinion, XPO Logistics, Inc. maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

Charlotte, North Carolina
February 28, 2017

XPO Logistics, Inc.
Consolidated Balance Sheets

(In millions, except share and per share data)

ASSETS

Current assets:

Cash and cash equivalents
Accounts receivable, net of allowances of $26.3 and $16.9, respectively
Other current assets

Total current assets

Property and equipment, net of $589.9 and $209.3 in accumulated depreciation, respectively
Goodwill
Identifiable intangible assets, net of $377.1 and $210.2 in accumulated amortization, respectively
Deferred tax asset
Other long-term assets

Total long-term assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
Accrued expenses
Current maturities of long-term debt
Other current liabilities

Total current liabilities

Long-term debt
Deferred tax liability
Employee benefit obligations
Other long-term liabilities

Total long-term liabilities

Stockholders’ equity:

Convertible perpetual preferred stock, $.001 par value; 10,000,000 shares authorized; 72,235 and 72,885
of Series A shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively

Common stock, $.001 par value; 300,000,000 shares authorized; 111,087,027 and 109,523,493 shares
issued and outstanding at December 31, 2016 and December 31, 2015, respectively

Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss

Total stockholders’ equity before noncontrolling interests

Noncontrolling interests
Total equity

Total liabilities and equity

See accompanying notes to consolidated financial statements.

December 31,

2016

2015

373.4
2,313.3
386.9
3,073.6
2,537.4
4,325.8
1,534.7
2.7
224.2
8,624.8
11,698.4

1,056.3
1,382.1
136.5
156.7
2,731.6
4,731.5
572.4
251.4
373.9
5,929.2

289.8
2,266.4
401.0
2,957.2
2,852.2
4,610.6
1,876.5
113.6
233.1
9,686.0
12,643.2

1,063.7
1,291.8
135.3
203.6
2,694.4
5,272.6
933.3
312.6
369.5
6,888.0

41.6

42.0

0.1
3,244.9
(392.9)
(193.7)
2,700.0
337.6
3,037.6
11,698.4

0.1
3,212.3
(465.0)
(72.3)
2,717.1
343.7
3,060.8
12,643.2

XPO Logistics, Inc.
Consolidated Statements of Operations

(In millions, except per share data)
Revenue
Operating expenses

Cost of transportation and services
Direct operating expense
Sales, general and administrative expense

Total operating expenses
Operating income (loss)

Other expense (income)
Foreign currency loss (gain)
Debt extinguishment loss
Interest expense

Income (loss) before income tax provision (benefit)

Income tax provision (benefit)

Net income (loss)

Net (income) loss attributable to noncontrolling interests

Net income (loss) attributable to XPO

Earnings per share data:

Net income (loss) attributable to common shareholders (Note 16)

Basic earnings (loss) per share (Note 16)
Diluted earnings (loss) per share (Note 16)

Weighted-average common shares outstanding

Basic weighted-average common shares outstanding
Diluted weighted-average common shares outstanding

$
$

Year Ended December 31,

2016

2015

2014

14,619.4

7,623.2

2,356.6

7,886.0
4,594.1
1,651.2
14,131.3
488.1
(9.2)
(40.3)
69.7
361.1
106.8
22.3
84.5
(15.5)
69.0

63.1

0.57
0.53

110.2
122.8

$
$

4,171.4
2,367.0
1,113.4
7,651.8
(28.6)
(7.6)
44.8
—
216.7
(282.5)
(90.9)
(191.6)
0.5
(191.1) $

1,701.8
273.2
422.5
2,397.5
(40.9)
0.4
0.4
—
48.0
(89.7)
(26.1)
(63.6)
—
(63.6)

(245.9) $

(107.4)

(2.65) $
(2.65) $

(2.00)
(2.00)

92.8
92.8

53.6
53.6

See accompanying notes to consolidated financial statements.

XPO Logistics, Inc.
Consolidated Statements of Comprehensive Loss

(In millions)
Net income (loss)

Other comprehensive income (loss)

Foreign currency translation losses

Unrealized gains (losses) on financial assets/liabilities designated
as hedging instruments, net of tax effect of $0.1, $2.2 and $0.0

Change in defined benefit plans liability, net of tax benefit of
$3.7, $9.8 and $0.0
Other comprehensive loss

Comprehensive loss

Less: Comprehensive loss attributable to noncontrolling interests

Comprehensive loss attributable to XPO

Year Ended December 31,

2016

2015

2014

84.5

(191.6) $

(63.6)

(137.7) $

(68.5) $

(7.1)

6.9

4.7
(140.1)
(55.6) $
3.2
(52.4) $

(17.0)
(78.6)
(270.2) $
6.8
(263.4) $

—

—
(63.6)
—
(63.6)

See accompanying notes to consolidated financial statements.

XPO Logistics, Inc.
Consolidated Statements of Cash Flows

(In millions)
Operating activities
Net income (loss)

Adjustments to reconcile net income (loss) to net cash from operating activities

Depreciation and amortization
Stock compensation expense
Accretion of debt
Deferred tax benefit
Loss on extinguishment of debt
Unrealized (gain) loss on foreign currency option and forward contracts
Other

Changes in assets and liabilities:

Accounts receivable
Other assets
Accounts payable
Accrued expenses and other liabilities
Cash flows provided (used) by operating activities
Investing activities

Acquisition of businesses, net of cash acquired
Proceeds from sale of business, net of $10.5 cash divested
Loss on forward contract related to acquisition
Payment for purchases of property and equipment
Proceeds from sale of assets
Other

Cash flows provided (used) by investing activities
Financing activities

Proceeds from preferred stock and common stock offerings
Payment for equity issuance costs
Proceeds from issuance of long-term debt
Payment of debt issuance costs
Repurchase of debt
Repayment of long-term debt and capital leases
Proceeds from borrowings on revolving credit facility
Repayment of borrowings on revolving credit facility
Bank overdrafts
Purchase of noncontrolling interests
Dividends paid
Other

Cash flows provided (used) by financing activities
Effect of exchange rates on cash
Net increase (decrease) in cash
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of cash flow information:

Cash paid for interest
Cash paid for income taxes

Year Ended December 31,
2015

2014

2016

84.5

(191.6) $

643.4
54.5
17.0
(20.9)
69.7
(39.7)
7.4

(153.7)
17.2
1.7
(55.7)
625.4

—
547.7
—
(483.4)
68.9
8.8
142.0

—
—
1,377.8
(25.8)
(1,889.2)
(151.4)
360.0
(330.0)
(16.5)
(1.4)
(5.4)
1.1
(680.8)
(3.0)
83.6
289.8
373.4

363.1
40.7

$
$

364.9
27.9
6.4
(91.9)
—
1.0
9.4

7.8
(35.3)
(51.3)
43.5
90.8

(3,887.0)
—
(9.7)
(249.0)
60.3
—
(4,085.4)

1,260.0
(31.9)
4,151.8
(42.9)
—
(1,215.6)
—
—
(12.3)
(459.7)
(2.8)
(1.7)
3,644.9
(4.6)
(354.3)
644.1
289.8

168.2
14.5

$
$

(63.6)

98.3
7.5
7.3
(30.0)
—
—
11.2

(143.9)
9.2
53.9
28.8
(21.3)

(814.0)
—
—
(44.6)
—
0.3
(858.3)

1,131.3
(33.9)
500.0
(10.4)
—
—
130.0
(205.0)
—
—
(2.9)
(6.9)
1,502.2
—
622.6
21.5
644.1

19.0
2.3

See accompanying notes to consolidated financial statements.

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4

XPO Logistics, Inc.
Notes to Consolidated Financial Statements
Years Ended December 31, 2016, 2015 and 2014

1. Organization

Nature of Operations

XPO Logistics, Inc. and its subsidiaries (“XPO” or the “Company”) use an integrated network of people, technology and
physical assets to help customers manage their goods more efficiently throughout their supply chains. The Company’s
customers are multinational, national, mid-size and small enterprises, and include many of the most prominent companies in the
world. XPO runs its business on a global basis, with two reportable segments: Transportation and Logistics.

In the Transportation segment, the Company provides multiple services to facilitate the movement of raw materials, parts and
finished goods. The Company accomplishes this by using its proprietary transportation technology, third-party carriers and
Company-owned trucks. XPO’s transportation services include: freight brokerage, last mile, less-than-truckload (“LTL”), full
truckload, and global forwarding services. Freight brokerage, last mile, and global forwarding are all non-asset or asset-light
businesses. LTL and full truckload are asset-based.

In the Logistics segment, referred to as supply chain, the Company provides a range of contract logistics services, including
highly engineered and customized solutions, value-added warehousing and distribution, cold chain solutions and other
inventory management solutions. The Company performs e-commerce fulfillment, order personalization, warehousing, reverse
logistics, storage, factory support, aftermarket support, manufacturing, distribution, packaging and labeling, as well as supply
chain optimization services such as production flow management.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The preparation of the consolidated financial statements requires management to make estimates and judgments that affect the
reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as
the reported amounts of revenue and expense during the reporting period. Estimates have been prepared on the basis of the
most current and best available information, but actual results could differ materially from those estimates. Intercompany
transactions have been eliminated in the consolidated financial statements. The results of operations of acquired companies are
included in the Company’s results from the closing date of the acquisition and forward. Income or loss attributable to
noncontrolling interests is deducted from net income/loss to determine net income/loss attributable to XPO.

Consolidation

The Company's financial statements consolidate all of its affiliates in which it has either a majority voting interest or a
controlling financial interest, most often because the Company has the power to direct the activities that significantly affect the
variable interest entity’s (“VIE”) economic performance, including having operational control over each VIE and operating the
VIEs under the XPO brand or policies.

Rights held by others to remove the party with power over the VIE are not considered unless one party can exercise those rights
unilaterally. When changes occur to the design of an entity, the Company reconsiders whether it is subject to the VIE model.
The Company continuously evaluates whether it has a controlling financial interest in a VIE.

The Company holds a controlling financial interest in other entities where it currently holds, directly or indirectly, more than
50% of the voting rights or where it exercises control through substantive participating rights or as a general partner. Where the
Company is a general partner, it considers substantive removal rights held by other partners in determining if it holds a
controlling financial interest. The Company reevaluates whether it has a controlling financial interest in these entities when its
voting or substantive participating rights change.

Associated companies are unconsolidated VIE's and other entities in which the Company does not have a controlling financial
interest, but over which it has significant influence, most often because the Company holds a voting interest of 20% to 50%.
Associated companies are accounted for as equity method investments. Results of operations of associated companies are
presented on a one-line basis, net of tax, in other income/expense. Investments in, and advances to, associated companies are
presented on a one-line basis in the other long-term assets line item in the consolidated balance sheet, net of allowance for
losses, which represents the Company's best estimate of probable losses inherent in such assets.

Reclassifications

Certain reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year’s
presentation. For the years ended December 31, 2015 and 2014, gains and losses on foreign currency option and forward

contracts were reclassified from other expense/income to foreign currency loss/gain to conform to the 2016 presentation. The
amount reclassified from other expense to foreign currency loss for the year ended December 31, 2015 was $10.7 million.
There was no impact on net income (loss) as a result of these reclassifications.

Significant Accounting Policies

Revenue Recognition

In the Company’s Transportation segment, with the exception of the LTL business, revenue is recognized at the point in time
when delivery is complete and the shipping terms of the contract have been satisfied. Related costs of delivery and service are
accrued and expensed in the same period the associated revenue is recognized. For the Company’s LTL business, revenue is
recognized based on relative transit time and expenses are recognized as incurred.

In the Company’s Logistics segment, revenue is recognized based on specific, objective criteria which, as discussed below, are
identified within the provisions of each contract. Related costs of delivery and service are accrued and expensed in the same
period the associated revenue is recognized. Under certain supply chain contracts, billings in excess of revenue recognized are
recorded as unearned revenue. Unearned revenue is recognized over the remaining contract period as services are provided. In
addition, the Company has deferred certain recoverable direct and incremental costs related to the setup of logistics operations
under long-term contracts. These deferred setup costs are recognized as expense over the contract term.

The Company’s Logistics segment recognizes a significant portion of its revenue based on objective criteria that do not require
significant estimates or uncertainties. Revenue on cost-reimbursable contracts is recognized by applying a factor to costs as
incurred, such factor being determined by the contract provisions. Revenue on unit-price contracts is recognized at the
contractual selling prices or as work is completed. Revenue on time and material contracts is recognized at the contractual rates
as the labor hours and direct expenses are incurred. Revenue from fixed-price contracts is recognized as services are provided,
unless revenue is earned and obligations fulfilled in a different pattern. Certain contracts provide for labor handling charges to
be billed for both incoming and outgoing handling of goods at the time the goods are received in a warehouse. For these
contracts, revenue is recognized upon receipt for the amounts representing handling of incoming goods and deferred revenue is
recorded for the performance of services related to the handling of outgoing goods, which is recognized once the related goods
leave the warehouse. Storage revenue is recognized as it is earned based on the length of time the related product is stored in
the warehouse. Generally, the contracts contain provisions for adjustments to future pricing based upon changes in volumes,
services and other market conditions, such as inflation. Revenue relating to such incentive or contingency payments is recorded
when the contingency is satisfied and the Company concludes the amounts are earned.

For all lines of business (other than the Company’s managed expedited freight business and the Company’s Logistics segment
with respect to those transactions where its contract logistics business is serving as the customer’s agent in arranging purchased
transportation), the Company reports revenue on a gross basis because XPO is the principal in the transaction. For those lines of
business where the Company acts as an agent, revenue is recognized on a net basis.

The Company’s global forwarding operations collects certain taxes and duties on behalf of their customers as part of the
services offered and arranged for international shipments. The Company presents these collections on a net basis.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less as of the date of
purchase to be cash equivalents unless the investments are legally or contractually restricted for more than three months.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the contractual amount. The Company records its allowance for doubtful accounts based
upon its assessment of various factors. The Company considers historical collection experience, the age of the accounts
receivable balances, credit quality of the Company’s customers, any specific customer collection issues that have been
identified, current economic conditions, and other factors that may affect the customers’ ability to pay. The Company writes off
accounts receivable balances that have aged significantly once all collection efforts have been exhausted and the receivables are
no longer deemed collectible from the customer.

The rollforward of the allowance for doubtful accounts is as follows:

(In millions)
Beginning balance

Provision, charged to expense

Write-offs, less recoveries, and other adjustments

Ending balance

Other Current Assets

Other current assets is comprised of the following:

(In millions)
Prepaid expenses

Value-added tax and income tax receivables

Materials and supplies

Foreign currency option and forward contracts
Other current assets

Total Other Current Assets

Property and Equipment

Year Ended December 31,

2016

2015

2014

16.9

9.8

15.1
(5.7)
26.3

12.9
(5.8)
16.9

3.5

6.9
(0.6)
9.8

December 31,

2016

2015

110.5

91.2

40.1

18.8
126.3

386.9

142.3

115.8

48.9

—
94.0

401.0

Property and equipment are generally recorded at cost, or in the case of acquired property and equipment, at fair value at the
date of acquisition. Maintenance and repair expenditures are charged to expense as incurred. When assets are sold, the
applicable costs and accumulated depreciation are removed from the accounts, and any gain or loss is included in income. For
internally-developed software, all costs incurred in the planning and evaluation stage of internally-developed computer
software are expensed as incurred. Costs incurred during the application development stage are capitalized and included in
property and equipment. Capitalized internally-developed software also includes the fair value of acquired internally-developed
technology.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Classification
Buildings and leasehold improvements
Vehicles, tractors, trailers and tankers
Rail cars, container and chassis
Machinery and equipment
Office and warehouse equipment
Computer software and equipment

Asset Retirement Obligations

Estimated Useful Life
Term of lease to 40 years
3 to 14 years
15 to 30 years
5 to 10 years
3 to 10 years
3 to 5 years

A liability for an asset retirement obligation (“ARO”) is recorded in the period in which it is incurred. When an ARO liability is
initially recorded, the Company capitalizes the cost by increasing the carrying amount of the related long-lived asset. For each
subsequent period, the liability is increased for accretion expense and the capitalized cost is depreciated over the useful life of
the related asset.

Goodwill

Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations. The Company
performs an annual impairment test for goodwill as of August 31 unless events or circumstances indicate impairment of
goodwill may have occurred before that time. The Company may first choose to perform a qualitative evaluation of the
likelihood of goodwill impairment. If the Company determines a quantitative evaluation is necessary, the goodwill at the
reporting unit is subject to a two-step impairment test. The first step compares the book value of a reporting unit, including
goodwill, with its fair value. If the book value of a reporting unit exceeds its fair value, the Company completes the second step
in order to determine the amount of goodwill impairment loss that should be recorded. The Company determines fair values for
each of the reporting units using an income approach. For purposes of the income approach, fair value is determined based on

the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company uses its internal
forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on its most recent views
of the long-term outlook for the business. For the periods presented, the Company did not recognize any goodwill impairment
as the estimated fair value of its reporting units with goodwill exceeded the book value of these reporting units. The Company
completed its goodwill impairment test for the identified reporting units as of August 31, 2016.

Intangible Assets

The Company’s intangible assets subject to amortization consist of customer relationships, trade names, and non-compete
agreements. The Company reviews long-lived assets to be held-and-used for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected
future cash flows over the remaining useful life of a long-lived asset group is less than its carrying amount, the asset is
considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset group
exceeds the fair value of the asset. The Company estimates fair value using the expected future cash flows discounted at a rate
commensurate with the risks associated with the recovery of the asset. For the periods presented, the Company did not
recognize any impairment of the identified intangible assets. Intangible assets are amortized on a straight-line basis or on a
basis consistent with the pattern in which the economic benefits are realized. The range of estimated useful lives and the
weighted-average useful lives of the respective intangible assets by type are as follows:

Classification
Customer relationships
Trade names
Non-compete agreements

Accrued Expenses

Accrued expenses is comprised of the following:

(In millions)
Accrued salaries and wages
Accrued value-added tax and other taxes
Accrued transportation and facility charges
Accrued insurance claims
Accrued litigation liabilities
Accrued purchased services
Accrued interest
Other accrued expenses

Total Accrued Expenses

Other Current Liabilities

Other current liabilities is comprised of the following:

(In millions)
Deferred revenue

Employee benefits

Book and bank overdrafts

Acquisition earn-out liability

Income tax payable

Other current liabilities

Total Other Current Liabilities

Estimated Useful Life Weighted-Average Amortization Period

1.5 to 16 years
1.2 to 3.5 years
Term of agreement

13.4 years
2.9 years
4.6 years

December 31,

2016

2015

570.9
145.5
266.9
83.9
74.6
30.6
36.4
173.3
1,382.1

December 31,

2016

2015

47.3

37.3

11.0

—

27.4

33.7

156.7

558.6
153.3
156.1
95.3
66.1
61.7
56.8
143.9
1,291.8

62.4

38.7

29.5

21.8

—

51.2

203.6

Self-Insurance

The Company uses a combination of self-insurance programs and purchased insurance to provide for the costs of medical,
casualty, liability, vehicular, cargo and workers' compensation claims. The long-term portion of self-insurance accruals relates
primarily to workers' compensation and vehicular claims that are expected to be payable over several years. The Company
periodically evaluates the level of insurance coverage and adjusts insurance levels based on risk tolerance and premium
expense.

