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Item 9A. Controls and Procedures

2024-02-27 compared with 2023-02-24 · 65 added, 111 removed, 107 unchanged (62% of the section changed)

CONTROLS AND PROCEDURES

MANAGEMENT’S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES

As of December 31, 2023, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)).

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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.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate controls over financial reporting as defined in Rule 13a-15(f) of the Exchange Act.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023.

Based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria), management concluded that our internal control over financial reporting was effective as of December 31, 2022.

On August 22, 2022, we completed the acquisition of TAGG.

On December 20, 2023, we completed the acquisition of Forward Air Final Mile (“FAFM”).

We are currently integrating processes, employees, technologies and operations.

As permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”), we excluded TAGG from our assessment of our internal control over financial reporting as of December 31, 2022.

As permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”), we excluded FAFM from our assessment of our internal control over financial reporting as of December 31, 2023.

Management will continue to evaluate our internal controls over financial reporting as we complete our integration.

As of December 31, 2022, TAGG represented 6.1% of total assets and 6.5% of net assets.

For the year ended December 31, 2022, TAGG represented 1.2% of revenues and 0.3% of net income.

As of December 31, 2023, FAFM represented 9.9% of total assets and 16.0% of net assets.

For the year ended December 31, 2023, FAFM represented 0.2% of revenues and 0.1% of net income.

Management believes, however, that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Ernst & Young LLP, an independent registered public accounting firm, who audited and reported on the consolidated financial statements, included in this report, has issued an attestation report on the Company’s internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Opinion on Internal Control over Financial Reporting

We have audited Hub Group, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

We have audited Hub Group, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Hub Group, Inc.

(the “

Company ”

) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

As indicated in the accompanying Management Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of TAGG Logistics, LLC (“TAGG”) , which was acquired on August 22, 2022 and is included in the 2022 consolidated financial statements of the Company and constituted 6.1% and 6.5% of total and net assets, respectively, as of December 31, 2022 and 1.2% and 0.3% of revenues and net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of TAGG.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ( “

PCAOB ”

), the consolidated balance sheets of Hub Group, Inc.

as of December 31, 2022 and 2021, the related consolidated statements of income and comprehensive income, stockholders’

equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(b), and our report dated February 24, 2023 expressed an unqualified opinion thereon.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

As indicated in the accompanying Management Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Forward Air Final Mile (“FAFM”), which was acquired on December 20, 2023 and is included in the 2023 consolidated financial statements of the Company and constituted 9.9% and 16.0% of total and net assets, respectively, as of December 31, 2023 and 0.2% and 0.1% of revenues and net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of FAFM.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ( “ PCAOB ” ), the consolidated balance sheets of Hub Group, Inc.

as of December 31, 2023 and 2022, the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(b), and our report dated February 27, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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OTHER INFORMATION

On February 22, 2023, David P.

Yeager, Executive Chairman of the Board of Directors, Phillip D.

Yeager, the Company’s President and Chief Executive Officer, other members of the Yeager family and certain trusts established for the benefit of certain members of the Yeager family (the “Yeager Entities”) entered into a stockholders’

agreement (the “DPY Stockholders’

Agreement”).

The DPY Stockholders Agreement requires, among other things, that the Yeager Entities agree to vote all of their Class B Common Stock in accordance with the vote of the holders of a majority of such Class B Common Stock and that the Yeager Entities will hold a meeting prior to the Annual Meeting of Stockholders of the Company (the “Annual Meeting”) to determine how the Class B Common Stock will be voted on matters presented at the Annual Meeting.

The forgoing descriptions of the DPY Stockholders’

Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, which is attached hereto as Exhibit 10.1 to this Annual Report.

Not applicable

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

(a) Information Regarding Directors and Executive Officers.

The information required by this Item 10 regarding our directors and director nominees is contained under the captions “Who are the nominees this year”

and “Are there any family relationships between any of the directors, executive officers or nominees,”

in each case under the heading “Proposal 1:

Election of Directors”

in the 2023 Proxy Statement, which information under such captions is incorporated herein by reference.

Information required by this Item 10 regarding our executive officers appears in Part I of this Annual Report under the caption “Information About Our Executive Officers,”

which information under such caption is incorporated herein by reference.

(b) Code of Business Conduct and Ethics.

The Company has adopted a Code of Business Conduct and Ethics (“Code”) that applies to all of our employees, officers and Board members.

The Code is posted on the “Investors”

section of our internet website at www.hubgroup.com.

