COVENANT LOGISTICS GROUP, INC. Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Updates to Management Team
On April 6, 2021 , the Board of Directors (the "Board") of Covenant
Logistics Group Inc. , a Nevada corporation (the "Company"), created
the Office of the Chief Executive Officer ("CEO") and appointed
certain of the Company's executives to new positions as follows:
On April 6, 2021 , the Compensation Committee (the "Committee") of the
Board approved compensation changes for certain of our Named Executive
Officers, as set forth below.
Restricted Stock Grants
The Committee approved grants of restricted stock for Messrs. Hogan and
Bunn under the Company's Third Amended and Restated Omnibus Incentive
Plan, as amended (the "Plan"), in recognition of their respective
promotions. Mr. Hogan received 150,000 shares of restricted stock to
vest in installments of 50,000 shares on each of April 6, 2022 ,
December 31, 2022 , and December 31, 2023 , subject to certain continued
employment, acceleration, and forfeiture provisions. Mr. Bunn received
16,667 shares of restricted stock to vest on January 1, 2025 , subject
to certain continued employment, acceleration, and forfeiture
provisions.
Mr. Hogan did not receive an equity award during 2020. Absent
extraordinary circumstances, the Committee does not expect to make
additional equity awards to Mr. Hogan for 2021, 2022, or 2023.
Incentive Stock Options
The Committee approved performance-based options to purchase the
Company's Class A common stock ("Options") to David R. Parker , our
Chairman and CEO, and Mr. Bunn under the Plan, to further align their
compensation with the Company's performance, as well as to recognize
Mr. Bunn's promotion. Mr. Parker received 400,000 Options and Mr. Bunn
received 50,000 Options. The Options vest (i) 25% if the average
closing price of the Company's Class A Common Stock exceeds a certain
level over any 90 day period before December 31, 2023 , but in no event
sooner than April 6, 2022 , (ii) 25% if the Company achieves a certain
level of freight revenue for the year ended December 31, 2023 , (iii)
25% if the Company achieves certain adjusted earnings per share ("EPS")
goals for the three-year period ended December 31, 2023 , along with a
minimum adjusted EPS goal for the year ended December 31, 2023 , and
(iv) 25% if the Company achieves certain other adjusted EPS goals for
the three-year period ended December 31, 2023 . The vesting of the
Options is subject to certain continued employment, acceleration, and
forfeiture provisions.
Mr. Parker did not receive an equity award during 2020. Absent
extraordinary circumstances, the Committee does not expect to make
additional equity awards to Mr. Parker for 2021, 2022, or 2023.
2021 Short-Term Cash Incentive Plans
The Committee approved a short-term cash incentive plan for Messrs.
Parker, Hogan, and Bunn (the "2021 Senior Executive Bonus Program").
Under the 2021 Senior Executive Bonus Program, the bonus targets,
expressed as a percentage of year-end annualized base salary, were the
same as under the 2020 short-term cash incentive plan for Messrs.
Parker and Hogan at 100% and Mr. Bunn's bonus target was changed from
60% to 80% of year-end annualized base salary in recognition of his
promotion. Under the 2021 Senior Executive Bonus Program, participants
are eligible to earn 100% of their target bonus upon the attainment of
a certain adjusted EPS goal for fiscal year 2021. Additionally, if the
adjusted EPS goal is met, participants are eligible to earn up to
additional 100% of their bonus target as follows: (i) 32% of the bonus
target for achieving a goal related to leadership structure, (ii) 34%
of the bonus target for achieving certain goals related to safety, and
(iii) up to 34% for achieving certain goals related to productivity.
The Committee approved a short-term cash incentive plan for Mr. Hough
(the "2021 Hough Bonus Program"). Mr. Hough's bonus target is 50% of
annualized year-end base salary. Under the 2021 Hough Bonus Program,
Mr. Hough is eligible to earn up to 200% of his bonus target for
achievement of goals related to Expedited gross margin (weighted at
75%) and adjusted EPS (weighted at 25%).
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Salary Change and Severance Agreement Amendment
In further recognition of Mr. Bunn's promotion, the Committee also
approved a salary increase for Mr. Bunn from $337,000 to $400,000 and
an amendment to the his Severance Agreement as follows:
• Upon a qualifying severance event, subject to employment, release,
and other customary provisions, including a non-compete through 12
months post-termination, the Severance Agreement was amended to
provide for 24 months of salary continuation and COBRA reimbursement
(versus 18 months previously).
• Upon a qualifying change-in-control event only when the recipient
is terminated without "cause" or is subject to a "constructive
termination" during the 24 months following a change-in-control,
subject to employment, release, and other customary provisions,
including a non-compete through 12 months post-termination, the
Severance Agreement was amended to provide for a 300% lump sum
severance payment and 36 months COBRA reimbursement (versus 200% and
24 months, respectively, previously).
The following is biographical information for Messrs. Hogan and Bunn:
Joey B. Hogan , 59, previously served as our Co-President and Chief
Operating Officer ("COO") from April 2020 to April 2021 and as our
President and COO from February 2016 to April 2020 . From May 2007 to
February 2016 Mr. Hogan served as our Senior Executive Vice President
and COO, as well as President of CTI. Mr. Hogan was our Chief
Financial Officer ("CFO") from 1997 to May 2007 , our Executive Vice
President ("EVP") from May 2003 to May 2007 , and a Senior Vice
President from December 2001 to May 2003 . From joining us in August
1997 through December 2001 , Mr. Hogan served as our Treasurer. Mr.
Hogan served as a director and on the Audit Committee of Chattem ,
Inc., a consumer products company, from April 2009 through March 2010 ,
and currently serves as an officer of the Truckload Carriers
Association .
M. Paul Bunn , 43, previously served as our EVP, CFO, and Secretary
form April 2020 to April 2021 , our EVP from April 2019 to April 2020 ,
our Chief Accounting Officer and Treasurer from January 2012 to April
2020 , and our SVP from 2017 to April 2019 . Previously, Mr. Bunn served
as our Corporate Controller from July 2009 to January 2012 . Prior to
that, Mr. Bunn served as an Audit Senior Manager for Ernst & Young,
LLP , a global professional services provider.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
99 Covenant Logistics Group, Inc. press release announcing the
continued evolution of leadership team
The information contained in Item 9.01 of this report and the exhibit
hereto shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
incorporated by reference in any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, except
as shall be expressly set forth by specific reference in such a
filing.
The information in Item 9.01 of this report and the exhibit hereto may
contain "forward-looking statements" within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act and such
statements are subject to the safe harbor created by those sections
and the Private Securities Litigation Reform Act of 1995, as amended.
Such statements are made based on the current beliefs and expectations
of the Company's management and are subject to significant risks and
uncertainties. Actual results or events may differ from those
anticipated by forward-looking statements. Please refer to the
italicized paragraph at the end of the attached press release and
various disclosures by the Company in its press releases, stockholder
reports, and filings with the Securities and Exchange Commission for
information concerning risks, uncertainties, and other factors that
may affect future results.
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