The measurement and classification of self-insured costs requires the consideration of historical cost experience, demographic
and severity factors, and judgments about the current and expected levels of cost per claim and retention levels. These methods
provide estimates of the undiscounted liability associated with claims incurred as of the balance sheet date, including estimates
of claims incurred but not reported. Changes in these assumptions and factors can materially affect actual costs paid to settle the
claims and those amounts may be different than estimates.

Advertising Costs

Advertising costs are expensed as incurred.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss (“AOCL”), net of tax at December 31, 2016 and 2015, are as
follows:

(In millions)

Foreign
Currency
Translation
Adjustments

Cash Flow and
Net Investment
Hedges

Defined Benefit
Plans Liability

Less: AOCL
Attributable to
Noncontrolling
Interests

As of December 31, 2014

— $

Other comprehensive income (loss)

As of December 31, 2015

Other comprehensive income (loss)

Amounts reclassified from AOCL

Net current period other comprehensive
income (loss)

(68.5)

(137.7)

—

(137.7)

As of December 31, 2016

(206.2) $

6.9

6.9
(7.1)
—

(17.0)
(17.0)
5.3
(0.6)

(7.1)
(0.2) $

4.7
(12.3) $

6.3

18.7

—

18.7

25.0

AOCL
Attributable to
the Company
—
(72.3)
(72.3)
(120.8)
(0.6)

(121.4)
(193.7)

Income Taxes

Taxes on income are provided for in accordance with ASC Topic 740, “Income Taxes.” Deferred income tax assets and
liabilities are recognized for the expected future tax consequences of events that have been reflected in the consolidated
financial statements. Deferred tax assets and liabilities are determined based on the differences between the book value and the
tax basis of particular assets and liabilities, and the tax effects of net operating loss and capital loss carryforwards. 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 the
tax rate is recognized as income or expense in the period that included the enactment date. A valuation allowance is provided to
offset net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax
assets will not be realized. Management periodically assesses the likelihood that the Company will utilize its existing deferred
tax assets and records a valuation allowance for deferred tax assets when it is more likely than not that such deferred tax assets
will not be realized.

Accounting for uncertainty in income taxes is determined based on ASC Topic 740, which clarifies the accounting for
uncertainty in income taxes recognized in a company’s financial statements and provides guidance on the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosures.

Foreign Currency Translation and Transactions

The assets and liabilities of foreign subsidiaries that use the local currency as their functional currency are translated to U.S.
dollars (“USD”) using the exchange rate prevailing at each balance sheet date, with balance sheet currency translation
adjustments recorded in accumulated other comprehensive income in the consolidated balance sheets. The assets and liabilities
of foreign subsidiaries whose local currency is not their functional currency are remeasured from their local currency to their
functional currency and then translated to USD. The results of operations of the Company's foreign subsidiaries are translated

to USD using average exchange rates prevailing for each period presented. Foreign currency transactions recognized in the
consolidated statements of operations are converted to USD by applying the exchange rate prevailing on the date of the
transaction. Gains and losses arising from foreign currency transactions and the effects of remeasuring monetary assets and
liabilities are recorded in foreign currency loss in the consolidated statements of operations.

The following table provides a breakdown of foreign currency (gain)/loss included in the consolidated statements of operations:

(In millions)

Unrealized foreign currency option and forward contracts (gains)/losses

Realized foreign currency option and forward contracts (gains)/losses

Foreign currency transaction and remeasurement (gains)/losses

Remeasurement loss on cash held to purchase ND

Loss on forward contract related to ND acquisition

Total foreign currency (gain)/loss

Fair Value Measurements

Years ended December 31,

2016

2015

2014

(39.7) $
(3.8)
3.2

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—
(40.3) $

1.0

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2.4

31.7

9.7

44.8

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0.4

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0.4

FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and
classifies the inputs used to measure fair value into the following hierarchy:

• Level 1—Quoted prices for identical instruments in active markets;

• Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations in which all significant inputs are observable in active
markets; and

• Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation

techniques that reflect management’s judgment and estimates.

The aggregate net fair value estimates are based upon certain market assumptions and pertinent information available to
management. The respective carrying value of certain financial instruments approximated their fair values as of December 31,
2016 and 2015, respectively. These financial instruments include cash, accounts receivable, accounts payable, accrued
expenses, and current maturities of long-term debt. Fair values approximate carrying values for these financial instruments
since they are short-term in nature and are receivable or payable on demand. The Level 1 cash equivalents include money
market funds valued using quoted prices in active markets. The Level 2 cash equivalents include short-term investments valued
using published interest rates for instruments with similar terms and maturities. For information regarding the fair value
hierarchy of the Company's financial liabilities and derivative instruments, refer to Note 9—Debt and Note 14—Derivative
Instruments, respectively.

The following table summarizes the fair value hierarchy of cash equivalents:

(In millions)

Cash equivalents

(In millions)

Cash equivalents

Derivative Instruments

Carrying Value
103.5
$

Carrying Value
83.2
$

December 31, 2016

Fair Value

Level 1

Level 2

103.5

26.4

77.1

December 31, 2015

Fair Value

Level 1

Level 2

83.2

9.1

74.1

The Company records all derivative instruments in the consolidated balance sheets as assets or liabilities at fair value. The
Company’s accounting treatment for changes in the fair value of derivative instruments depends on whether the instruments
have been designated and qualify as part of a hedging relationship and, further, on the type of hedging relationship. For those
derivative instruments that are designated and qualify as hedging instruments, the Company must designate the derivative based
upon the exposure being hedged. The effective portions of cash flow hedges are recorded in accumulated other comprehensive
income in the consolidated balance sheets until the hedged item is recognized in earnings. The effective portions of net
investment hedges are recorded in accumulated other comprehensive income in the consolidated balance sheets as a part of the
cumulative translation adjustment. The ineffective portions of cash flow hedges and net investment hedges are recorded in

interest expense in the consolidated statements of operations. Derivatives that are not designated as hedging instruments are
adjusted to fair value through earnings and are recorded in foreign currency gain/loss in the consolidated statements of
operations, depending on the objective of the derivative. Cash receipts and payments are classified according to the derivative’s
nature. However, cash flows from derivative instruments that are accounted for as cash flow hedges are classified in the same
category as the cash flows from the items being hedged.

Defined Benefit Pension Plans

Defined benefit pension plan obligations are calculated using various actuarial assumptions and methodologies. Assumptions
include discount rates, inflation rates, expected long-term rate of return on plan assets, mortality rates, and other factors. The
assumptions used in recording the projected benefit obligation and fair value of plan assets represent the Company's best
estimates based on information available regarding historical experience and factors that may cause future expectations to differ
from past experiences. Differences in actual experience or changes in assumptions could materially impact the Company's
obligation and future expense amounts.

The impact of plan amendments, actuarial gains and losses and prior-service costs are recorded in accumulated other
comprehensive income, and are generally amortized as a component of net periodic benefit cost over the remaining service
period of the active employees covered by the defined benefit pension plans. Unamortized gains and losses are amortized only
to the extent they exceed 10% of the higher of the fair value of plan assets or the projected benefit obligation of the respective
plan.

Stock-Based Compensation

The Company accounts for stock-based compensation based on the equity instrument’s grant date fair value. For grants of
restricted stock units (“RSUs”) subject to service- or performance-based vesting conditions only, the fair value is established
based on the market price on the date of the grant. For grants of RSUs subject to market-based vesting conditions, the fair value
is established using the Monte Carlo simulation lattice model. For grants of options and stock appreciation rights (“SARs”), the
Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based payment awards. The
determination of the fair value of stock-based awards is affected by the Company’s stock price and a number of assumptions,
including expected volatility, expected life, risk-free interest rate and expected dividends. The Company has elected to account
for forfeitures as they occur with the adoption of ASU 2016-09.

The weighted-average fair value of each stock option recorded in expense is amortized over the requisite service period of the
option. For options with graded vesting, it is the Company’s policy to recognize compensation cost on a straight-line basis over
the requisite service period for the entire award; however, the amount of compensation cost recognized at any date will at least
equal the portion of the grant date value of the award that is vested at that date. For the Company’s performance-based
restricted stock units (“PRSUs”), the Company recognizes expense over the awards’ requisite service period based on the
number of awards expected to vest with consideration to the actual and expected financial results. If achievement of the
performance targets for a PRSU award is not considered to be probable, then no expense is recognized until achievement of
such targets becomes probable.

New Accounting Standards

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue (Topic 606): “Revenue from
Contracts with Customers.” This new standard includes the required steps to achieve the core principle that an entity should
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. The new standard will be effective for our
annual and interim periods beginning January 1, 2018, and permits the use of either the retrospective or cumulative effect
transition method. The Company does not plan to adopt the standard early and has not yet determined which transition method
will be used. We are currently evaluating the effects of this standard. We have completed an initial “gap assessment,” whereby
we have compared our current revenue recognition practices to those required by the new standard. The main areas under
consideration include (i) the recognition of revenue using proportionate delivery within our Transportation segment, (ii) the
application of principal vs. agent, and (iii) the identification and capitalization of contract inception costs. We do not currently
expect that the adoption of the standard will have a material effect on our consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in
Certain Entities That Calculate Net Asset Value Per Share (or Its Equivalent) (a consensus of the Emerging Issues Task Force).”
This ASU eliminates the existing requirement to categorize investments measured using the net asset value (“NAV”) practical
expedient in the fair value hierarchy table. It requires entities to disclose the fair value of investments measured using the NAV
practical expedient so that financial statement users can reconcile amounts reported in the fair value hierarchy table to amounts
reported on the balance sheet. The adoption of this standard resulted in changes to the presentation of the fair value of

investments tables for the Company’s defined benefit pension plans, but it did not affect the Company’s financial condition,
results of operations, or cash flows. For additional information, refer to Note 10—Employee Benefit Plans.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The core principle of Topic 842 is that a lessee
should recognize the assets and liabilities that arise from leases, including operating leases. Under the new requirements, a
lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and the right-
of-use asset representing the right to the underlying asset for the lease term. For leases with a term of 12 months or less, the
lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease
liabilities. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those
fiscal years. The Company is currently evaluating the effects ASU 2016-02 will have on its consolidated financial statements
and related disclosures. The Company currently discloses approximately $2,144.3 million in operating lease obligations in the
lease commitments footnote (Note 5) and will evaluate those contracts as well as other existing arrangements to determine if
they qualify for lease accounting under the new standard. The Company does not plan to adopt the standard early.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): “Improvements to
Employee Share-based Payment Accounting.” This ASU involves several aspects of the accounting for share-based payment
transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on
the statement of cash flows. Under the new standard, income tax benefits and deficiencies are to be recognized as income tax
expense or benefit in the income statement and the tax effects of exercised or vested awards should be treated as discrete items
in the reporting period in which they occur. An entity should also recognize excess tax benefits regardless of whether the
benefit reduces taxes payable in the current period. Excess tax benefits should be classified along with other income tax cash
flows as an operating activity. In regards to forfeitures, the entity may make an entity-wide accounting policy election to either
estimate the number of awards that are expected to vest or account for forfeitures when they occur. The Company adopted this
standard in the fourth quarter of 2016, effective January 1, 2016. As a result of adoption, a deferred tax asset of $7.6 million
was recorded, with an offset to retained earnings, and a discrete tax benefit of $5.4 million is included in income tax expense
for the year ended December 31, 2016. The Company has elected to account for forfeitures as they occur, resulting in a retained
earnings adjustment of $1.3 million.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): “Classification of Certain Cash
Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).” This ASU addresses eight specific cash flow
classification issues with the objective of reducing the existing diversity in practice. Under the new standard, cash payments for
debt prepayments or debt extinguishment costs should be classified as outflows for financing activities. Additional cash flow
issues covered under the standard include: settlement of zero-coupon debt instruments or other debt instruments with coupon
interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments
made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of
corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in
securitization transactions, and separately identifiable cash flows and application of the predominance principle. This ASU is
effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within that reporting
period; however, early adoption is permitted. The Company is currently evaluating the standard and the impacts, if any, on the
consolidated financial statements and related disclosures.

3. Acquisitions and Divestitures

2015 Acquisitions

Con-way Inc.

On September 9, 2015, XPO entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Con-way
Inc., a Delaware corporation (“Con-way”). Headquartered in Ann Arbor, Michigan, Con-way was a Fortune 500 company with
a transportation and logistics network of 582 locations and approximately 30,000 employees serving over 36,000 customers.

XPO completed its acquisition of Con-way on October 30, 2015. The fair value of the total consideration paid by XPO was
$2,317.8 million, net of cash acquired of $437.3 million, consisting of $2,706.6 million of cash paid at the time of closing for
the purchase of all of Con-way’s outstanding shares of common stock, par value $0.625 (the “Con-way Shares”), $17.6 million
representing the portion of replacement equity awards attributable to pre-acquisition service, and a $30.9 million liability for the
settlement of certain Con-way stock-based compensation awards.

(In millions)
Cash consideration
Liability for equity award settlement
Portion of replacement equity awards attributable to pre-acquisition service
Cash acquired
Total consideration

2,706.6
30.9
17.6
(437.3)
2,317.8

The Con-way transaction was accounted for as a business combination in accordance with ASC Topic 805 “Business
Combinations.” Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their
estimated fair values as of October 30, 2015, with the remaining unallocated purchase price recorded as goodwill. Goodwill
includes the expected synergies and cost rationalization from the merger of operations as well as intangible assets that do not
qualify for separate recognition such as an assembled workforce.

The following table outlines the consideration transferred and purchase price allocation at the respective estimated fair values as
of October 30, 2015:

(In millions)
Consideration
Accounts receivable
Other current assets
Property and equipment
Trade name
Customer relationships
Other long-term assets
Accounts payable
Accrued expenses
Other current liabilities
Long-term debt
Deferred tax liabilities
Employee benefit obligations
Other long-term liabilities
Goodwill

2,317.8
676.5
141.0
1,932.4
5.6
658.5
53.5
(363.4)
(402.3)
(69.3)
(637.8)
(578.1)
(155.5)
(257.6)
1,314.3

The Con-way purchase price allocation is final. Approximately $1,057.9 million of the goodwill relates to the Transportation
segment and $256.4 million of the goodwill relates to the Logistics segment. The goodwill as a result of the acquisition is not
deductible for income tax purposes.

Norbert Dentressangle SA

On April 28, 2015, XPO entered into (1) a Share Purchase Agreement (the “Share Purchase Agreement”) relating to Norbert
Dentressangle SA (“ND”), a French société anonyme and (2) a Tender Offer Agreement (the “Tender Offer Agreement” and,
together with the Share Purchase Agreement, the “ND Transaction Agreements”) between XPO and ND. The ND Transaction
Agreements provided for the acquisition of a majority stake in ND by XPO, followed by an all-cash simplified tender offer by
XPO to acquire the remaining outstanding ND shares.

On June 8, 2015, pursuant to the terms of the Share Purchase Agreement, XPO purchased approximately 67% of the share
capital of ND and all of the outstanding share subscription warrants granted by ND to employees, directors or other officers of
ND and its affiliates (together, the “Share Purchase”). Total cash consideration paid by XPO for the Share Purchase was
€1,437.0 million, or $1,603.9 million, excluding acquired debt. This cash consideration reflected only that portion of the fair
value of the warrants attributable to service performed by employees, officers, or directors of ND and its affiliates prior to the
acquisition date. The remaining balance of the fair value of the warrants was recorded as compensation expense in the post-
combination period. The Company also agreed to settle certain ND performance stock awards. Similar to the warrants, the
consideration paid by XPO for these stock awards of €11.8 million, or $13.2 million, included only that portion of the fair value
attributable to service performed prior to the acquisition date with the balance recorded as compensation expense in the post-
combination period. The performance shares were scheduled to be settled in cash with 50% of the awards paid 18 months from
the acquisition date and the remaining 50% paid 36 months from the acquisition date. Further, as a result of the acquisition, the
Company repaid certain ND indebtedness and related interest rate swap liabilities totaling €628.5 million, or $705.0 million.

On June 25, 2015, XPO launched a mandatory simplified cash offer (the “Tender Offer”) to purchase all of the outstanding
ordinary shares of ND (other than the shares already owned by XPO). During the Tender Offer period, the minority
shareholders had the right to sell their shares of ND to the Company and the Company had the obligation to purchase those
shares at the Tender Offer price. Once the Tender Offer closed on July 17, 2015, the noncontrolling interest is classified as
noncontrolling interest in equity in the consolidated balance sheet. The Company purchased 1,921,553 shares under the Tender
Offer and acquired a total of approximately 86.25% of the share capital of ND. The total fair value of the consideration paid by
XPO in connection with the Tender Offer was €702.5 million, or $784.2 million, which is based on the quoted market price of
ND shares on the acquisition date. The total consideration paid by XPO for ND is summarized in the table below in Euros
(“EUR”) and USD:

(In millions)
Cash consideration
Liability for performance share settlement
Repayment of indebtedness
Noncontrolling interests
Cash acquired
Total consideration

In EUR

In USD

1,437.0
11.8
628.5
702.5
(134.6)
2,645.2

1,603.9
13.2
705.0
784.2
(151.0)
2,955.3

€

The Share Purchase was accounted for as a business combination in accordance with ASC Topic 805 “Business Combinations.”
Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair
values as of June 8, 2015, with the remaining unallocated purchase price recorded as goodwill. Goodwill includes the expected
synergies and cost rationalization from the merger of operations as well as intangible assets that do not qualify for separate
recognition such as an assembled workforce.

The following table outlines the consideration transferred and purchase price allocation at the respective estimated fair values as
of June 8, 2015:

(Dollars in millions)
Consideration
Accounts receivable
Other current assets
Deferred tax assets
Property and equipment
Trade name covenants
Non-compete agreements
Customer relationships
Other long-term assets
Accounts payable
Accrued expenses
Other current liabilities
Long-term debt
Deferred tax liabilities
Employee benefit obligations
Other long-term liabilities
Noncontrolling interests
Goodwill

2,955.3
1,058.5
353.6
44.6
706.1
40.0
5.6
827.0
57.1
(806.0)
(428.2)
(131.8)
(643.4)
(237.7)
(142.3)
(177.2)
(37.2)
2,466.6

The ND purchase price allocation is final. Approximately $962.4 million of the goodwill relates to the Transportation segment
and $1,504.2 million of the goodwill relates to the Logistics segment. The goodwill resulting from the ND acquisition is not
deductible for local country income tax purposes.

Bridge Terminal Transport Services, Inc.

On May 4, 2015, the Company entered into a Stock Purchase Agreement with BTTS Holding Corporation to acquire all of the
outstanding capital stock of Bridge Terminal Transport Services, Inc. (“BTT”), a leading asset-light drayage provider in the
United States. The closing of the transaction was effective on June 1, 2015. The fair value of the total consideration paid by
XPO under the BTT Stock Purchase Agreement was $103.8 million and consisted of $103.1 million of cash paid at the time of
closing, including an estimate of the working capital adjustment, and $0.7 million of equity.

The BTT acquisition was accounted for as a business combination in accordance with ASC Topic 805 “Business
Combinations.” Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their
estimated fair values as of June 1, 2015 with the remaining unallocated purchase price recorded as goodwill. As a result of the
acquisition, the Company recorded goodwill of $56.5 million and definite-lived intangible assets of $30.0 million. All goodwill
relates to the Transportation segment and is not deductible for income tax purposes. The BTT purchase price allocation is final.