If we choose to no longer post such Code, we will provide a free copy to any person upon written request to Investor Relations, Hub Group, Inc.

2001 Hub Group Way, Oak Brook, Illinois 60523.

We intend to provide any required disclosure of an amendment to or waiver from such Code that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our internet website located at www.hubgroup.com promptly following any such amendment or waiver.

We may elect to disclose any such amendment or waiver in a Current Report on Form 8-K filed with the SEC either in addition to or in lieu of the website disclosure.

The information contained on or connected to our internet website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report that we file with or furnish to the SEC.

There have been no material changes to the procedures by which security holders may recommend nominees to the registrant’s Board of Directors.

(d) Audit Committee Information.

Information required by this Item 10 regarding our Audit Committee and our audit committee financial experts may be found under the captions “What functions are performed by the Audit, Compensation, and Nominating Committees”

and “Does Hub Group have an audit committee financial expert serving on its Audit Committee,”

in each case under the heading “Corporate Governance”

in the 2023 Proxy Statement, which information pertaining to the audit committee and its membership and audit committee financial experts under such captions is incorporated herein by reference.

(e) Compliance with Section 16(a) of the Exchange Act.

Information required by this Item 10 regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 by our directors, executive officers and holders of more than ten percent of the Company's equity securities is contained under the caption “Delinquent Section 16(a) Reports”

in the 2023 Proxy Statement, which information is incorporated herein by reference.

The information required by this Item 10 is incorporated by reference to our Proxy Statement.

The information regarding executive officers called for by Item 401 of Regulation S-K is included in Part I, Item 1, beginning under “Information About Our Executive Officers.”

The Company has adopted a Code of Business Conduct and Ethics (“Code”) that applies to all of our employees, officers and Board members.

The Code is posted on the “Investors” section of our internet website at www.hubgroup.com.

If we make any substantive amendments to the finance code of ethics or grant any waiver from a provision of the code to our principal executive officer, principal financial officer or principal accounting officer, we will disclose the nature of the amendment or waiver on that website or in a report on Form 8-K.

EXECUTIVE COMPENSATION

The information required by this Item 11 regarding executive officer compensation is contained under the captions “Director Compensation”

and “Executive Compensation”

appearing in our 2023 Proxy Statement, which information under such captions is incorporated herein by reference.

The information required by this Item 11 is incorporated by reference to our Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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(b) Other Information.

The information required by this Item 12 regarding security ownership of certain beneficial owners and our management is contained under the caption “Security Ownership”

in the 2023 Proxy Statement, which information under such caption is incorporated herein by reference.

The information required by this Item 12 regarding security ownership of certain beneficial owners and our management is incorporated by reference to our Proxy Statement.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 regarding certain relationships and related transactions is contained under the caption “Transactions with Management and Others”

in the 2023 Proxy Statement, which information under such caption is incorporated herein by reference.

The information required by this Item 13 regarding director independence is contained under the caption “Director Independence”

in the 2023 Proxy Statement, which information under such caption is incorporated herein by reference.

The information required by this Item 13 is incorporated by reference to our Proxy Statement.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item 14 regarding fees we paid to our principal accountant and the pre-approval policies and procedures established by the Audit Committee of our Board of Directors is contained under the caption “Fees Paid to Auditors”

in the 2023 Proxy Statement, which information under such caption is incorporated herein by reference.

The information required by this Item 14 is incorporated by reference to our Proxy Statement.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Consolidated Statements of Income and Comprehensive Income - Years ended December 31, 2023, December 31, 2022 and December 31, 2021

Consolidated Statements of Stockholders’

Equity - Years ended December 31, 2022, December 31, 2021 and December 31, 2020

Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2023, December 31, 2022 and December 31, 2021

Consolidated Statements of Cash Flows - Years ended December 31, 2023, December 31, 2022 and December 31, 2021

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are filed as part of this report and should be read in conjunction with the consolidated financial statements of Hub Group, Inc.:

Valuation and qualifying accounts and reserves

All other schedules are omitted because they are not required, are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.

The exhibits included as part of this Form 10-K are set forth in the Exhibit Index immediately preceding the signature page to this report, which Exhibit Index is incorporated herein by reference.

FORM 10-K SUMMARY

HUB GROUP, INC.

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(2) Represents bad debt recoveries.

INDEX TO EXHIBITS

Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s quarterly report on Form 10-Q filed July 23, 2007)

By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s report on Form 8-K filed February 23, 2016)

Certificate of Incorporation of Hub Group, Inc.