UX Specialized Logistics

On February 9, 2015, pursuant to an Asset Purchase Agreement of the same date between the Company and Earlybird Delivery
Systems, LLC, the Company acquired certain assets of UX Specialized Logistics, LLC (“UX”). The fair value of the total
consideration paid under the UX Asset Purchase Agreement was $58.9 million and consisted of $58.1 million of cash paid at
the time of closing, including an estimate of the working capital adjustment, and $0.8 million of equity. UX provided last mile
logistics and same day delivery services for major retail chains and e-commerce companies.

The UX acquisition was accounted for as a business combination in accordance with ASC Topic 805 “Business Combinations.”
Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair
values as of February 9, 2015 with the remaining unallocated purchase price recorded as goodwill. As a result of the UX
acquisition, the Company recorded goodwill of $38.1 million and definite-lived intangible assets of $18.8 million. All goodwill
relates to the Transportation segment and is fully deductible for income tax purposes. The UX purchase price allocation is final.

Pro Forma Financial Information (Unaudited)

The following unaudited pro forma consolidated results of operations for the year ended December 31, 2015 present
consolidated information of the Company as if the acquisitions of Con-way and ND had occurred as of January 1, 2015:

(Dollars in millions, except per share data)
Revenue
Operating income
Net loss
Basic loss per share
Diluted loss per share

Pro Forma Year Ended
December 31,

2015

$
$
$
$
$

14,833.5
233.3
(174.5)
(2.11)
(2.11)

The unaudited pro forma consolidated results for the year ended December 31, 2015 was prepared using the acquisition method
of accounting and is based on the historical financial information of Con-way, ND, and the Company. The unaudited pro forma
consolidated results incorporate historical financial information for all significant acquisitions pursuant to U.S. Securities and
Exchange Commission (“SEC”) regulations since January 1, 2015, without effect to the sale of the North American Truckload
operations noted below. The historical financial information has been adjusted to give effect to pro forma adjustments that are:
(i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the
combined results. The unaudited pro forma consolidated results are not necessarily indicative of what the Company’s
consolidated results of operations actually would have been had it completed these acquisitions on January 1, 2015.

Divestitures

North American Truckload Operations

On October 27, 2016, pursuant to a Stock Purchase Agreement of the same date between the Company and a subsidiary of
TransForce Inc. (“TransForce”), the Company divested its North American Truckload operations (formerly known as Con-way
Truckload) for approximately $558.0 million cash consideration, subject to certain adjustments. The Company also agreed to
provide certain specified transition services to TransForce following the transaction. For the period from January 1, 2016
through October 26, 2016, these North American Truckload operations generated revenue of $393.2 million and operating
income of $31.9 million. These North American Truckload operations are included in the Company’s Transportation segment
through the date of sale.

On November 3, 2016, the Company used the proceeds from sale of the North American Truckload operations to repurchase
$555.0 million of Term Loan debt at par. The repurchase of debt resulted in a non-cash debt extinguishment charge of $16.5
million in the fourth quarter of 2016.

4. Restructuring Charges

In conjunction with various acquisitions, the Company has initiated facility rationalization and severance programs to close
facilities and reduce employment in order to improve the Company’s efficiency and profitability or adjust for the loss of certain
business.

The amount of restructuring charges incurred during the years ended December 31, 2016 and 2015 and included in the
Company’s consolidated statements of operations as sales, general and administrative expense, direct operating expense, and
cost of transportation and services, are summarized below. The 2015 table includes charges recorded on ND’s opening balance
sheet which were incurred prior to the acquisition date. Only ND restructuring initiatives in existence at the acquisition date
were included in the purchase price allocation.

(In millions)
Transportation

Year ended December 31, 2016

Reserve Balance at
December 31, 2015

Charges
Incurred

Payments

Reserve Balance at
December 31, 2016

Contract termination

61.2

26.8

Reserve Balance at
December 31, 2014

From ND
Acquisition

Charges
Incurred

Payments

Reserve Balance at
December 31, 2015

Year ended December 31, 2015

Contract termination

— $

Facilities

Severance

Total
Logistics

Contract termination

Facilities

Severance

Total
Corporate

Contract termination

Facilities

Severance

Total

(In millions)
Transportation

Facilities

Severance

Total
Logistics

Contract termination

Severance

Total
Corporate

Contract termination

Severance

Total

—

3.8

1.3

5.1

5. Commitments and Contingencies

Lease Commitments

0.1

0.6

26.7

27.4

0.8

—

25.5

26.3

4.0

—

3.5

7.5

1.8

1.7

5.0

8.5

2.2

0.7

14.1

17.0

—

0.1

1.2

1.3

(1.9) $
(0.9)
(25.9)
(28.7)

(2.3)
(0.2)
(23.5)
(26.0)

(3.7)
(0.1)
(4.3)
(8.1)
(62.8) $

—

1.4

5.8

7.2

0.7

0.5

16.1

17.3

0.3

—

0.4

0.7

25.2

0.1

—

4.8

4.9

0.1

9.3

9.4

—

0.8

27.3

28.1

0.9

21.3

22.2

3.3

6.6

(0.2)
(5.4)
(5.6)

(0.2)
(5.1)
(5.3)

(3.1)
(1.1)
(4.2)
(15.1) $

0.1

0.6

26.7

27.4

0.8

25.5

26.3

4.0

3.5

7.5

61.2

14.3

56.9

Under operating leases, the Company is required to make payments for various real estate, double-stack railcars, containers,
chassis, tractors, data processing equipment, transportation and office equipment leases that have an initial or remaining non-
cancelable lease term. Certain leases also contain provisions that allow the Company to extend the leases for various renewal
periods.

Under certain capital lease agreements, the Company guarantees the residual value of tractors at the end of the lease term. The
stated amounts of the residual-value guarantees have been included in the minimum lease payments below.

Future minimum lease payments with initial or remaining non-cancelable lease terms in excess of one year, at December 31,
2016, were as follows:

(In millions)

Year ending December 31:

2017

2018

2019

2020

2021

Thereafter

Total minimum lease payments

Amount representing interest

Present value of minimum lease payments

Capital Leases

Operating Leases

542.1

422.6

314.7

222.0

163.6

479.3

2,144.3

18.3

24.1

10.4

9.3

8.9

30.9

101.9
(4.5)
97.4

Rent expense was approximately $677.2 million, $412.1 million and $82.3 million for the years ended December 31, 2016,
2015 and 2014, respectively.

Litigation

The Company is involved, and will continue to be involved, in numerous proceedings arising out of the conduct of its business.
These proceedings may include, among other matters, claims for property damage or personal injury incurred in connection
with the transportation of freight, claims regarding anti-competitive practices, and employment-related claims, including claims
involving asserted breaches of employee restrictive covenants and tortious interference with contract. These proceedings also
include numerous purported class action lawsuits, multi-plaintiff and individual lawsuits and state tax and other administrative
proceedings that claim either that the Company’s owner operators or contract carriers should be treated as employees, rather
than independent contractors, or that certain of the Company's drivers were not paid for all compensable time or were not
provided with required meal or rest breaks. These lawsuits and proceedings may seek substantial monetary damages (including
claims for unpaid wages, overtime, failure to provide meal and rest periods, unreimbursed business expenses and other items),
injunctive relief, or both.

The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred
and the amount of the loss can be reasonably estimated. Accruals for loss contingencies are reviewed quarterly and adjusted as
additional information becomes available. In connection with certain acquisitions of privately-held businesses, the Company
has retained purchase price holdbacks or escrows to provide security for a negotiated duration with respect to damages incurred
in connection with pre-acquisition claims and litigation matters. If a loss is not both probable and reasonably estimable, or if an
exposure to loss exists in excess of the amount accrued therefor or the applicable purchase price holdback or escrow, the
Company assesses whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If
there is a reasonable possibility that a loss, or additional loss, may have been incurred, the Company discloses the estimate of
the possible loss or range of loss if it is material and an estimate can be made, or states that such an estimate cannot be made.
The evaluation as to whether a loss is reasonably possible or probable is based on the Company’s assessment, in conjunction
with legal counsel, regarding the ultimate outcome of the matter.

The Company believes that it has adequately accrued for, or has adequate purchase price holdbacks or escrows with respect to,
the potential impact of loss contingencies that are probable and reasonably estimable. The Company does not believe that the
ultimate resolution of any matters to which the Company is presently a party will have a material adverse effect on its results of
operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an
unfavorable resolution of one or more of these matters could have a material adverse effect on the Company’s financial
condition, results of operations or cash flows. Legal costs incurred related to these matters are expensed as incurred.

The Company carries liability and excess umbrella insurance policies that it deems sufficient to cover potential legal claims
arising in the normal course of conducting its operations as a transportation and logistics company. The liability and excess
umbrella insurance policies generally do not cover the misclassification claims described in this Note. In the event the

Company is required to satisfy a legal claim outside the scope of the coverage provided by insurance, the Company’s financial
condition, results of operations or cash flows could be negatively impacted.

Intermodal Drayage Classification Claims

Certain of the Company’s intermodal drayage subsidiaries received notices from the California Labor Commissioner, Division
of Labor Standards Enforcement (the “DLSE”), that a total of approximately 150 owner operators contracted with these
subsidiaries filed claims in 2012 with the DLSE in which they assert that they should be classified as employees, rather than
independent contractors. These claims seek reimbursement for the owner operators’ business expenses, including fuel, tractor
maintenance and tractor lease payments. After a decision was rendered by a DLSE hearing officer in seven of these claims, in
2014, the Company appealed the decision to California Superior Court, San Diego, where a de novo trial was held on the merits
of those claims. On July 17, 2015, the court issued a final statement of decision finding that the seven claimants were
employees rather than independent contractors, and awarding an aggregate of $2.9 million plus post-judgment interest and
attorneys’ fees to the claimants. The Company appealed this judgment, but cannot provide assurance that such appeal will be
successful. Separate decisions were rendered in June 2015 by a DLSE hearing officer in claims involving five additional
plaintiffs, resulting in an award for the plaintiffs in an aggregate amount of approximately $0.9 million, following which the
Company has appealed the decisions in the U.S. District Court for the Central District of California. These proceedings are
currently in the discovery phase. The remaining DLSE claims (the “Pending DLSE Claims”) have been transferred to California
Superior Court in three separate actions involving approximately 200 claimants, including the approximately 150 claimants
mentioned above. These matters are in the discovery stage. The Company believes that it has adequately accrued for the
potential impact of loss contingencies that are probable and reasonably estimable relating to the claims referenced above. The
Company is unable at this time to estimate the amount of the possible loss or range of loss, if any, in excess of its accrued
liability that it may incur as a result of these claims given, among other reasons, that the number and identities of plaintiffs in
these lawsuits are uncertain and the range of potential loss could be impacted substantially by future rulings by the courts
involved, including on the merits of the claims.

One of the Company's intermodal drayage subsidiaries also is a party to a class action lawsuit (Manuela Ruelas Mendoza v.
Pacer Cartage, Inc.) brought by Edwin Molina on August 19, 2013 and currently pending in the U.S. District Court, Southern
District of California. Mr. Molina asserts that he should be classified as an employee, rather than an independent contractor, and
seeks damages for alleged violation of various California wage and hour laws on behalf of himself and all owner-operators
contracted with this subsidiary at any time from August 19, 2009 to April 29, 2016. Certain of these potential claimants also
may have Pending DLSE Claims. The Company has reached an agreement to settle this litigation with the claimant. The Court
has approved the settlement agreement, and it has been accepted by 520 members of the putative class. The Company has
accrued the full amount of the proposed settlement. The full amount of the settlement has been paid in 2016 and the matter will
be dismissed by the U.S. District Court, Southern District of California.

There are other putative class action litigation matters pending against the Company’s intermodal drayage subsidiaries in which
the plaintiffs claim they should have been classified as employees, rather than independent contractors, and seek damages for
alleged violations of various California wage and hour laws. The particular claims asserted vary from case to case, but the
claims generally allege unpaid wages, unpaid overtime, or failure to provide meal and rest periods, and seek reimbursement of
the contract carriers’ business expenses. However, these claims are all subject to arbitration provisions in the claimants’
independent contractor agreements, and class action certification is therefore unlikely. These cases include the following
matters filed in the Superior Court for the State of California, Los Angeles District: C. Arevalo v. XPO Port Services, Inc. filed
in August 2015; M. Cortez v. Pacer filed in June 2016; and the following case filed in U.S. District Court for the Central
District of California: I. Hernandez v. Pacer filed in May 2016. One of these cases, Cortez, has filed a California Private
Attorneys General Act (“PAGA”) claim, which is not subject to arbitration and therefore is subject to PAGA class action
procedures. However, this matter is in the initial pleading stage and the court has not yet determined whether to certify the
PAGA claim to proceed. The Company believes that it has adequately accrued for the potential impact of loss contingencies that
are probable and reasonably estimable relating to these claims. The Company is unable at this time to estimate the amount of
the possible loss or range of loss, if any, in excess of its accrued liability that it may incur as a result of these claims given,
among other reasons, that the number and identities of plaintiffs in these lawsuits are uncertain and the range of potential loss
could be impacted substantially by future rulings by the courts involved, including on the merits of the claims.

Last Mile Logistics Classification Claims

Certain of the Company’s last mile logistics subsidiaries are party to several putative class action litigations brought by
independent contract carriers who contracted with these subsidiaries in which the contract carriers assert that they should be
classified as employees, rather than independent contractors. The particular claims asserted vary from case to case, but the
claims generally allege unpaid wages, unpaid overtime, or failure to provide meal and rest periods, and seek reimbursement of
the contract carriers’ business expenses. Putative class actions against the Company’s subsidiaries are pending in California
(Fernando Ruiz v. Affinity Logistics Corp., filed in May 2005, currently in the Federal District Court, Southern District of
California; Ron Carter, Juan Estrada, Jerry Green, Burl Malmgren, Bill McDonald and Joel Morales v. XPO Logistics, Inc.,

filed in March 2016 in the Federal District Court, Northern District of California; Ramon Garcia v. Macy’s and XPO Logistics
Inc., filed in July 2016 in Superior Court of the State of California, Alameda County; and Kevin Kramer v. XPO Logistics Inc.,
filed in September 2016 in Superior Court of the State of California, Alameda County); New Jersey (Leonardo Alegre v.
Atlantic Central Logistics, Simply Logistics, Inc., filed in March 2015 in the Federal District Court, New Jersey); Pennsylvania
(Victor Reyes v. XPO Logistics, Inc., filed in May 2015 in the U.S. District Court, Pennsylvania); and Connecticut (Carlos
Taveras v. XPO Last Mile, Inc., filed in November 2015 in the Federal District Court, Connecticut). The Company believes that
it has adequately accrued for the potential impact of loss contingencies relating to the foregoing claims that are probable and
reasonably estimable. The Company is unable at this time to estimate the amount of the possible loss or range of loss, if any, in
excess of its accrued liability that it may incur as a result of these claims given, among other reasons, that the number and
identities of plaintiffs in these lawsuits are uncertain and the range of potential loss could be impacted substantially by future
rulings by the courts involved, including on the merits of the claims.

Last Mile TCPA Claims

The Company is a party to a putative class action litigation (Leung v. XPO Logistics, Inc., filed in May 2015 in the U.S. District
Court, Illinois) alleging violations of the Telephone Consumer Protection Act (“TCPA”) related to an automated customer call
system used by a last mile logistics business that the Company acquired. This matter is in the initial pleading stage and the court
has not yet determined whether to certify the matter as a class action. The Company believes that it has adequately accrued for
the potential impact of loss contingencies that are probable and reasonably estimable relating to this matter. The Company is
unable at this time to estimate the amount of the possible loss or range of loss, if any, in excess of its accrued liability that it
may incur as a result of this matter given, among other reasons, that the Company is vigorously defending the matter and
believes that it has a number of meritorious legal defenses and that it remains uncertain what evidence of their claims and
damages, if any, plaintiffs will be able to present.

Less-Than-Truckload Meal Break Claims

The Company’s LTL subsidiary is a party to several class action litigations alleging violations of the state of California's wage
and hour laws. Plaintiffs allege failure to provide drivers with required meal breaks and rest breaks. Plaintiffs seek to recover
unspecified monetary damages, penalties, interest and attorneys’ fees. The primary case is Jose Alberto Fonseca Pina, et al. v.
Con-way Freight Inc., et al. (the “Pina case”). The Pina case was initially filed in November 2009 in Monterey County
Superior Court and was removed to the U.S. District Court of California, Northern District. The Company has reached an
agreement to settle the Pina case, which has been tentatively approved by the court, and no interested parties have timely filed
objections to the proposed settlement. The Company has accrued the full amount of the proposed settlement.

XPO Logistics Worldwide Government Services Investigation

On June 11, 2014, XPO Logistics Worldwide Government Services, LLC, formerly known as Menlo Worldwide Government
Services, LLC (“Government Services”), a subsidiary of the contract logistics business that the Company acquired through the
Con-way transaction, received a subpoena duces tecum from the U.S. Department of Defense Inspector General requesting
records relating to an investigation into compliance with the terms and conditions of its contractual arrangements with the
United States Transportation Command (the “DTCI Contract”) for work performed prior to the acquisition of Government
Services by the Company. Government Services received a follow-on Civil Investigative Demand from the U.S. Department of
Justice dated September 30, 2015, related to the same or related matters. On April 23, 2016, the Company entered into a
settlement agreement with the United States Department of Justice regarding the foregoing investigation. The settlement fully
resolves disputed charges under the DTCI Contract, and all related claims have been dismissed with prejudice, waived and
released. The Company denied that any wrongdoing occurred.

6. Property and Equipment

The following table outlines the Company’s property and equipment:

(In millions)

Property and Equipment
Land
Buildings and leasehold improvements
Vehicles, tractors, trailers and tankers
Machinery and equipment
Office and warehouse equipment
Computer software and equipment

Less: Accumulated depreciation and amortization
Total Property and Equipment, net

December 31,

2016

2015

442.0
503.8
1,194.2
370.9
113.3
503.1
3,127.3
(589.9)
2,537.4

359.5
476.8
1,440.5
325.9
79.5
379.3
3,061.5
(209.3)
2,852.2

Depreciation of property and equipment and amortization of computer software was $466.0 million, $203.0 million and $35.8
million for the years ended December 31, 2016, 2015 and 2014, respectively. Assets represented by capital leases, net of
accumulated depreciation, were $100.1 million and $57.7 million at December 31, 2016 and 2015, respectively. The net book
value of capitalized internally-developed software totaled $132.1 million and $122.8 million as of December 31, 2016 and
2015, respectively.

7. Intangible Assets

The following table outlines the Company’s identifiable intangible assets:

(In millions)
Definite-lived intangibles

Customer relationships
Trade name
Non-compete agreements

December 31, 2016

December 31, 2015

Gross Carrying
Amount

Accumulated
Amortization

Gross Carrying
Amount

Accumulated
Amortization

1,848.3
47.5
16.0
1,911.8

326.3
39.9
10.9
377.1

2,017.0
51.0
18.7
2,086.7

174.3
29.1
6.8
210.2

Estimated future amortization expense for amortizable intangible assets for the next five years is as follows:

(In millions)
Estimated amortization expense

2017

2018

2019

2020

2021

161.0

153.5

147.4

141.4

134.1

Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates,
additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets and other
events.

Intangible asset amortization expense recorded in sales, general and administrative expense was $174.4 million, $160.8 million
and $62.5 million for the years ended December 31, 2016, 2015 and 2014, respectively.

8. Goodwill

The following table shows changes in the gross carrying amounts of goodwill. The 2016 adjustments are the result of 2015
acquisitions for which the measurement period remained open, as well as the impact of foreign exchange translation.

(In millions)
Goodwill at December 31, 2014

Acquisitions
Impact of foreign exchange translation
Litigation liability adjustments, net of tax
Other adjustments

Goodwill at December 31, 2015

Divestiture
Property and equipment and intangible asset fair value adjustments
Other fair value adjustments
Deferred tax and other tax adjustments
Impact of foreign exchange translation

Goodwill at December 31, 2016

9. Debt

Transportation
577.0
$
1,942.6
(23.7)
10.5
(1.7)
2,504.7
(290.6)
95.8
140.5
(53.1)
(46.8)
2,350.5

Logistics

Total

352.3
1,792.9
(37.1)
—
(2.2)
2,105.9
—
40.0
(54.6)
(29.6)
(86.4)
1,975.3

929.3
3,735.5
(60.8)
10.5
(3.9)
4,610.6
(290.6)
135.8
85.9
(82.7)
(133.2)
4,325.8

The following table summarizes the primary terms for components of debt, along with the valuation of financial liabilities
within the fair value hierarchy:

(In millions)

ABL Facility

Senior Notes due 2023

Senior Notes due 2022

Senior Notes due 2021

Senior Notes due 2019

Senior Notes due 2018

Term loan facility

December 31, 2016

December 31, 2015

Fair Value

Principal
Balance

Carrying
Value

Level 1

Level 2

Principal
Balance

Carrying
Value

Level 1

Level 2

30.0

— $

30.0

— $

535.0

527.1

560.4

1,600.0

1,579.9

1,689.4

527.1

—

265.8

520.7

—

267.1

546.0

—

274.0

—

1,600.0

1,577.0

1,479.8

544.4

900.0

265.8

536.6

900.4

268.2

1,481.9

1,439.2

—

1,507.1

1,600.0

1,540.3

Senior Debentures due 2034

Convertible senior notes

Euro private placement notes due 2020

Asset financing

Capital leases for equipment

300.0

49.4

12.6

145.0

97.4

200.8

47.1

13.7

145.0

97.4

241.6

129.8

—

145.0

—

Total debt

$ 5,044.2

$ 4,868.0

Current maturities of long-term debt

138.9

136.5

Long-term debt

$ 4,905.3

$ 4,731.5

—

14.0

—

97.4

300.0

52.3

13.1

266.0

59.1

199.0

46.8

14.5

266.0

59.1

$ 5,600.7

$ 5,407.9

133.9

135.3

$ 5,466.8

$ 5,272.6

—

507.5

—

271.0

1,590.0

201.0

—

13.9

—

59.1

—

920.3

—

89.1

—

266.0

—

The Level 1 debt was valued using quoted prices in active markets. The Level 2 debt was valued using bid evaluation pricing
models or quoted prices of securities with similar characteristics. The fair value of the asset financing arrangements
approximates carrying value since the debt is primarily issued at a floating rate, may be prepaid any time at par without penalty
and the remaining life is short-term in nature.

The following table outlines the Company’s principal payment obligations on debt (excluding capital leases) for the next five
years:

(In millions)
Principal payments on debt

2017

2018

2019

2020

2021

121.7

312.8

20.4

46.1

2,009.5

Senior Notes

On September 12, 2016 (the “Redemption Date”), XPO redeemed all of its outstanding 7.875% Senior Notes due 2019 issued
under the Indenture, dated as of August 25, 2014, between XPO Logistics, Inc. and The Bank of New York Mellon Trust
Company, N.A., as Trustee. The redemption price for the Senior Notes due 2019 was 103.938% of the principal amount of the
Senior Notes due 2019, plus accrued and unpaid interest to, but excluding, the Redemption Date. Debt extinguishment costs
were $35.2 million.

On August 25, 2016, the Company completed a private placement of $535.0 million aggregate principal amount of 6.125%
senior notes due September 1, 2023 (“Senior Notes due 2023”). On June 4, 2015, the Company completed a private placement
of $1,600.0 million aggregate principal amount of 6.50% Senior Notes due 2022 and €500.0 million Euro-denominated
aggregate principal amount of 5.75% Senior Notes due 2021. In conjunction with the Company’s 2015 acquisition of Con-way,
the Company assumed Con-way’s 7.25% Senior Notes due 2018.

The Senior Notes due 2023 bear interest at a rate of 6.125% per annum payable semiannually, in cash in arrears, on March 1
and September 1 of each year, commencing March 1, 2017 and maturing on September 1, 2023. The Senior Notes due 2022
bear interest at a rate of 6.50% per annum payable semiannually, in cash in arrears, on June 15 and December 15 of each year,
commencing December 15, 2015 and maturing on June 15, 2022. The Senior Notes due 2021 bear interest at a rate of 5.75%
per annum payable semiannually, in cash in arrears, on June 15 and December 15 of each year, commencing December 15,
2015 and maturing on June 15, 2021. The Senior Notes due 2018 bear interest at a rate of 7.25% per annum payable
semiannually, in cash in arrears, on January 15 and July 15 of each year, maturing on January 15, 2018.

The Senior Notes, except for the Senior Notes due 2018, are guaranteed by each of the Company’s direct and indirect wholly-
owned restricted subsidiaries (other than certain excluded subsidiaries) that are obligors under, or guarantee obligations under,
the Company’s ABL Facility (or certain replacements thereof) or guarantee certain capital markets indebtedness of the
Company or any guarantor of the Senior Notes. The Senior Notes and the guarantees thereof are unsecured, unsubordinated
indebtedness of the Company and the guarantors. Among other things, the covenants of the Senior Notes limit the Company’s
ability to, with certain exceptions: incur indebtedness or issue disqualified stock; grant liens; pay dividends or make
distributions in respect of capital stock; make certain investments or other restricted payments; prepay or repurchase
subordinated debt; sell or transfer assets; engage in certain mergers, consolidations, acquisitions and dispositions; and enter into
certain transactions with affiliates.

Senior Debentures

In conjunction with the Company’s acquisition of Con-way, the Company assumed Con-way’s 6.70% Senior Debentures due
2034 (the “Senior Debentures”) with an aggregate principal amount of $300.0 million. The Senior Debentures bear interest at a
rate of 6.70% per annum payable semiannually, in cash in arrears, on May 1 and November 1 of each year, maturing on May 1,
2034. In accordance with ASC 805 “Business Combinations,” the Senior Debentures were recorded at fair value on the Con-
way acquisition date, resulting in a fair value discount of $101.3 million on October 30, 2015. Including amortization of the fair
value adjustment, interest expense on the Senior Debentures is recognized at an annual effective interest rate of 10.96%.

Euro Private Placement Notes

The Euro Private Placement Notes due 2020 have €12.0 million Euro-denominated aggregate principal amount outstanding as
of December 31, 2016. The Euro Private Placement Notes due 2020 bear interest at a rate of 4.00% per annum payable
annually, in cash in arrears, on December 20 of each year, maturing on December 20, 2020.

The Euro Private Placement Notes are subject to leverage ratio and indebtedness ratio financial covenants, as defined in the
agreements. ND is required to maintain a leverage ratio of less than or equal to 3.50 and an indebtedness ratio of less than or
equal to 2.00 as of each semi-annual testing date. As of December 31, 2016, the latest semi-annual testing date, ND is in
compliance with the financial covenants.

Asset Financing

The asset financing arrangements are unsecured and are used to purchase Company-owned trucks in Europe. The financing
arrangements are denominated in USD, EUR, British Pounds Sterling and Romanian New Lei, with primarily floating interest
rates. As of December 31, 2016, interest rates on asset financing range from 0.281% to 5.5%, with a weighted average interest
rate of 1.38%, and initial terms range from five years to ten years.

ABL Facility

existing Amended Credit Agreement, and, among other things, (i) increased the commitments under the ABL Facility to $1.0
billion, (ii) permitted the acquisition of Con-way, and the transactions relating thereto, (iii) reduced the margin on loans under
the ABL Facility by 0.25% from that contained in the then existing Amended Credit Agreement and (iv) matures on October 30,
2020. Up to $350 million of the ABL Facility is available for issuance of letters of credit, and up to $50 million of the ABL
Facility is available for swing line loans. Total unamortized debt issuance costs related to the ABL Facility classified in other
long-term assets at December 31, 2016 were $8.1 million.

Availability on the ABL Facility is equal to the borrowing base less advances and outstanding letters of credit. The borrowing
base includes a fixed percentage of (i) eligible U.S. and Canadian accounts receivable plus (ii) any eligible U.S. and Canadian
rolling stock and equipment. At December 31, 2016, the Company had a borrowing base of $986.5 million and availability
under the ABL Facility of $717.4 million at December 31, 2016 after considering outstanding advances of $30.0 million and
outstanding letters of credit on the ABL Facility of $239.1 million. XPO may from time to time increase base availability under
the ABL Facility up to $1.0 billion less any then outstanding letters of credit by including into the borrowing additional rolling
stock and equipment. A maximum of 20% of the borrowing base can be attributable to the equipment and rolling stock in the
aggregate. As of December 31, 2016, the Company was in compliance with the ABL Facility’s financial covenants.

The ABL Facility is secured on a first lien basis by the assets of the credit parties which constitute ABL Facility priority
collateral and on a second lien basis by certain other assets. ABL Facility priority collateral consists primarily of U.S. and
Canadian accounts receivable as well as any U.S. and Canadian rolling stock and equipment included by XPO in the borrowing
base. The Company’s borrowings under the ABL Facility will bear interest at a rate equal to LIBOR or a Base Rate, as defined
in the agreement, plus an applicable margin of 1.50% to 2.00%, in the case of LIBOR loans, and 0.50% to 1.00%, in the case of
Base Rate loans. The interest rate on outstanding borrowings at December 31, 2016 was 2.26%. The ABL Facility contains
representations and warranties, affirmative and negative covenants and events of default customary for agreements of this
nature.

Among other things, the covenants in the ABL Facility limit the Company’s ability to, with certain exceptions: incur
indebtedness; grant liens; engage in certain mergers, consolidations, acquisitions and dispositions; make certain investments
and restricted payments; and enter into certain transactions with affiliates. In certain circumstances, such as if availability is
below certain thresholds, the ABL Facility also requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in
the ABL Facility) of not less than 1.00 to 1.00. As of December 31, 2016, the Company is in compliance with this financial
covenant. If an event of default under the ABL Facility shall occur and be continuing, the commitments thereunder may be
terminated and the principal amount outstanding thereunder, together with all accrued unpaid interest and other amounts owed
thereunder, may be declared immediately due and payable. Certain subsidiaries acquired by the Company in the future may be
excluded from the restrictions contained in certain of the foregoing covenants.

Convertible Senior Notes

The Convertible Senior Notes bear interest at a rate of 4.50% per annum payable semi-annually, in cash in arrears, on April 1
and October 1 of each year, maturing on October 1, 2017. The Convertible Senior Notes are included in current maturities of
long-term debt at December 31, 2016.

During the year ended December 31, 2016, the Company issued an aggregate of 173,158 shares of the Company’s common
stock to certain holders of the Convertible Senior Notes in connection with the conversion of $2.8 million aggregate principal
amount of the Convertible Senior Notes. The conversions were allocated to long-term debt and equity in the amounts of $2.6
million and $2.8 million, respectively. A loss on conversion of $0.2 million was recorded as part of the transactions. Certain of
these transactions represented induced conversions pursuant to which the Company paid the holder a market-based premium in
cash. The negotiated market-based premiums, in addition to the difference between the current fair value and the book value of
the Convertible Senior Notes, were reflected in interest expense. The number of shares of common stock issued in the foregoing
transactions equals the number of shares of common stock presently issuable to holders of the Convertible Senior Notes upon
conversion under the original terms of the Convertible Senior Notes.

Under certain circumstances at the election of the holder, the Convertible Senior Notes may be converted until the close of
business on the business day immediately preceding April 1, 2017, into cash, shares of the Company’s common stock, or a
combination of cash and shares of common stock, at the Company’s election, at the initial conversion rate of approximately
60.8467 shares of common stock per $1,000 in principal amount, which is equivalent to an initial conversion price of
approximately $16.43 per share. In addition, following certain corporate events that occur prior to the maturity date, the
Company will increase the conversion rate for a holder who elects to convert its Convertible Senior Notes in connection with
such corporate event in certain circumstances. On or after April 1, 2017, until the close of business on the business day
immediately preceding the maturity date of October 1, 2017, holders may convert their Convertible Senior Notes at any time.

Term Loan Facility

On October 30, 2015, XPO entered into a Senior Secured Term Loan Credit Agreement (the “Term Loan Credit Agreement”)
that provided for a single borrowing of $1.6 billion on the date thereof. The Term Loan Credit Agreement was issued at an
original issue discount of $32.0 million.

On August 25, 2016, the Company entered into an Incremental and Refinancing Amendment (Amendment No. 1 to Credit
Agreement) (the “Amendment”), by and among XPO, its subsidiaries signatory thereto, as guarantors, the lenders party thereto
and MSSF, in its capacity as administrative agent (the “Administrative Agent”), amending the Term Loan Credit Agreement, by
and among XPO, the other subsidiaries from time to time party thereto, as guarantors, the lenders from time to time party
thereto and the Administrative Agent.

Pursuant to the Amendment, the outstanding $1,592.0 million principal amount of term loans under the Term Loan Credit
Agreement (the “Existing Term Loans”) were replaced with a like aggregate principal amount of new term loans (the “New
Term Loans”) having substantially similar terms as the Existing Term Loans, other than with respect to the applicable interest
rate and prepayment premiums in respect of certain voluntary prepayments. Of the $1,592.0 million of term loans which were
refinanced, $1,197.2 million were exchanged and represent a non-cash financing activity. The interest rate margin applicable to
the New Term Loans was reduced from 3.50% to 2.25%, in the case of base rate loans, and from 4.50% to 3.25%, in the case of
LIBOR loans. The interest rate at December 31, 2016 was 4.25%. Debt extinguishment costs related to various lenders exiting
the syndicate were $18.0 million.

In addition, pursuant to the Amendment, the Company borrowed an additional $400.0 million of Incremental Term B-1 Loans
(the “Incremental Term B-1 Loans”) and an additional $50.0 million of Incremental Term B-2 Loans (the “Incremental Term
B-2 Loans”). The New Term Loans, Incremental Term B-1 Loans and Incremental Term B-2 Loans have identical terms, other
than with respect to original issue discount, and will mature on October 30, 2021.

On the last business day of each fiscal quarter, commencing with the fiscal quarter ending March 31, 2016, a portion of the
principal amount in an amount equal to 0.25% of the loan amount is to be repaid. The repurchase of debt in November 2016
satisfied the principal payments required per this provision of the agreement. In addition, commencing with the fiscal year
ending December 31, 2016, the Company must prepay an aggregate principal amount of the Term Loan Facility equal to (a)
50% of Excess Cash Flow, as defined in the agreement, if any, for the most recent fiscal year ended minus (b) the sum of (i) all
voluntary prepayments of loans during such fiscal year and (ii) all voluntary prepayments of loans under the ABL Facility or
any other revolving credit facilities during such fiscal year to the extent accompanied by a corresponding permanent reduction
in the commitments under the credit agreement or any other revolving credit facilities in the case of each of the immediately
preceding clauses (i) and (ii), to the extent such prepayments are funded with internally generated cash flow, as defined in the
agreement; provided, further, that (x) the Excess Cash Flow percentage shall be 25% if the Consolidated Secured Net Leverage
Ratio of Borrower, as defined in the agreement, for the fiscal year was less than or equal to 3.00:1.00 and greater than 2.50:1.00
and (y) the Excess Cash Flow percentage shall be 0% if the Consolidated Secured Net Leverage Ratio of Borrower for the fiscal
year was less than or equal to 2.50:1.00. The remaining principal is due at maturity. As of December 31, 2016, the Company’s
Consolidated Secured Net Leverage Ratio was less than 2.50:1.00; therefore, no excess cash payment is required.

10. Employee Benefit Plans

Defined Benefit Pension Plans

The Company maintained two separate defined benefit pension plans for certain employees in the United Kingdom. These
plans consisted of the Christian Salvesen Pension Scheme (“CSPS”) and TDG Pension Scheme (“TDGPS” and together with
the CSPS, the “UK Plans”). On November 1, 2016, the UK Plans were merged into one plan (the “UK Plan”) in order to reduce
overhead and administrative costs, resulting in a $41.7 million prior service credit recognized in accumulated other
comprehensive income. The amount currently recognized in accumulated other comprehensive income is expected to be
recognized as a component of net periodic benefit expense (income) over a period of approximately 26 years. In conjunction
with the plan merger, a one-time settlement offer was made to certain UK Plan participants. On November 30, 2016, the
settlement was completed, resulting in a payment of plan benefits of approximately $22.3 million and a reduction of the pension
benefit obligation. The Company also maintains defined benefit pension plans for certain of its foreign subsidiaries. These
international defined benefit pension plans are excluded from the disclosures below due to their immateriality.

The Company also maintains defined benefit pension plans for certain employees in the United States. These pension plans
include qualified plans that are eligible for certain beneficial treatment under the Internal Revenue Code of 1986, as amended
(“IRC”), as well as non-qualified plans that do not meet the IRC criteria. The Company’s qualified defined benefit pension
plans consist of a primary qualified defined benefit pension plan and another qualified defined benefit pension plan (the “U.S.
64

Qualified Plans”). The Company’s non-qualified defined benefit pension plans (collectively, the “U.S. Non-Qualified Pension
Plans” and together with the U.S. Qualified Plans, the “U.S. Plans”) consist mostly of a primary non-qualified supplemental
defined benefit pension plan and provides additional benefits for certain employees who are affected by IRC limitations on
compensation eligible for benefits available under the qualified plans. As a result of the Company’s acquisition of Con-way, the
Company maintains defined benefit pension plans sponsored by certain of Con-way’s foreign subsidiaries. These international
defined benefit pension plans are excluded from the disclosures below due to their immateriality. Both the U.S. Plans and UK
Plan do not allow for new plan participants or additional benefit accruals.

Defined benefit pension plan obligations are measured based on the present value of projected future benefit payments for all
participants for services rendered to date. The projected benefit obligation is a measure of benefits attributed to service to date
assuming that the plan continues in effect and that estimated future events (including turnover and mortality) occur. The net
periodic benefit costs are determined using assumptions regarding the projected benefit obligation and the fair value of plan
assets as of the beginning of the year. Net periodic benefit costs are recorded in sales, general and administrative expense. The
funded status of the defined benefit pension plans, which represents the difference between the projected benefit obligation and
the fair value of plan assets, is calculated on a plan-by-plan basis. The Company did not have defined benefit pension plans
prior to June 2015.

Funded Status of Defined Benefit Pension Plans

The following tables provide a reconciliation of the changes in the plans’ projected benefit obligations as of December 31:

(In millions)

Projected benefit obligation at beginning of year

U.S. Qualified Plans

U.S Non-Qualified Plans

UK Plan

2016
$ 1,665.8

2015

2016

2015

2016

2015

— $

73.0

— $ 1,287.7

—

From acquisitions

Interest cost

Plan amendment

Actuarial loss (gain)

Foreign currency exchange rate changes

Benefits paid

Settlement

—

76.1

—

63.7

—

(60.6)

—

1,685.8

12.7

—
(23.0)
—
(9.7)
—

—

3.3

—

3.0

—
(5.4)
—

74.1

0.5

—
(0.7)
—
(0.9)
—

Projected benefit obligation at end of year

$ 1,745.0

$ 1,665.8

73.9

73.0

—

1,393.4

40.5
(41.7)
262.4
(238.7)
(52.7)
(22.3)
$ 1,235.2

28.6

—
(65.3)
(37.5)
(31.5)
—

$ 1,287.7

The following tables provide a reconciliation of the changes in the plans' fair value of plan assets as of December 31:

(In millions)

Fair value of plan assets at beginning of year

From acquisitions

Actual return (loss) on plan assets

Employer contributions

Benefits paid

Settlement

Foreign currency exchange rate changes

U.S. Qualified Plans

U.S Non-Qualified Plans

UK Plan

2016
$ 1,619.9

2015

2016

2015

2016

2015

— $

— $ 1,203.8

—

140.8

—

(60.6)

—

1,659.4
(29.8)
—
(9.7)
—

—

5.4
(5.4)
—

—

291.4

0.9
(0.9)
—

14.2
(52.7)
(22.3)
(227.6)
— $ 1,206.8

—

1,290.5
(30.3)
10.3
(31.5)
—
(35.2)
$ 1,203.8

Fair value of plan assets at end of year

$ 1,700.1

$ 1,619.9

— $

The following table provides the funded status of the plans as of December 31:

(In millions)

Funded Status:

Fair value of plan assets

Projected benefit obligation

Funded status at end of year

Funded Status Recognized in Balance Sheet:

Long-term assets

Current liabilities

Long-term liabilities

U.S. Qualified Plans

U.S Non-Qualified Plans

UK Plan

2016

2015

2016

2015

2016

2015

$ 1,700.1

$ 1,619.9

1,745.0

(44.9)

18.1

—

(63.0)

1,665.8
(45.9)

17.3

—
(63.2)
(45.9)

— $

— $ 1,206.8

$ 1,203.8

73.9
(73.9)

73.0
(73.0)

1,235.2
(28.4)

1,287.7
(83.9)

— $

—

(5.4)
(68.5)
(73.9)

(5.2)
(67.8)
(73.0)

—
(28.4)
(28.4)

—
(83.9)
(83.9)

Total liability at end of year

(44.9)

Plans with projected and accumulated benefit
obligation in excess of plan assets:

Projected and accumulated benefit obligation

$ 1,725.5

$ 1,645.7

73.9

73.0

$ 1,235.2

$ 1,287.7

Fair value of plan assets

1,662.6

1,582.5

—

1,206.8

1,203.8

Weighted-average assumptions as of December
31:

Discount rate

4.35%

4.65%

4.35%

4.65%

2.70%

3.75%

The following table provides amounts included in accumulated other comprehensive loss that have not yet been recognized in
net periodic benefit expense as of December 31, 2016:

(In millions)

Actuarial gain (loss)

Prior-service credit

Accumulated other comprehensive income (loss)

U.S. Qualified
Plans

U.S Non-
Qualified Plans

UK Plan

(33.5) $
—
(33.5)

(2.3) $
—
(2.3)

(28.9)
41.1

12.2

The following table sets forth the amount of net periodic benefit cost and amounts recognized in other comprehensive income
or loss for the year ended December 31:

(In millions)

2016

2015

2016

2015

2016

2015

U.S. Qualified Plans

U.S Non-Qualified Plans

UK Plan

Net periodic benefit expense (income):

Interest cost

Expected return on plan assets

Amortization of prior-service cost (credit)

Recognized AOCI gain (loss) due to settlements

Net periodic benefit expense (income)

Amounts recognized in other comprehensive income
or loss:

Actuarial loss (gain)

Prior-service cost

Recognized AOCI gain (loss) due to settlements

Reclassification of prior-service cost to net
periodic benefit expense (income)

Loss (gain) recognized in other comprehensive
income or loss

76.1
(88.4)
—

—
(12.3) $

12.7
(15.4)
—

—
(2.7) $

3.3

0.5

—

3.3

0.5

40.5
(58.4)
(0.5)
(0.1)
(18.5) $

28.6
(34.6)
—

—
(6.0)

11.3

22.2

3.0

—

(0.7) $
—

—

29.4
(41.7)
0.1

0.5

(0.5)
—

—

11.3

22.2

3.0

(0.7) $

(11.7) $

(0.5)

Approximately $1.5 million of the amount currently recognized in other comprehensive income (loss) is expected to be
recognized as a component of net periodic benefit expense (income) for the year ended December 31, 2017.

The following table outlines the weighted-average assumptions used to determine the net periodic benefit cost at December 31,
2016 and 2015:

Discount rate

Expected long-term rate of return on plan assets

U.S. Qualified Plans

UK Plan

2016

2015

2016

2015

4.65%

5.58%

4.55%

5.57%

3.75%

5.40%

3.60%

5.00%

No rate of compensation increase was assumed as the plans are frozen to additional participant benefit accruals. As of
December 31, 2016, the impact of a 25 basis point decrease in the discount rate would increase the projected benefit obligation
by approximately $61.9 million, $1.9 million and $54.4 million for the U.S. Qualified Plans, U.S. Non-Qualified Plans and UK
Plan, respectively.

Expected benefit payments for the defined benefit pension plans are summarized below. These estimates are based on
assumptions about future events. Actual benefit payments may vary from these estimates.

(In millions)
Year ending December 31:
2017
2018
2019
2020
2021
2022-2026

Plan Assets

U.S. Qualified Plans

U.S. Qualified
Plans

U.S Non-
Qualified Plans

UK Plan

70.9
75.1
79.5
84.2
88.4
498.6

5.4
5.4
5.4
5.4
5.3
25.3

44.3
45.6
49.2
50.5
51.7
295.5

The U.S. Qualified Plans’ assets are segregated from those of the Company and are managed pursuant to a long-term liability
driven asset allocation strategy that seeks to mitigate the funded status volatility by increasing exposure to fixed income
investments over time. This strategy was developed by analyzing a variety of diversified asset-class combinations in
conjunction with the projected liabilities.

The current investment strategy is to achieve a mix of approximately 76% in fixed income securities and 24% of investments in
equity securities. The target allocations for fixed income securities includes 7% in global opportunistic fixed income. The target
allocations for equity securities include 14% in U.S. companies and 10% in international companies. Investments in equity and
fixed income securities consist of individual securities held in managed separate accounts as well as commingled investment
funds. The investment strategy does not include a meaningful long-term investment allocation to cash and cash equivalents;
however, the cash allocation may rise periodically in response to timing considerations regarding contributions, investments,
and the payment of benefits and eligible plan expenses. The Company evaluates its defined benefit plans' asset portfolios for the
existence of significant concentrations of risk. Types of investment concentration risks that are evaluated include, but are not
limited to, concentrations in a single entity, industry, foreign country and individual fund manager. As of December 31, 2016,
there were no significant concentrations of risk in the Company's defined benefit plan assets.

The investment policy does not allow investment managers to use market-timing strategies or financial derivative instruments
for speculative purposes. However, financial derivative instruments are used to manage risk and achieve stated investment
objectives regarding duration, yield curve, credit and equity exposures. Generally, the investment managers are prohibited from
short selling, trading on margin, and trading commodities, warrants or other options, except when acquired as a result of the
purchase of another security, or in the case of options, when sold as part of a covered position.

The assumption of 5.58% for the overall expected long-term rate of return in 2016 was developed using asset allocation, return,
risk (defined as standard deviation), and correlation expectations. The return expectations are created using long-term historical
returns and current market expectations for inflation, interest rates and economic growth.

UK Plan

The UK Plan’s assets are segregated from those of the Company and invested by trustees, which include Company
representatives, with the goal of meeting the UK Plan’s projected future pension liabilities. The trustees' investment objectives
are to meet the performance target set in the deficit recovery plan of the UK Plan in a risk-controlled framework. The actual
asset allocations of the UK Plan are in line with the target asset allocations. The implied target asset allocation of the UK Plan
consists of 28% matching assets (UK gilts and cash) and 72% growth assets (consisting of government and credit - commingled
funds, illiquid credit, hedge funds, dynamic asset allocation, and risk parity). The target asset allocations of the UK Plan
includes acceptable ranges for each asset class, which are typically +/- 10% from the target.

The risk parity and dynamic asset allocation categories include investments in multi-asset funds. These funds are designed to
provide a diversified exposure to markets with less volatility than equities. Collateral assets consist of UK gilts and cash, which
are used to back derivative positions that hedge the sensitivity of the liability to changes in interest rates and inflation.
Approximately 85% of the actuarial liability sensitivities were hedged as of December 31, 2016. The derivative positions are
also used to gain a synthetic exposure to equity markets. The expected return over 2016 is 5.40%. The approach to determine
the expected long-term rate of return on plan assets is consistent with the one used for the U.S. Plans.

The following table sets forth the fair values of investments held in the pension plans by major asset category as of
December 31, as well as the percentage that each asset category comprises of total plan assets:

(Dollars in millions)

December 31, 2016

Asset Category (U.S. Qualified Plans)

Level 1

Level 2

Level 3

Cash and Cash Equivalents

Not Subject
to Leveling

Total

Percentage
of Plan
Assets

Short-term investment fund

— $

40.7

2.3 %

Equity

U.S. large companies

S&P 500 futures

Growth

Value

U.S. Small Companies

Value

International

Growth

Value fund [a]

Fixed Income Securities

(0.3)

75.0

88.0

31.9

60.7

—

Global long-term debt instruments [a]

148.2

893.4

—

65.8

(0.3)
75.0

88.0

— %

4.4 %

5.2 %

31.9

1.9 %

60.7

65.8

3.6 %

3.9 %

296.7

1,338.3

78.7 %

100.0 %

Total U.S. Plan Assets

403.5

893.4

— $

403.2

$ 1,700.1

Asset Category (UK Plan)

Cash and Cash Equivalents

Fixed Income Securities

Government

Government and credit - commingled
funds [a]

Illiquid credit [a] [b]

Derivatives

Equity [a]

Interest rate

Currencies

Hedge Funds [a] [c]

Diversified Multi-Asset Funds

Risk parity [a]

Dynamic asset allocation [a]

63.1

— $

63.1

5.2 %

—

248.1

—

13.3

78.3
(1.0)
—

—

248.1

20.6 %

247.2

33.7

21.3

—

34.6

224.2

244.0

247.2

33.7

34.6

78.3
(1.0)
34.6

224.2

244.0

20.5 %

2.8 %

2.9 %

6.5 %

(0.1)%

2.9 %

18.5 %

20.2 %

Total UK Plan Assets

63.1

338.7

— $

805.0

$ 1,206.8

100.0 %

[a] In accordance with ASU 2015-07, Fair Value Measurement (Topic 820), certain investments that are measured at fair value
using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The
fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts
presented for the total defined benefit pension plan assets.

[b] The underlying investments in the fund consist primarily of commercial mortgage-backed securities and real estate loans.

[c] The fair value of the fund is based on the fair value of the underlying assets, substantially all of which is invested in the York
Credit Opportunities Master Fund, L.P., an exempted limited partnership formed under the laws of the Cayman Islands. The
fund offers very limited liquidity with redemption only allowed on anniversary of investment with 60 days’ prior notice.

(Dollars in millions)

December 31, 2015

Asset Category (U.S. Qualified Plans)
Cash and Cash Equivalents

Level 1

Level 2

Level 3

Not Subject
to Leveling

Total

Percentage
of Plan
Assets

Short-term investment fund

— $

34.3

2.2 %

Equity

U.S. large companies

S&P 500 futures

Growth

Value

U.S. Small Companies

Value

International

Growth

Value fund [a]

Fixed Income Securities

0.7

91.4

88.2

27.1

66.1

—

Global long-term debt instruments [a]

158.1

796.0

—

65.9

0.7

91.4

88.2

— %

5.6 %

5.4 %

27.1

1.7 %

66.1

65.9

4.1 %

292.1

1,246.2

76.9 %

100.0 %

Total U.S. Plan Assets

431.6

796.0

— $

392.3

$ 1,619.9

Asset Category (UK Plans)
Cash and Cash Equivalents

Fixed Income Securities

Government

Government and credit - commingled
funds [a]

Illiquid credit [a] [b]

Derivatives

Equity [a]

Interest rate

Currencies

Hedge Funds [a] [c]

Diversified Multi-Asset Funds

Risk parity [a]
Dynamic asset allocation [a]

Total UK Plan Assets

32.8

— $

32.8

2.7 %

—

—
—

260.3

—

13.1
(1.6)
—

—
—

—

—
—

—

260.3

21.6 %

210.8

55.2

20.8

—

40.6

235.2
336.6

210.8

55.2

20.8

13.1
(1.6)
40.6

235.2
336.6

17.5 %

4.6 %

1.7 %

1.1 %

(0.1)%

3.4 %

19.5 %
28.0 %

32.8

271.8

— $

899.2

$ 1,203.8

100.0 %

[b] The underlying investments in the fund consist primarily of commercial mortgage-backed securities and real estate loans.

There was no XPO common stock held in plan assets as of December 31, 2016. The U.S. Non-Qualified Pension Plans are
unfunded.

Funding

The Company’s funding practice is to evaluate its tax and cash position, as well as the funded status of its plans, in determining
its planned contributions. The Company estimates that it will contribute $5.4 million to its U.S. Plans and $12.7 million to its
UK Plan in 2017; however, this could change based on variations in interest rates, asset returns and other factors.

Defined Contribution Retirement Plans

The Company’s cost for defined contribution retirement plans was $59.1 million in 2016 and $13.0 million in 2015.

Postretirement Medical Plan

The Company sponsors a postretirement medical plan that provides health benefits to certain non-contractual employees at least
55 years of age with at least 10 years of service (the “Postretirement Plan”). The Postretirement Plan does not provide
employer-subsidized retiree medical benefits for employees hired on or after January 1, 1993.

Funded Status of Postretirement Medical Plan

The following sets forth the changes in the benefit obligation and the determination of the amounts recognized in the
consolidated balance sheets for the Postretirement Plan at December 31:

(In millions)
Projected benefit obligation at beginning of year

From Con-way acquisition
Service cost – benefits earned during the year
Interest cost on projected benefit obligation
Actuarial loss (gain)
Participant contributions
Benefits paid

Projected and accumulated benefit obligation at end of year
Funded status of the plan
Amounts recognized in the balance sheet consist of :

Current liabilities
Long-term liabilities
Net amount recognized
Discount rate assumption as of December 31

$
$

2016

2015

$
$

54.0
—
0.5
2.2
(2.9)
1.9
(5.1)
50.6
(50.6)

(3.9)
(46.7)
(50.6)
3.90%

—
51.0
0.1
0.3
3.3
0.3
(1.0)
54.0
(54.0)

(4.0)
(50.0)
(54.0)
4.20%

The following table provides amounts included in accumulated other comprehensive loss that have not yet been recognized in
net periodic benefit expense:

(In millions)
Actuarial loss

2016

2015

$
$

0.3
0.3

$
$

3.3
3.3

Net Periodic Benefit Expense for Postretirement Medical Plan

Net periodic benefit expense and amounts recognized in other comprehensive income or loss for the years ended December 31
includes the following:

(In millions)
Net periodic benefit expense (income):

Service cost - benefits earned during the year
Interest cost on projected benefit obligation
Net periodic benefit expense (income)

Discount rate assumption used to calculate interest cost

2016

2015

0.5
2.2
2.7
4.20%

0.1
0.3
0.4
4.10%

Expected benefit payments, which reflect expected future service, as appropriate, are summarized below. These estimates are
based on assumptions about future events. Actual benefit payments may vary from these estimates.

(In millions)
Year ending December 31:

2017
2018
2019
2020
2021
2022-2025

The assumed health care cost trend rates used to determine the benefit obligation are as follows:

Health care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
Year that the rate reaches the ultimate trend rate

Benefit
Payments

3.9
3.9
4.0
4.2
4.3
20.6

2016

6.49%
4.50%
2038

Assumed health care cost trends affect the amounts recognized for the Company’s postretirement benefits. A one-percentage-
point change in the assumed health care cost trend rate would not have a material effect on the service and interest cost
components of net periodic benefit costs or on the accumulated postretirement benefit obligation.

11. Stockholders’ Equity

Series C Convertible Perpetual Preferred Stock and Common Stock

On May 29, 2015, the Company issued and sold 15,499,445 shares (the “2015 Purchased Common Shares”) in the aggregate of
the Company's common stock, par value $0.001 per share (the “Company Common Stock”), and 562,525 shares (the “2015
Purchased Preferred Stock” and, together with the 2015 Purchased Common Shares, the “2015 Purchased Securities”) in the
aggregate of the Company’s Series C Convertible Perpetual Preferred Stock, par value $0.001 per share, in a private placement.
The purchase price per 2015 Purchased Common Share was $45.00 (resulting in aggregate gross proceeds to the Company of
approximately $697.5 million), and the purchase price per share of 2015 Purchased Preferred Stock was $1,000 (resulting in
aggregate gross proceeds to the Company of approximately $562.5 million). The Company received net proceeds of $1,228.1
million after equity issuance costs which was initially allocated between common and preferred stock based on the relative fair
values of each instrument. The 2015 Purchased Preferred Stock was mandatorily convertible into an aggregate of 12,500,546
additional shares of Company common stock subject to the approval of the Company's stockholders. On September 8, 2015, the
2015 Purchased Preferred Stock was automatically converted into 12,500,546 shares of Company common stock. The 2015
Purchased Preferred Stock was issued with an initial conversion price of $45.00 per share. As of May 29, 2015, the Company's
common stock price was $49.16. As a result, the conversion feature was issued “in-the-money” and the Company allocated the
beneficial conversion feature of $52.0 million to additional paid-in capital. The beneficial conversion feature was contingent
upon receiving approval of the Company's stockholders and was therefore recognized in net loss attributable to common
shareholders upon receiving stockholder approval on September 8, 2015.

Series B Convertible Perpetual Preferred Stock and Common Stock

On September 17, 2014, the Company issued and sold 10,702,934 shares (the “2014 Purchased Common Shares”) in the
aggregate of Company Common Stock and 371,848 shares (the “2014 Purchased Preferred Stock” and, together with the 2014
Purchased Common Shares, the “2014 Purchased Securities”) in the aggregate of the Company’s Series B Convertible
Perpetual Preferred Stock, par value $0.001 per share, in a private placement. The purchase price per 2014 Purchased Common
Share was $30.66 (resulting in aggregate gross proceeds to the Company of approximately $328.0 million), and the purchase
price per share of 2014 Purchased Preferred Stock was $1,000 (resulting in aggregate gross proceeds to the Company of
approximately $372.0 million). The Company received net proceeds of $684.2 million after equity issuance costs which was
initially allocated between common and preferred stock based on the relative fair values of each instrument. The 2014
Purchased Preferred Stock was mandatorily convertible into an aggregate of 12,128,115 additional shares of Company
Common Stock subject to the approval of the Company’s stockholders. On December 23, 2014, the 2014 Purchased Preferred
Stock was automatically converted into 12,128,115 shares of Company Common Stock. The 2014 Purchased Preferred Stock
was issued with an initial conversion price of $30.66. As of September 11, 2014, the Company’s common stock price was
$34.05. As a result, the conversion feature was issued “in-the-money” and the Company allocated the intrinsic value of the
conversion feature of $40.9 million to additional paid-in capital. The beneficial conversion feature was contingent upon
receiving the approval of the Company’s stockholders and was therefore recognized in net loss attributable to common
stockholders upon receiving stockholder approval on December 23, 2014.

February 2014 Common Stock Offering

On February 5, 2014, the Company closed a registered underwritten public offering of 15,000,000 shares of common stock, and
on February 11, 2014, the Company closed as part of the same public offering the sale of an additional 2,250,000 shares as a
result of the full exercise of the underwriters’ overallotment option, in each case at a price of $25.00 per share (together, the
“February 2014 Offering”). The Company received $413.2 million in net proceeds from the February 2014 Offering after
underwriting discounts and expenses.

Series A Convertible Perpetual Preferred Stock and Warrants

Pursuant to the Company’s Certificate of Incorporation, the Board of Directors may establish one or more series of preferred
stock. Other than the Series A Convertible Perpetual Preferred Stock, par value $0.001 per share (the “Series A Preferred
Stock”), no shares of preferred stock are currently outstanding.

On September 2, 2011, pursuant to the Investment Agreement, dated as of June 13, 2011 (the “Investment Agreement”), by and
among Jacobs Private Equity, LLC (“JPE”), the other investors party thereto (collectively with JPE, the “Investors”) and the
Company, the Company issued to the Investors, for $75.0 million in cash: (i) an aggregate of 75,000 shares of the Series A
Preferred Stock with an initial liquidation preference of $1,000 per share, which are convertible into shares of Company
common stock at a conversion price of $7.00 per common share (subject to customary anti-dilution adjustments), and (ii)
warrants exercisable for shares of Company common stock at an initial exercise price of $7.00 per common share (subject to
customary anti-dilution adjustments) (the “Warrants”). As of December 31, 2016, the outstanding Series A Preferred Stock is
convertible into 10,319,286 shares of Company common stock and there are outstanding Warrants exercisable for an aggregate
of 10,276,314 shares of Company common stock. The Series A Preferred Stock ranks, with respect to dividend rights and rights
upon liquidation, winding-up or dissolution of the Company, senior to the Company’s common stock and to each other class or
series of stock of the Company (including any series of preferred stock) the terms of which do not expressly provide that such
class or series ranks senior to or pari passu with the Series A Preferred Stock. The Series A Preferred Stock pays quarterly cash
dividends equal to the greater of (i) the “as-converted” dividends on the underlying Company common stock for the relevant
quarter and (ii) 4% of the then-applicable liquidation preference per annum. The Series A Preferred Stock is not redeemable or
subject to any required offer to purchase, and votes together with the Company’s common stock on an “as-converted” basis on
all matters, except as otherwise required by law, and separately as a class with respect to certain matters implicating the rights
of holders of shares of Series A Preferred Stock.

12. Stock-Based Compensation

On December 20, 2016, the Company held a special meeting of stockholders, at which the Company’s stockholders approved
the XPO Logistics, Inc. 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”). The 2016 Plan replaces the XPO
Logistics, Inc. Amended and Restated 2011 Omnibus Incentive Compensation Plan (the “2011 Plan”) and the Con-way Inc.
2012 Equity and Incentive Plan (the “Con-way Plan”), the latter of which was assumed by the Company in connection with the
acquisition of Con-way. Any awards granted under the 2011 Plan and the Con-way Plan will remain in effect pursuant to their
respective terms.

Under the terms of the 2016 Plan, the Company grants various types of stock-based compensation awards to directors, officers
and key employees. The 2016 Plan provides for awards in the form of stock options, stock appreciation rights, restricted stock,
restricted stock units, deferred share units, performance compensation awards, performance units, cash incentive awards and
other equity-based or equity-related awards (collectively, “Awards”) that the Compensation Committee of the Board of
Directors (the “Committee”) determines are consistent with the purpose of the 2016 Plan and interests of the Company.

The maximum aggregate number of shares of common stock that may be delivered pursuant to Awards under the 2016 Plan is
3,400,000 shares. Awards that are settled in cash would not reduce the number of shares available for delivery under the 2016
Plan. In the event of any extraordinary dividend or other extraordinary distribution, recapitalization, rights offering, stock split,
reverse stock split, split-up or spin-off, the Committee shall equitably adjust any or all of the number of shares of the Company
with respect to which Awards may be granted, including 2011 Plan share limits, the terms of any outstanding Award, the
number of shares subject to outstanding Awards, and the exercise price of any Award, if applicable. Any shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and unissued shares or of treasury shares.

The 2016 Plan will continue in effect until December 20, 2026, unless terminated earlier by the Board of Directors. As of
December 31, 2016, there were 3,319,710 shares available for issuance under the 2016 Plan.

The Company recognized the following stock-based compensation expense in direct operating expense and sales, general and
administrative expense in the consolidated statements of operations:

(In millions)
Stock options

Stock appreciation rights

Restricted stock units

Performance-based restricted stock units

Cash-settled performance-based restricted stock units

Warrants

Total stock-based compensation expense

Years ended December 31,

2016

2015

2014

1.2

0.6

13.0

12.8

26.9

—

1.9

0.4

9.0

17.0

—

8.5

54.5

36.8

1.7

—

5.8

—

7.5

The Company settled the outstanding warrants and certain performance stock awards of ND. The portion of the fair value of the
warrants and performance shares not attributable to service performed prior to the acquisition date was recorded as stock-based
compensation expense in 2015. The amount of stock-based compensation expense related to the settlement of ND stock awards
included in the year ended December 31, 2015 was $18.5 million. The $8.5 million of stock-based compensation related to the
warrants was settled in cash during the second quarter of 2015.

The Company settled all outstanding restricted stock awards as well as certain restricted stock units and performance-stock
awards of Con-way. All remaining outstanding Con-way equity awards were assumed by the Company, as more fully discussed
below. The portion of the fair value not attributable to service performed prior to the acquisition date was recorded as stock-
based compensation expense in the post-combination period. The total value of the cash settlement of Con-way stock-based
compensation awards in connection with the acquisition was $30.9 million, of which $17.8 million and $10.0 million was
settled in cash during 2016 and 2015, respectively.

Stock Options

For employees and officers, stock options typically vest over three to five years after the grant date, have a ten year contractual
term, and an exercise price equal to the Company’s stock price on the grant date. For grants to members of the Company’s
Board of Directors, stock options vest one year after the grant date, have a ten year contractual term, and an exercise price equal
to the Company’s stock price on the grant date.

In connection with the Con-way transaction, each outstanding Con-way stock option was converted into an equivalent intrinsic
value of stock options with the same terms and conditions as were applicable prior to the acquisition, resulting in a total of
883,733 stock options assumed by the Company. All assumed stock options were fully vested as of the acquisition date.

The following is a summary of the weighted-average assumptions used to calculate the grant-date fair value using the Black-
Scholes option pricing model for newly issued stock options:

Weighted-average risk-free interest rate

Weighted-average volatility

Weighted-average dividend yield

Weighted-average expected option term (in years)

2016

2015

2014

1.8%

50.0%

—

6.44

1.6%

60.7%

—

6.61

1.9%

50.5%

—

6.44

For stock options with an exercise price equal to the Company’s stock price on the date of grant, the expected term of options
granted has been derived based upon the Company’s history of actual exercise behavior and represents the period of time that
options granted are expected to be outstanding. The expected volatility is based upon the Company’s historical market price at
consistent points in a period equal to the expected life of the options. The risk-free interest rate is based on the U.S. Treasury
yield curve with a term equal to the expected term of the option in effect at the time of grant.

A summary of stock option award activity for the year ended December 31, 2016 is presented below:

Outstanding at December 31, 2015

Granted

Exercised

Forfeited

Outstanding at December 31, 2016

Number of
Stock
Options
2,004,280

5,000

(725,291)

(203,435)

1,080,554

Options exercisable at December 31, 2016

977,179

Weighted-
Average Exercise
Price

16.66

22.58

18.20

29.01

13.32

12.10

Stock Options

Exercise Price
Range
$2.68 - $31.88

$22.58 - $22.58

$2.68 - $27.75

$6.08 - $31.88

$3.88 - 28.72

Weighted-Average
Grant Date Fair
Value

6.06

11.37

6.59

2.08

6.57

5.76

Weighted-
Average
Remaining
Term
4.57

5.21

4.88

The intrinsic value of options outstanding and exercisable at December 31, 2016 was $32.2 million and $30.3 million,
respectively. As of December 31, 2016, the Company had approximately $1.0 million of unrecognized compensation cost
related to stock options which is expected to be recognized over a weighted-average period of 2.07 years.

The total intrinsic value of options exercised during 2016, 2015 and 2014 was $11.7 million, $4.1 million and $1.7 million,
respectively. The total cash received from options exercised during 2016, 2015 and 2014 was $13.2 million, $5.2 million, and
$0.5 million, respectively.

Restricted Stock Units and Performance-based Restricted Stock Units

The Company has granted RSUs and PRSUs to certain key employees, officers and directors of the Company with various
vesting requirements as established by the Compensation Committee of the Board of Directors. The RSUs granted vest based
on the passage of time. The vesting of certain RSU awards also is subject to the price of the Company’s common stock
exceeding a specified per share price for a designated period of time and continued employment at the Company by the grantee
as of the vesting date. The PRSUs granted will vest based on the achievement of certain targets with respect to the Company’s
overall financial performance for specified periods. The vesting of certain PRSUs also is subject to the price of the Company’s
common stock exceeding a specified per share price for a designated period of time and generally require continued
employment at the Company by the grantee as of the vesting date.

In connection with the Con-way transaction, each outstanding RSU not previously settled was converted into an equivalent
number of RSUs with the same terms and conditions as were applicable prior to the acquisition, resulting in a total of 661,988
RSUs assumed. Additionally, each outstanding PRSU not previously settled was converted into an equivalent number of PRSUs
with the same time-vesting and settlement terms and conditions that existed prior to the acquisition, with the performance-based
vesting conditions deemed satisfied at target, resulting in a total of 426,686 RSUs assumed.

The RSUs and PRSUs may vest in whole or in part before the applicable vesting date if the grantee’s employment is terminated
by the Company without cause or by the grantee with good reason (as defined in the grant agreement), upon death or disability
of the grantee or in the event of a change in control of the Company. Upon vesting, the RSUs and PRSUs result in the issuance
of shares of XPO common stock after required minimum tax withholdings. The holders of the RSUs and PRSUs do not have
the rights of a stockholder and do not have voting rights until certificates representing shares are issued and delivered in
settlement of the awards. The fair value of all grants of RSUs and PRSUs subject to market-based vesting conditions was
estimated using the Monte Carlo simulation lattice model.

A summary of RSU and PRSU award activity for the year ended December 31, 2016 is presented below:

RSUs

PRSUs

Outstanding at December 31, 2015

Granted

Vested

Forfeited

Number of RSUs

1,558,441

382,819

(773,581)

(189,859)

Outstanding at December 31, 2016

977,820

Weighted-Average
Grant Date Fair Value
23.01
$

Number of PRSUs

1,987,060

849,018
(228,155)
(341,367)
2,266,556

Weighted-Average
Grant Date Fair Value
21.47
$

27.39

30.91

18.62

20.88

30.08

21.61

25.02

26.60

The total fair value of RSUs vested during 2016, 2015 and 2014 was $26.8 million, $14.3 million and $9.9 million,
respectively. Of the 977,820 outstanding RSUs, 931,535 vest subject to service conditions and 46,285 vest subject to service
and market conditions.

The total fair value of PRSUs that vested during 2016 and 2015 was $7.2 million and $0.7 million. No PRSUs vested during
2014. Of the 2,266,556 outstanding PRSUs, 1,289,968 vest subject to service and a combination of market and performance
conditions and 976,588 vest subject to service and performance conditions.

As of December 31, 2016, the Company had approximately $40.1 million of unrecognized compensation cost related to non-
vested RSU and PRSU compensation that is anticipated to be recognized over a weighted-average period of approximately 2.77
years.

Cash-settled Performance-based Restricted Stock Units

In February 2016, the Company entered into employment agreements with its executive officers. Pursuant to these agreements,
on February 9, 2016 the Company granted cash-settled PRSUs under the 2011 Plan to each of the executive officers. Twenty-
five percent of the PRSUs vest and are settled in cash on each of the first four anniversaries of the grant, subject to the grantee's
continued employment through the applicable anniversary and achievement of certain performance targets for each tranche.
Cash-settled PRSU awards are measured at fair value initially based on the closing price of the Company’s common stock at the
date of grant and are required to be re-measured to fair value at each reporting date until settlement. Compensation expense for
cash-settled PRSUs is recognized over the applicable performance periods based on the probability of achieving the
performance conditions and the closing price of the Company’s common stock at each balance sheet date. The Company
records as a liability (until settlement) the cost of a cash-settled PRSU award for which achievement of the performance
condition is deemed probable. At December 31, 2016, the Company had recognized accrued liabilities of $26.9 million using a
fair value per PRSU of $43.16.

A summary of cash-settled PRSU award activity for the year ended December 31, 2016 is presented below:

Outstanding at December 31, 2015

Granted

Vested

Forfeited

Outstanding at December 31, 2016

Number of Cash-
settled PRSUs

—

2,508,727

—
(61,710)
2,447,017

As of December 31, 2016, the Company had approximately $78.7 million of unrecognized compensation cost related to non-
vested cash-settled PRSU compensation that is anticipated to be recognized over a weighted-average period of approximately
3.0 years and will vary based on changes in the Company's common stock price and the probability of achieving performance
targets in future periods.

13. Income Taxes

A summary of income (loss) before taxes related to U.S. and non U.S. operations are as follows:

(In millions)
Operations

U.S. domestic
Foreign

Total pre-tax income (loss)

Year Ended December 31,

2016

2015

2014

(69.8) $
176.6
106.8

(305.7) $
23.2
(282.5) $

(87.2)
(2.5)
(89.7)

The components of the income tax provision (benefit) consist of the following:

(In millions)
Current

Federal

State and local

Foreign

Deferred

Federal

Federal benefit of operating loss carryforwards

State and local

State and local benefit of operating loss carrryforward

Foreign

Foreign deferred taxes revalued for enacted rate change

Total income tax provision (benefit)

Year Ended December 31,

2016

2015

2014

(10.6) $
6.3

47.5

43.2

(32.6)
33.9

1.9
(4.4)
(6.6)
(13.1)
(20.9)
22.3

(34.2) $
8.8

26.4

1.0

(8.4)
(49.7)
(9.3)
(8.9)
(15.6)
—
(91.9)
(90.9) $

—

3.4

0.5

3.9

(22.7)
(5.1)
(2.7)
—

0.5

—
(30.0)
(26.1)

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate
to income before income taxes. The items causing this difference are as follows:

(In percent)
U.S. Federal statutory tax rate
State and local taxes, net
Transaction expense
Loss on convertible debt
Foreign tax credit
Change in valuation allowance
Nontaxable purchase price adjustment
Fuel and employment tax credits
Change in uncertain tax position provision
U.S. taxation of foreign earnings
Loss on remeasurement of foreign activities
Foreign tax rate differences
Impact of tax rate change on deferred taxes
Excess tax benefits
All other items

Net effective tax rate

Year Ended December 31,

2016

2015

2014

35.0%
4.8
0.9
—
(10.7)
10.7
—
(4.1)
(4.5)
6.6
—
(4.2)
(12.3)
(4.7)
3.4
20.9%

35.0%
2.2
(3.7)
(0.6)
—
(3.2)
2.2
2.0
0.5
(2.4)
2.6
—
—
—
(2.4)
32.2%

35.0%
0.7
(1.7)
(2.1)
—
(1.4)
—
—
0.4
—
—
(0.5)
—
—
(1.3)
29.1%

The tax effects of temporary differences that give rise to significant portions of the noncurrent deferred tax asset and deferred
tax liability are as follows:

(In millions)
Deferred tax assets

Net operating loss and other tax attribute carryforwards
Accrued expenses
Pension and other retirement obligations
Other
Total deferred tax asset
Valuation allowance
Total deferred tax asset, net

Deferred tax liabilities

Intangible assets
Property & equipment
Other
Total deferred tax liability

Net deferred tax liability

Year Ended December 31,

2016

2015

235.1
115.8
59.6
71.9
482.4
(83.1)
399.3

(515.7)
(392.7)
(60.6)
(969.0)
(569.7) $

242.0
125.4
70.3
65.2
502.9
(67.6)
435.3

(655.0)
(541.7)
(58.3)
(1,255.0)
(819.7)

At December 31, 2016 and 2015, the Company had federal net operating losses for all U.S. operations (including those of
minority owned subsidiaries) of $284.4 million and $409.7 million, respectively, expiring at various times between 2031 and
2036. At December 31, 2016 and 2015, the tax effect (before federal benefit) of the Company’s state net operating losses was
$38.2 million and $26.5 million, respectively, expiring at various times between 2017 and 2036.

At December 31, 2016 and 2015, the Company had federal tax credit carryforwards of $25.3 million and $7.4 million,
respectively, expiring at various times starting in 2017 with certain credits having an unlimited carryforward period. At
December 31, 2016, the Company had state tax credit carryforwards of $4.2 million expiring at various times between 2017 and
2028. At December 31, 2015, the Company had state tax credit carryforwards of $4.6 million expiring at various times between
2016 and 2028.

At December 31, 2016 and 2015, the Company’s foreign net operating losses that are available to offset future taxable income
were $296.5 million and $267.0 million, respectively. These foreign loss carryforwards will expire at various times between
2017 and 2035 with some losses having an unlimited carryforward period.

On December 30, 2016, Law No. 2016-1917 was published in France enacting a rate reduction from 33.33% to 28% to be
phased in over four years starting in 2017. As a result of this change, the company recognized a reduction of its deferred tax
liabilities of approximately $13.1 million in its financial statements.

In determining valuation allowances, an assessment of positive and negative evidence was performed regarding realization of
the net deferred tax assets in accordance with ASC 740-10. This assessment included the evaluation of scheduled reversals of
deferred tax liabilities and the availability of carry forwards. Based on the assessment, as of December 31, 2016, total valuation
allowances of $83.1 million were recorded against deferred tax assets. Although realization is not assured, the Company has
concluded that it is more likely than not that the remaining deferred tax assets will be realized and as such no valuation
allowance has been provided on these assets. The increase in the Company’s valuation allowance of $15.5 million is a result of
the Company’s updated determination that certain federal, state and foreign deferred tax assets do not meet the “more likely
than not” criteria during the period based on operating results.

As of December 31, 2016, our foreign subsidiaries have undistributed earnings which could be subject to taxation if repatriated.
Deferred tax liabilities have not been recorded for such earnings because it is management’s intention to permanently reinvest
such undistributed earnings in its non-U.S. subsidiaries. We estimate the amount of unremitted earnings and profits as of
December 31, 2016 to be approximately $75.0 million. Due to the uncertainty caused by various methods in which such
earnings could be repatriated, it is not practicable to estimate the actual amount of such deferred tax liabilities. The Company
would consider and pursue appropriate alternatives to reduce any tax liability that could occur. If, in the future, undistributed
earnings are repatriated to the U.S., or it is determined such earnings will be repatriated in the foreseeable future, deferred tax
liabilities will be recorded accordingly.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as
follows:

(In millions)
Uncertain tax positions, beginning of the year
Additions for tax positions of prior years
Additions for tax positions from acquisitions
Additions for tax positions taken during the current period
Reductions due to the statute of limitations

Uncertain tax positions, end of the year

Year Ended December 31,

2016

2015

11.5
0.6
10.3
0.1
(7.9)
14.6

6.2
0.2
6.1
0.5
(1.5)
11.5

The Company recognizes interest and penalties accrued related to uncertain tax positions in the provision for income taxes. For
the years ended December 31, 2016 and 2015, $11.4 million and $8.1 million of the unrecognized tax benefits of $14.6 million
and $11.5 million, respectively, if resolved favorably, would impact our effective tax rates. The release of the remaining
approximately $3.0 million of unrecognized tax benefits would not affect the tax rate upon favorable resolution as the liability
would be settled through a holdback provision of an acquisition agreement.

The Company and its wholly owned U.S. subsidiaries file a consolidated Federal income tax return. In addition, its minority
owned U.S. subsidiaries file consolidated Federal income tax returns in accordance with U.S. filing requirements. The
Company also files unitary or separate returns in various state, local and non-U.S. jurisdictions based on state, local and non-
U.S. filing requirements. As a matter of course, various taxing authorities, including the Internal Revenue Service (“IRS”),
regularly audit the Company. These audits may result in proposed assessments where the ultimate resolution may result in the
Company owing additional taxes. Currently, the Company has no tax years under examination by the IRS. The Company has
various non-U.S examinations in process, but at this time, the Company does not expect any of these routine examinations to
yield a material assessment. While there are no other Federal, state or local examinations currently in progress, generally, the
Federal returns after 2010, state and local returns after 2009 and non-U.S. returns after 2010 are open under relevant statute of
limitations and therefore subject to potential adjustment. The Company believes that its tax positions comply with applicable
tax law. The Con-way Federal return is closed through 2015.

14. Derivative Instruments

In the normal course of business, the Company is exposed to certain risks arising from business operations and economic
factors, including fluctuations in interest rates and foreign currencies. To manage the volatility related to this exposure to
fluctuations in interest rates and foreign currencies, the Company uses derivative instruments. The objective of these derivative
instruments is to reduce fluctuations in the Company’s earnings and cash flows associated with changes in foreign currency
rates and interest rates. These financial instruments are not used for trading or other speculative purposes. The Company has not
historically incurred, and does not expect to incur in the future, any losses as a result of counterparty default.

The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk
management objective and strategy for undertaking various hedge transactions. This process includes linking cash flow hedges
to specific forecasted transactions or variability of cash flow to be paid. The Company also formally assesses, both at the
hedge's inception and on an ongoing basis, whether the designated derivative instruments that are used in hedging transactions
are highly effective in offsetting changes in cash flow of hedged items. When a derivative instrument is determined not to be
highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued
prospectively.

The following table presents the location on the consolidated balance sheets in which the Company’s derivative instruments
have been recognized, the fair value hierarchy level applicable to each type of derivative instrument, and the related notional
amounts and fair values:

(In millions)

Derivatives designated as hedges:

Cross-currency swap agreements

Interest rate swaps

Derivatives not designated as
hedges:

Foreign currency option and
forward contracts

Total

(In millions)

Derivatives designated as hedges:

Cross-currency swap agreements

Interest rate swaps

Derivatives not designated as
hedges:

Interest rate swaps

Foreign currency option contracts

Total

Fair Value
Hierarchy Level

Notional
Amount

Balance Sheet
Location

Fair Value

Balance Sheet
Location

Fair Value

December 31, 2016

Derivative Assets

Derivative Liabilities

Level 2

730.9 Other long-term assets

11.9

Other long-term
liabilities

3.3

Other current assets

0.1 Other current liabilities

105.4

Other current assets

— Other current liabilities

552.2

Other current assets

18.8 Other current liabilities

742.6 Other long-term assets

26.7

57.5

Other long-term
liabilities

(6.9)

—

(2.3)

(1.0)

(5.8)

(16.0)

Fair Value
Hierarchy Level

Notional
Amount

Balance Sheet
Location

Fair Value

Balance Sheet
Location

Fair Value

December 31, 2015

Derivative Assets

Derivative Liabilities

Level 2

730.9 Other long-term assets

0.2

Other long-term
liabilities

228.6

Other current assets

— Other current liabilities

43.5

235.2

Other current assets

— Other current liabilities

0.2

—

(7.3)

(0.7)

(1.0)

(9.0)

The following table indicates the amount of gains/(losses) that have been recognized in accumulated other comprehensive loss
in the consolidated balance sheets and gains/(losses) recognized in earnings in the consolidated statements of operations for the
twelve months ended December 31, 2016, 2015, and 2014 for derivative and nonderivative instruments:

(In millions)

2016

2015

2014

2016

2015

2014

Recognized in Accumulated Other
Comprehensive Income (Loss)

Recognized in Net Income (Loss)

Derivatives designated as hedges:

Cross-currency swap agreements

15.3

Interest rate swaps

Derivatives not designated as hedges:

Interest rate swaps

Foreign currency option and forward contracts

Nonderivatives designated as hedges:

Foreign currency denominated notes

Total

4.4

—

(26.9)

(7.2) $

Hedge of Net Investments in Foreign Operations

— $

4.9
(1.4)

—

4.7

8.2

—

0.7

43.5

—

— $

44.2

—

(1.0)
(9.7)

—
(10.7) $

—

In connection with the issuance of the Senior Notes due 2022, the Company entered into certain cross-currency swap
agreements to manage the related foreign currency exchange risk by effectively converting a portion of the fixed-rate USD-
denominated Senior Notes due 2022, including the semi-annual interest payments, to fixed-rate, EUR-denominated debt. The
risk management objective is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign
currencies and reduce the variability in the functional currency equivalent cash flows of a portion of the Senior Notes due 2022.

During the term of the swap contracts, the Company will receive semi-annual interest payments in June and December of each
year from the counterparties based on USD fixed interest rates, and the Company will make semi-annual interest payments in
June and December of each year to the counterparties based on EUR fixed interest rates. At maturity, the Company will repay
the original principal amount in EUR and receive the principal amount in USD. The Company has designated the cross-
currency swap agreements as qualifying hedging instruments and is accounting for these as net investment hedges. The gains
and losses resulting from fair value adjustments to the cross-currency swap agreements are recorded in accumulated other
comprehensive income to the extent that the cross-currency swaps are effective in hedging the designated risk. The Company
did not record any ineffectiveness for the years ended December 31, 2016 and 2015. Cash flows related to the cross-currency
swaps are included in operating activities on the consolidated statements of cash flows. The Company does not expect amounts
that are currently deferred in accumulated other comprehensive income to be reclassified to income over the next 12 months.

In addition to the cross-currency swaps, the Company uses foreign currency denominated notes as nonderivative hedging
instruments of its net investments in foreign operations. During the period that the Senior Notes due 2021 are designated as a net
investment hedge, the gains and losses resulting from the exchange rate adjustments to the designated portion of the foreign
currency denominated notes are recorded in accumulated other comprehensive income/loss to the extent that the foreign currency
denominated notes are effective in hedging the designated risk. As of December 31, 2016, there is no amount of Senior Notes due
2021 included in long-term debt on the consolidated balance sheets that is designated as a net investment hedge of its investments
in international subsidiaries that use the EUR as their functional currency. The most recent de-designation occurred in November
2016 and the amount recognized in accumulated other comprehensive income during the period that the Senior Notes due 2021
were designated as a net investment hedge remains in accumulated other comprehensive income as of December 31, 2016 and
will remain in accumulated other comprehensive income until the subsidiary is sold, completely liquidated, or deconsolidated due
to a change in control. From the de-designation date through December 31, 2016, the gains and losses resulting from exchange
rate adjustments to the foreign currency denominated notes are recorded in the statement of operations in foreign currency gain/
loss. The Company did not record any ineffectiveness for the years ended December 31, 2016 and 2015. The Company does not
expect amounts that are currently deferred in accumulated other comprehensive income/loss to be reclassified to income over the
next 12 months.

Interest Rate Hedging

In order to mitigate variability in forecasted interest payments on the Company’s EUR-denominated asset financings that are
based on benchmark interest rates (e.g., Euribor), the Company has entered into interest rate swaps. The objective is for the
cash flows of the interest rate swaps to offset any changes in cash flows of the forecasted interest payments attributable to
changes in the benchmark interest rate. The interest rate swaps convert floating rate interest payments into fixed rate interest
payments. The Company has designated the interest rate swaps as qualifying hedging instruments and is accounting for these as
cash flow hedges of the forecasted obligations. The gains and losses resulting from fair value adjustments to the designated
portion of the interest rate swaps are recorded in accumulated other comprehensive income/loss to the extent that the interest
rate swaps are effective in hedging the designated risk. The gains and losses will be reclassified from accumulated other
comprehensive income/loss to interest expense on the dates that interest payments accrue, or when the hedged item becomes
probable not to occur. The Company is hedging its exposure to the variability in future cash flows for forecasted interest
payments through December 2017. During the year ended December 31, 2016, certain interest rate swaps were not designated
as hedges. The gains and losses related to the interest rate swaps not designated as hedges are included in interest expense on
the consolidated statements of operations. As of December 31, 2016, there is no amount of the Company's interest rate swaps
that is not designated as hedges. Cash flows related to the interest rate swaps are included in operating activities on the
consolidated statements of cash flows. The Company expects an inconsequential amount that is currently deferred in
accumulated other comprehensive income/loss to be reclassified to income over the next 12 months.

Foreign Currency Option and Forward Contracts

In order to mitigate against the risk of a reduction in the value of foreign currency from the Company’s international operations
with the EUR and GBP as the functional currency, the Company uses foreign currency option and forward contracts. The
foreign currency contracts were not designated as qualifying hedging instruments as of December 31, 2016. The contracts are
not speculative and are used to manage the Company’s exposure to foreign currency exchange rate fluctuations and other
identified risks. Gains or losses on the contracts are recorded in foreign currency gain/loss in the consolidated statements of
operations. Cash flows related to the foreign currency contracts are included in operating activities on the condensed
consolidated statements of cash flows. The risk of loss associated with the option contracts is limited to the premium amounts
payable.

15. Variable Interest Entities

The Company applies the guidance under ASC 810-10 for the determination of its VIEs and the accounting determination for
consolidation. The determination to consolidate these entities is based on a 4-step analysis to first identify those entities in
which the Company holds a variable interest. Upon the determination that the Company holds a variable interest in the entity,

the Company evaluates the relevant criteria to determine if the entity meets the definition of a VIE. These criteria include
evaluating whether the equity investment at risk is insufficient to finance the activities of the entity, the holders of the equity
interest lack decision making rights, the equity investment at risk was established with non-substantive voting rights, the
holders of the equity investment at risk lack the obligation to absorb losses, and the holders of the equity investment at risk lack
the right to receive residual returns. Upon the determination that an entity meets the criteria of a VIE, an evaluation is made
over controlling interest and the determination of the primary beneficiary.

Based on the analysis completed, the Company determined it had variable interests in certain VIEs and consolidates these
entities because it has the power to direct the activities that significantly affect the VIEs' economic performance, including
having operational control over each VIE and operating the VIEs under the XPO brand or policies. The VIEs provide logistics
services for their customers. Investors in these entities only have recourse to the assets owned by the entity and not to the
Company’s general credit. The Company does not have implicit support arrangements with any VIE. The assets and liabilities
of the consolidated VIEs are outlined in the table below.

(In millions)

Assets

Cash and cash equivalents

Accounts receivable, net of allowance

Other current assets

Property and equipment, net of accumulated depreciation

Other long-term assets
Total

Liabilities

Accounts payable

Accrued expenses

Other current liabilities

Other long-term liabilities
Total

December 31, 2016

December 31, 2015

23.5

57.9

4.2

6.0

2.6

94.2

47.9

13.3

8.3

9.1

78.6

14.3

54.7

3.8

4.8

3.0

80.6

44.9

8.1

8.9

5.2

67.1

The following table summarizes total revenue and expenses in connection with the Company’s consolidated VIEs. The
Company did not have any VIEs prior to its June 2015 acquisition of ND.

(In millions)

Revenue

Operating expenses

16. Earnings (Loss) per Share

Years ended December 31,

2016

2015

321.0

309.8

189.5

185.5

Basic and diluted earnings (loss) per share are computed using the two-class method, which is an earnings allocation method
that determines earnings (loss) per share for common shares and participating securities. The participating securities consist of
the Company's Series A Convertible Perpetual Preferred Stock. The undistributed earnings are allocated between common
shares and participating securities as if all earnings had been distributed during the period. In periods of loss, no allocation is
made to the preferred shares. The dividend rights are defined in the Certificate of Designation of Series A Convertible Perpetual
Preferred Stock of XPO Logistics, Inc. filed with the SEC on Form 8-K on September 6, 2011.

(In millions, except per share data)
Basic earnings (loss) per common share
Net income (loss) attributable to XPO
Preferred stock beneficial conversion charge
Convertible preferred dividends
Non-cash allocation of undistributed earnings
Net income (loss) allocable to common shares, basic

Basic weighted-average common shares
Basic earnings (loss) per share

Diluted earnings (loss) per common share

Net income (loss) allocable to common shares, basic
Interest from Convertible Senior Notes

Net income allocable to common shares, diluted

Basic weighted-average common shares

Dilutive effect of non-participating stock-based awards and Convertible
Senior Notes

Diluted weighted-average common shares

Year Ended December 31,

2016

2015

2014

69.0
—
(2.9)
(3.0)
63.1

110.2
0.57

63.1
1.4
64.5

110.2

12.6
122.8

(191.1) $
(52.0)
(2.8)
—
(245.9) $

92.8
(2.65) $

(245.9) $
—
(245.9) $

92.8

—
92.8

(63.6)
(40.9)
(2.9)
—
(107.4)

53.6
(2.00)

(107.4)
—
(107.4)

53.6

—
53.6

Diluted earnings (loss) per share

0.53

(2.65) $

(2.00)

Potentially dilutive common shares excluded

11.8

25.7

27.4

Certain shares were not included in the computation of diluted earnings per share because the effect was either anti-dilutive or
in the case of certain unvested PRSU awards, the contingent performance measure was not met as of December 31, 2016.

17. Quarterly Financial Data (Unaudited)

The Company’s unaudited results of operations for each of the quarters in the years ended December 31, 2016 and 2015 are
summarized below:

(In millions, except per share data)
2016
Revenue

Operating income (loss)
Net income (loss)

Net income (loss) attributable to common shareholders
Basic earnings (loss) per share(1)
Diluted earnings (loss) per share(1)
2015
Revenue

Operating income (loss)

Net loss

Net loss attributable to common shareholders
Basic loss per share(1)
Diluted loss per share(1)

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

$ 3,545.7

$ 3,683.3

$ 3,713.8

$ 3,676.6

62.4
(19.3)
(23.2)
(0.21)
(0.21)

170.3
50.4

42.6

0.39

0.35

168.8
21.3

13.8

0.13

0.11

86.6
32.1

27.3

0.25

0.22

703.0
(4.8)
(14.7)
(15.4)
(0.20)
(0.20)

$ 1,215.9
(30.1)
(78.8)
(75.1)
(0.89)
(0.89)

$ 2,362.0

$ 3,342.3

44.3
(35.0)
(92.6)
(0.94)
(0.94)

(38.0)

(63.1)

(62.8)

(0.58)

(1) The sum of the quarterly net income (loss) attributable to common shareholders and earnings per share may not equal annual
amounts due to differences in the weighted-average number of shares outstanding during the respective periods and due to the
impact of the two-class method.

18. Segment Reporting and Geographic Information

The Company is organized into two reportable segments: Transportation Services and Logistics Services. Corporate and
Eliminations constitute the remaining portions of the Company’s operating results required to be presented in order to reconcile
the Company’s operating results to the condensed consolidated financial statements. The Transportation segment provides
freight brokerage, last mile, LTL, full truckload, and global forwarding services. The Logistics segment provides a range of
contract logistics services, including highly engineered and customized solutions, value-added warehousing and distribution
and other inventory solutions.

The Company evaluates performance based on the various financial measures of the respective business segments. The
following schedule identifies selected financial data for the years ended December 31, 2016, 2015 and 2014, respectively:

(In millions)
Year Ended December 31, 2016

Revenue

Operating income (loss)
Depreciation and amortization

Year Ended December 31, 2015

Revenue

Operating income (loss)

Depreciation and amortization

Year Ended December 31, 2014

Revenue

Operating income (loss)

Depreciation and amortization

Transportation

Logistics

Corporate

Eliminations

Total

9,457.3

5,323.9

— $

438.0
449.1

209.5
192.3

(159.4)
2.0

(161.8) $
—
—

14,619.4

488.1
643.4

4,924.4

2,768.4

— $

51.6

226.5

81.6

136.9

(162.0)
1.5

(69.6) $
0.2

—

2,140.0

216.6

— $

18.9

79.5

17.6

16.3

(77.4)
2.5

—

7,623.2
(28.6)
364.9

2,356.6
(40.9)
98.3

For segment reporting purposes by geographic region, revenues are attributed to the sales office location. The following table
presents revenues generated by geographical area.

(In millions)
Revenue

United States

North America (excluding United States)
France

United Kingdom

Europe (excluding France and United Kingdom)

Asia

Other

Total

Year Ended December 31,

2016

2015

2014

8,758.0

4,278.5

2,141.4

322.0

1,902.7

1,700.9

1,644.5

264.3

27.0

166.3

1,018.8

1,063.5

904.6

171.9

19.6

132.0

—

1.8

11.1

66.3

4.0

14,619.4

7,623.2

2,356.6

As of December 31, 2016, the Company held long-lived tangible and definite-lived intangible assets outside of the United
States of $1,213.3 million.

Exhibit
Number

2.1 *

2.2 *

2.3 *

2.4 *

2.5 *

2.6 *

2.7 *

2.8 *

3.1 *

3.2 *

3.3 *

3.4 *

3.5 *

3.6 *

3.7 *

3.8 *

EXHIBIT INDEX

Description

Investment Agreement, dated as of June 13, 2011, by and among Jacobs Private Equity, LLC (“JPE”), each of the
other investors party thereto and the registrant (incorporated herein by reference to Exhibit 2.1 to the registrant’s
Current Report on Form 8-K dated June 14, 2011).

Stock Purchase Agreement, dated July 12, 2013, by and among 3PD Holding, Inc., Logistics Holding Company
Limited, Mr. Karl Meyer, Karl Frederick Meyer 2008 Irrevocable Trust II, Mr. Randall Meyer, Mr. Daron Pair,
Mr. James J. Martell and XPO Logistics, Inc. (incorporated herein by reference to Exhibit 2.1 to the registrant’s
Current Report on Form 8-K dated July 12, 2013).

Amendment No. 1 dated August 14, 2013 to Stock Purchase Agreement dated July 12, 2013 by and among the
Company, 3PD, Logistics Holding Company Limited, Mr. Karl Meyer, Karl Frederick Meyer 2008 Irrevocable
Trust II, Mr. Randall Meyer, Mr. Daron Pair and Mr. James J. Martell (incorporated herein by reference to
Exhibit 2.1 to the registrant’s Current Report on Form 8-K dated August 15, 2013).

Agreement and Plan of Merger, dated as of January 5, 2014, by and among Pacer International, Inc., XPO
Logistics, Inc. and Acquisition Sub, Inc. (incorporated by reference to Exhibit 2.1 to XPO’s Current Report on
Form 8-K filed with the SEC on January 6, 2014).

Agreement and Plan of Merger, dated as of July 29, 2014, by and among New Breed Holding Company, XPO
Logistics, Inc., Nexus Merger Sub, Inc. and NB Representative, LLC, in its capacity as the Representative
(incorporated by reference to Exhibit 2.1 to XPO’s Current Report on Form 8-K filed with the SEC on July 30,
2014).

Share Purchase Agreement relating to Norbert Dentressangle SA among Dentressangle Initiatives, Mr. Norbert
Dentressangle, Mrs. Evelyne Dentressangle, Mr. Pierre-Henri Dentressangle, Ms. Marine Dentressangle and
XPO Logistics, Inc., dated as of April 28, 2015 (incorporated by reference to Exhibit 2.1 to XPO’s Current
Report on Form 8-K filed with the SEC on April 29, 2015).

Tender Offer Agreement between XPO Logistics, Inc. and Norbert Dentressangle SA, dated as of April 28, 2015
(incorporated by reference to Exhibit 2.2 to XPO’s Current Report on Form 8-K filed with the SEC on April 29,
2015).

Agreement and Plan of Merger, dated as of September 9, 2015, by and among XPO Logistics, Inc., Con-way
Inc., Inc. and Canada Merger Corp. (incorporated by reference to Exhibit 2.1 to XPO’s Current Report on Form
8-K filed with the SEC on September 10, 2015).

Amended and Restated Certificate of Incorporation of the registrant, dated May 17, 2005 (incorporated herein by
reference to Exhibit 3.1 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31,
2007).

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the registrant, dated May
31, 2006 (incorporated herein by reference to Exhibit 3 to the registrant’s Current Report on Form 8-K dated
June 7, 2006).

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the registrant, dated June
20, 2007 (incorporated herein by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2007 (the “June 2007 Form 10-Q”)).

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the registrant, dated
September 1, 2011 (incorporated herein by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-
K dated September 6, 2011 (the “September 2011 Form 8-K”))

2nd Amended and Restated Bylaws of the registrant, dated August 30, 2007 (incorporated herein by reference to
Exhibit 3.2 to the registrant’s Current Report on Form 8-K/A dated September 14, 2007).

Certificate of Amendment to Amended and Restated Certificate of Incorporation of XPO Logistics, Inc.
(incorporated by reference to Exhibit 3.1 to XPO’s Current Report on Form 8-K filed with the SEC on May 21,
2015)

Text of Amendments to the 2nd Amended and Restated Bylaws of XPO Logistics, Inc. (incorporated by
reference to Exhibit 3.2 to XPO’s Current Report on Form 8-K filed with the SEC on May 21, 2015).

Exhibit
Number

4.1 *

Certificate of Designation of Series A Convertible Perpetual Preferred Stock of the registrant (incorporated
herein by reference to Exhibit 4.1 of the September 2011 Form 8-K).

Description

4.2 *

Form of Warrant Certificate (incorporated herein by reference to Exhibit 4.2 of the September 2011 Form 8-K).

4.3 *

4.4 *

4.5 *

4.6 *

4.7 *

4.8 *

4.9 *

4.10 *

4.11 *

4.12 *

4.13 *

10.1 +*

10.2 +*

10.3 +*

10.4 +*

10.5 +*

Registration Rights Agreement, dated as of September 2, 2011, by and among JPE, each of the other holders and
designated secured lenders party thereto and the registrant (incorporated herein by reference to Exhibit 4.3 of the
September 2011 Form 8-K).

Senior Indenture dated as of September 26, 2012 between XPO Logistics, Inc. and The Bank of New York
Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 of the registrant’s
Current Report on Form 8-K dated September 26, 2012 (the “September 2012 Form 8-K”).

First Supplemental Indenture dated as of September 26, 2012 between XPO Logistics, Inc. and The Bank of New
York Mellon Trust Company, N.A., as trustee, supplementing the Senior Indenture dated as of September 26,
2012 (incorporated herein by reference to Exhibit 4.2 of the September 2012 Form 8-K).

Form of Indenture for Senior Debt Securities between the Company and one or more banking institutions to be
qualified as Trustee pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939 (incorporated herein by
reference to Exhibit 4.6 to the registrant’s Registration Statement on Form S-3, registration statement no.
333-188848, filed with the Securities and Exchange Commission on May 24, 2013 (the “May 2013 Form S-3”)).

Form of Indenture for subordinated Debt Securities between the Company and one or more banking institutions
to be qualified as Trustee pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939 (incorporated herein
by reference to Exhibit 4.8 to the registrant’s May 2013 Form S-3).

Investment Agreement, dated as of September 11, 2014, by and among XPO Logistics, Inc. and the Purchasers
set forth on Schedule I thereto (incorporated by reference to Exhibit 4.1 to XPO’s Current Report on Form 8-K
filed with the SEC on September 15, 2014).

Certificate of Designation of Series B Convertible Perpetual Preferred Stock of XPO Logistics, Inc., dated as of
September 17, 2014 (incorporated by reference to Exhibit 4.1 to XPO’s Current Report on Form 8-K filed with
the SEC on September 18, 2014).

Form of Investment Agreement, dated as of May 29, 2015, by and among XPO Logistics, Inc. and the Purchasers
set forth on Schedule I thereto (incorporated by reference to Exhibit 4.1 to XPO’s Current Report on Form 8-K
filed with the SEC on June 1, 2015).

Indenture, dated as of June 9, 2015, between XPO Logistics, Inc. and The Bank of New York Mellon Trust
Company, N.A., as Trustee, The Bank of New York Mellon, London Branch as London Paying Agent and The
Bank of New York Mellon (Luxembourg) S.A. as Luxembourg Paying Agent (incorporated by reference to
Exhibit 4.1 to XPO’s Current Report on Form 8-K filed with the SEC on June 15, 2015).

Certificate of Designation of Series C Convertible Perpetual Preferred Stock of XPO Logistics, Inc., dated as of
June 3, 2015 (incorporated by reference to Exhibit 4.2 to XPO’s Amendment No. 1 to Current Report on Form 8-
K filed with the SEC on June 26, 2015).

Indenture, dated as of August 25, 2016, between XPO Logistics, Inc., the guarantors party thereto and The Bank
of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to XPO’s
Current Report on Form 8-K filed with the SEC on August 26, 2016).

Amended and Restated 2011 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit A to
XPO Logistics, Inc.’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange
Commission on April 27, 2012).

2001 Amended and Restated Stock Option Plan (incorporated herein by reference to Exhibit 4.1 to the
registrant’s Registration Statement on Form S-8 dated May 20, 2010).

Form of Restricted Stock Unit Award Agreement (Service-Vesting) (2011 Omnibus Incentive Compensation
Plan) (incorporated herein by reference to Exhibit 10.18 to the registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2011).

Form of Performance-Based Restricted Stock Unit Award Agreement (2011 Omnibus Incentive Compensation
Plan) (incorporated herein by reference to Exhibit 10.19 to the registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2011).

Form of Option Award Agreement (2011 Omnibus Incentive Compensation Plan) (incorporated herein by
reference to Exhibit 10.20 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December
31, 2011).

Exhibit
Number

10.6 +*

10.7 +*

10.8 +*

10.9 +*

10.10 +*

10.11 +*

10.12 +*

10.13 +*

10.14 +*

10.15 +

10.16 +

10.17 +

10.18 +*

10.19 +*

10.20 +*

10.21 +*

10.22 +*

10.23 +*

10.24 +*

Description

Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (2011 Omnibus Incentive
Compensation Plan) (incorporated herein by reference to Exhibit 10.21 to the registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2011).

Form of Option Award Agreement for Non-Employee Directors (2011 Omnibus Incentive Compensation Plan)
(incorporated herein by reference to Exhibit 10.22 to the registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2011).

Form of Option Award Agreement (2001 Amended and Restated Stock Option Plan) (grants from June 2011
through September 2011) (incorporated herein by reference to Exhibit 10.23 to the registrant’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2011).

Form of Option Award Agreement (2001 Amended and Restated Stock Option Plan) (grants through May
2011) (incorporated herein by reference to Exhibit 10.24 to the registrant’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2011).

Form of Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.1 to XPO’s Current Report on Form 8-K filed with the SEC on March 20, 2014).

Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to XPO’s Current
Report on Form 8-K filed with the SEC on March 20, 2014).

Form of Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.7 to XPO’s Current Report on Form 8-K filed with the SEC on February 11, 2016).

Form of Amendment to PRSU Agreements, dated March 7, 2016 (incorporated herein by reference to Exhibit
10.1 of the Company’s Current Report on Form 8-K filed with the SEC on March 8, 2016).

2016 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A to XPO’s definitive proxy
statement on Schedule 14A filed with the SEC on November 21, 2016).

Form of Restricted Stock Unit Award Agreement (Service-Vesting) (2016 Omnibus Incentive Compensation
Plan).

Form of Performance-Based Restricted Stock Unit Award Agreement (2016 Omnibus Incentive Compensation
Plan).

Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (2016 Omnibus Incentive
Compensation Plan).

Form of Employment Agreement, dated as of February 9, 2016, (incorporated by reference to Exhibit 10.1 to
XPO’s Current Report on Form 8-K filed with the SEC on February 11, 2016).

Exhibit A to Employment Agreement, dated as of February 9, 2016, between the registrant and Bradley S.
Jacobs, (incorporated by reference to Exhibit 10.2 to XPO’s Current Report on Form 8-K filed with the SEC
on February 11, 2016).

Exhibit A to Employment Agreement, dated as of February 9, 2016, between the registrant and John J. Hardig,
(incorporated by reference to Exhibit 10.4 to XPO’s Current Report on Form 8-K filed with the SEC on
February 11, 2016).

Exhibit A to Employment Agreement, dated as of February 9, 2016, between the registrant and Scott B. Malat,
(incorporated by reference to Exhibit 10.6 to XPO’s Current Report on Form 8-K filed with the SEC on
February 11, 2016).

Exhibit A to Employment Agreement, dated as of February 9, 2016, between the registrant and Gordon E.
Devens (incorporated by reference to Exhibit 10.5 to XPO’s Current Report on Form 8-K filed with the SEC
on February 11, 2016).

Exhibit A to Employment Agreement, dated as of February 9, 2016, between the registrant and Troy A. Cooper
(incorporated by reference to Exhibit 10.3 to XPO’s Current Report on Form 8-K filed with the SEC on
February 11, 2016).

Exhibit A to Employment Agreement, dated as of February 9, 2016, between the registrant and Mario A. Harik
(incorporated by reference to Exhibit 10.7 to XPO's Current Report on Form 8-K filed with the SEC on May 5,
2016).

Exhibit
Number

10.25 *

10.26 *

10.27 *

10.28 *

10.29 *

10.30 *

10.31 +*

10.32

31.1

31.2

32.1**

32.2**

Description

Amended and Restated Revolving Loan Credit Agreement, dated as of April 1, 2014, by and among XPO
Logistics, Inc. and certain subsidiaries, Morgan Stanley Bank, N.A., Morgan Stanley Senior Funding, Inc.,
Credit Suisse AG, Cayman Islands Branch, Deutsche Bank AG New York Branch, JPMorgan Chase Bank,
N.A., Citibank N.A. and KeyBank National Association as Lenders, and Morgan Stanley Senior Funding, Inc.,
as Administrative Agent (incorporated by reference to Exhibit 10.1 to XPO’s Current Report on Form 8-K filed
with the SEC on April 4, 2014).

Amendment to Amended and Restated Revolving Loan Credit dated as of August 8, 2014 (incorporated by
reference to Exhibit 10.1 to XPO’s Current Report on Form 8-K filed with the SEC on August 11, 2014).

Amendment No. 2 to the Amended and Restated Credit Agreement among XPO Logistics, Inc. and certain of
its wholly owned subsidiaries, as borrowers, the lenders party thereto and Morgan Stanley Senior Funding,
Inc., as administrative agent for such lenders (incorporated by reference to Exhibit 10.1 to XPO’s Current
Report on Form 8-K filed with the SEC on June 2, 2015).

Second Amended and Restated Revolving Loan Credit Agreement, dated as of October 30, 2015, by and
among XPO Logistics, Inc. and certain subsidiaries signatory thereto, as borrowers, other credit parties
signatory thereto, Morgan Stanley Senior Funding, Inc., as agent, and the Lenders from time to time party
thereto (incorporated by reference to Exhibit 10.1 to XPO’s Current Report on Form 8-K filed with the SEC on
November 2, 2015).

Senior Secured Term Loan Credit Agreement by and among XPO Logistics, Inc., certain subsidiaries signatory
thereto, Morgan Stanley Senior Funding, Inc., as agent, and the Lenders from time to time party thereto
(incorporated by reference to Exhibit 10.2 to XPO’s Current Report on Form 8-K filed with the SEC on
November 2, 2015).

Incremental and Refinancing Amendment (Amendment No. 1 to Credit Agreement), dated as of August 25,
2016, by and among XPO Logistics, Inc., the subsidiaries signatory thereto, as guarantors, the lenders party
thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated by reference to Exhibit
10.1 to XPO’s Current Report on Form 8-K filed with the SEC on August 26, 2016).

Departure Agreement between the Company and Hervé Montjotin dated September 5, 2015 (incorporated by
reference to Exhibit 10.4 to XPO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015).

Retirement and Release Agreement, dated as of December 1, 2015, by and between XPO Logistics, Inc. and
Louis DeJoy.

Code of Business Ethics.

Subsidiaries of the registrant.

Consent of KPMG LLP, Independent Registered Public Accounting Firm.

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
with respect to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
with respect to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Certification of the Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
with respect to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Certification of the Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
with respect to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

101.INS

XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.

101.DEF

XBRL Taxonomy Extension Definition Linkbase.

101.LAB XBRL Taxonomy Extension Label Linkbase.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.

* Incorporated by reference.

** Furnished herewith.

+ This exhibit is a management contract or compensatory plan or arrangement.

Reconciliation of Non-GAAP Measures
XPO Logistics, Inc.
Consolidated Reconciliation of Net Income to Adjusted EBITDA
(in millions)

Year Ended
December 31, 2016

Net income attributable to common shareholders . . . . . . . . . . . . . . . . . . . .
Distributed and undistributed net income . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loss on conversion of convertible senior notes . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation & amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (gain) on foreign currency option and forward contracts . . . . .

63.1
5.9
15.5

84.5

0.2
69.7
360.9
22.3
643.4
(36.0)

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,145.0

Transaction & integration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rebranding costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73.1
30.1

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,248.2

Note: Adjusted EBITDA was prepared assuming 100% ownership of XPO Logistics Europe.

XPO Logistics, Inc.
Free Cash Flow
(in millions)

Cash flows provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . .
Payment for purchases of property and equipment . . . . . . . . . . . . . . . . . . .
Proceeds from sales of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Free Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 625.4
(483.4)
68.9

$ 210.9

Year Ended
December 31, 2016

Non-GAAP Financial Measures

This document contains certain non-GAAP financial measures as defined under the rules of the Securities and
Exchange Commission (“SEC”), including free cash flow for the twelve-month period ended December 31,
2016, as well as adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) for
the twelve-month period ended December 31, 2016.

We believe that the above adjusted financial measures facilitate analysis of our ongoing business operations
because they exclude items that may not be reflective of, or are unrelated to, XPO and its business segments’
core operating performance, and may assist investors with comparisons to prior periods and assessing trends in
our underlying businesses. These adjustments are consistent with how management views our businesses.
Management uses these non-GAAP financial measures in making financial, operating and planning decisions and
evaluating XPO’s and each business segment’s ongoing performance.

Accordingly, we believe that free cash flow is an important measure of our ability to repay maturing debt or fund
other uses of capital that we believe will enhance stockholder value. We believe that adjusted EBITDA improves
comparability from period to period by removing the impact of our capital structure (interest and financing
expenses), asset base (depreciation and amortization), tax impacts and other adjustments as set out in the attached
tables that management has determined are not reflective of normalized operating activities. Adjusted EBITDA
includes adjustments for acquisition costs and related integration and rebranding initiatives. Transaction and
integration adjustments are generally incremental costs that result from an acquisition and include transaction
costs, restructuring costs, acquisition and integration consulting fees, internal salaries and wages (to the extent
the individuals are assigned full-time to integration activities) and certain costs related to integrating and
converting IT systems. Rebranding adjustments relate primarily to the rebranding of the XPO Logistics name on
our truck fleet and buildings.

Other companies may calculate adjusted EBITDA differently, and therefore our measure may not be comparable
to similarly titled measures of other companies. Free cash flow and adjusted EBITDA are not measures of
financial performance or liquidity under GAAP and should not be considered in isolation or as an alternative to
revenue, net income or cash flows provided (used) by operating activities and other measures determined in
accordance with GAAP. Items excluded from adjusted EBITDA are significant and necessary components of the
operations of our business, and, therefore, adjusted EBITDA should only be used as a supplemental measure of
our operating performance.

As required by SEC rules, we provide reconciliations of these historical measures to the most directly
comparable measure under United States generally accepted accounting principles (“GAAP”), which are set forth
in the financial tables attached to this document. With respect to our 2017 and 2018 financial targets of adjusted
EBITDA and our 2017 and 2017-2018 cumulative targets for free cash flow, each of which is a non-GAAP
measure, a reconciliation of the non-GAAP measure to the corresponding GAAP measure is not available
without unreasonable effort due to the variability and complexity of the reconciling items described below that
we exclude from the non-GAAP target measure. The variability of these items may have a significant impact on
our future GAAP financial results and, as a result, we are unable to prepare the forward-looking balance sheet,
statement of income and statement of cash flow, prepared in accordance with GAAP that would be required to
produce such a reconciliation.

BOAOO RD OF DIRECTORS

FINANCIAL AND OTHER COMPAPP NY INFORMATAA ION:

Bradley S. Jacobs
Chairman and Chief Executive Offiff cer,rr
XPO Logistics, Inc.

Gena L. Ashe
Executive Vice President, Chief Legal
Offiff cer and Corporate Secretaryrr
BrightView Landscapes, LLC
(f(( ormerly The Brickman Group, LtLL d. LLC)

(retired),

Louis DeJoy
Chief Executive Offiff cer,rr
Supply Chain (retired),
XPO Logistics, Inc.

Copies of XPO Logistics, Inc.’s financial
information such as the Company’s Annual
Reportrr on Form 10-K as filed with the SEC,
quartrr erly reportrr s on Form 10-Q and Proxy
Statement are available at the Company’s
website at www.ww xpxx o.com or by contacting
“Investor Relations” at our corporate
executive offiff ce address.

ANNUAL MEETING OF STOCKHOLDERS:

The Annual Meeting of Stockholders will
be held on May 10, 2017 at 10:00 a.m. Eastern
Daylight Time at Five Greenwich Offiff ce Park,
Greenwich, CT 06831

Michael G. Jesselson
Lead Independent Director,rr
XPO Logistics, Inc.
President and Chief Executive Offiff cer,rr
Jesselson Capital Corporation

TRANSFER AGENT:TT

Computershare Investor Servrr ices, LLC
TeTT l. (877) 581-5548
www.ww compm utett rsrr harerr .com/i// nii vevv stott r

Adrian P.PP Kingshott
Chief Executive Offiff cer,rr
AdSon LLC

Mailing address - courier:
250 Royall Street
Canton, MA 02021

Jason D. Papastavrou
Founder and Chief Investment Offiff cer,rr
ARIS Capital Management, LLC

Mailing address - regular mail:
P.PPO. Box 30170
College Station, TXTT 77842-3170

Orerr n G. Shaffff er
Vice Chairman and
Chief Financial Offiff cer (retired),
Qwest Communications International, Inc.

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM:

KPMG LLP,PP Charlotte, NC

COMMON STOCK:

The company’s common stock is traded on
NYSE under the symbol “XPO.”

CORPORATAA E EXECUTIVE OFFICE:

Five American Lane
Greenwich, CT 06831
TeTT l. (855) 976-6951

XPO Logistics, Inc.

Five American Lane

Greenwich, CT 06831 USA

xpo.com