(Amended as of June 26, 2023) (incorporated by reference to Exhibit 3.1 to the Registrant's quarterly report on Form 10-Q filed August 4, 2023)

Amended and Restated By-Laws of Hub Group, Inc.

(incorporated by reference to Exhibit 3.1 to the Registrant’s report on Form 8-K filed February 28, 2023)

Description of Hub Group, Inc.

Class A Common Stock, $.01 par value (filed herewithin)

DPY Stockholders’

Agreement dated February 22, 2023 (filed herewithin)

Common Stock Exchange and Repurchase Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K filed August 9, 2022)

Hub Group’s Nonqualified Deferred Compensation Plan Basic Plan Document as amended and restated as of January 1, 2008 (incorporated by reference to Exhibit 10.4 to the Registrant’s report on Form 10-K filed February 22, 2008)

Hub Group’s Nonqualified Deferred Compensation Plan Adoption Agreement as amended and restated as of January 1, 2008 (incorporated by reference to Exhibit 10.5 to the Registrant’s report on Form 10-K filed February 22, 2008).

Credit Agreement, dated February 24, 2022, among the Registrant, the Guarantors, the Lenders and Bank of Montreal (incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K filed March 1, 2022)

Hub Group’s 2022 Long Term Incentive Plan (incorporated by reference from Exhibit A to the Registrant’s definitive proxy statement on Schedule 14A filed April 12, 2022)

Form of Terms of Restricted Stock Award to Directors under Hub Group, Inc.

2017 and 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K filed May 16, 2017)

Form of Terms of Restricted Stock Award to non-directors under Hub Group, Inc.

2017 and 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s report on Form 8-K dated May 10, 2017 and filed May 16, 2017)

Class A Common Stock, $.01 par value

DPY Stockholders’ Agreement dated February 22, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's quarterly report on Form 10-K filed February 24, 2023)

Common Stock Exchange and Repurchase Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's report on Form 8-K filed August 9, 2022)

Hub Group’s 2017 Long Term Incentive Plan (incorporated by reference from Exhibit A to the Registrant’s definitive proxy statement on Schedule 14A filed March 22, 2017)

Hub Group’s 2022 Long Term Incentive Plan (incorporated by reference from Exhibit A to the Registrant’s definitive proxy statement on Schedule 14A filed April 12, 2022)

Form of Terms of Restricted Stock Award to Non-Employee Directors under Hub Group, Inc.

2017 and 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K filed May 16, 2017)

Form of Terms of Restricted Stock Award under Hub Group, Inc.

2017 and 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s report on Form 8-K filed May 16, 2017)

Form of Terms of Performance Based Restricted Stock Award under Hub Group, Inc.

2017 and 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s report on Form 8-K filed January 5, 2018)

Subsidiaries of the Registrant

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Powers of Attorney (included as part of the signature pages hereto)

Certification of Phillip D.

Yeager, President, Chief Executive Officer and Director, Pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934 is attached hereto as Exhibit 31.1

Certification of Geoffrey F.

DeMartino, Executive Vice President, Chief Financial Officer and Treasurer, Pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934 is attached hereto as Exhibit 31.2

Certification of Phillip D.

Yeager and Geoffrey F.

DeMartino, Chief Executive Officer and Chief Financial Officer respectively, Pursuant to 18 U.S.C.

Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data”

of this Annual Report on Form 10-K

Rule 13a-14(a) Certification of Phillip D.

Yeager, Chief Executive Officer

Rule 13a-14(a) Certification of Kevin W.

Beth, Chief Financial Officer

Section 1350 Certifications of Phillip D.

Yeager and Kevin W.

Beth, Chief Executive Officer and Chief Financial Officer, respectively

Hub Group, Inc.

Compensation Clawback Policy

Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K

Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set

* Management contract or compensatory plan or arrangement.

FORM 10-K SUMMARY

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.

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/s/ PHILLIP D.

President and Chief Executive Officer

We, the undersigned directors and officers of the registrant, hereby severally constitute Phillip D.

Yeager and Geoffrey F.

DeMartino, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, and in our names in the

capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Vice Chairman of the Board of Directors, President and Chief Executive Officer

W e, the undersigned directors and officers of the registrant, hereby severally constitute Phillip D.

Yeager and Kevin W.

Beth and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, and in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.

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 and on the dates indicated:

/s/ Phillip D.

President, Chief Executive Officer (Principal Executive Officer)

February 24, 2023

/s/ Geoffrey F.

Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

Vice Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)

February 27, 2024

Executive Vice President and Chief Accounting Officer (Principal Accounting Officer)

Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

February 27, 2024

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures