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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On May 1, 2019, Celadon Group, Inc., a Delaware corporation (the “Company”), appointed Vincent Donargo as its Executive Vice President, Chief Accounting Officer, and Chief Financial Officer, effective immediately.
Mr. Donargo, 58, previously served as the Company’s Executive Vice President and Chief Accounting Officer since November 2017. Prior to joining the Company, Mr. Donargo served as Executive Vice President and Chief Financial Officer of Beaulieu Group LLC, a North American carpet and flooring manufacturing company, from August 2016 to November 2017. Prior to joining Beaulieu Group, he was at Brightstar Corp., a mobile services company, serving as Executive Vice President Finance Operations from August 2015 to August 2016 and as Executive Vice President and Chief Financial Officer from April 2014 to August 2015. Before his tenure at Brightstar, Mr. Donargo worked for Brightpoint, Inc., a publicly traded provider of worldwide distribution and integrated logistics services prior to its acquisition by Ingram Micro Inc., where he served as Chief Accounting Officer and Controller from September 2005 to May 2011 and as Chief Financial Officer and Treasurer from May 2011 to October 2012. Mr. Donargo also served as Executive Vice President, Integration, Financial Planning and Analysis, and Finance Transformation at Ingram Micro after Brightpoint's acquisition from October 2012 to April 2014. Mr. Donargo holds a B.A. in accounting from Rutgers University.
In connection with the appointment, the Company and Mr. Donargo entered into an Amended and Restated Employment Agreement (the “A&R Employment Agreement”), dated May 1, 2019, amending certain terms and conditions of Mr. Donargo’s employment with the Company. Under the A&R Employment Agreement, Mr. Donargo (i) has a base salary of $425,000; (ii) received an equity grant in connection with his appointment, the material terms of which are further described below; (iii) continues to be eligible to participate in future equity grants under the Company’s long-term incentive program; (iv) continues to be eligible to participate in the Company’s performance cash bonus program; (v) received a one-time cash bonus of $100,000; (vi) is entitled to severance pay, if the Company terminates his employment without “Cause” or he terminates his employment for “Good Reason” (in either case, not involving a “Change in Control”), equal to twenty-four months of salary continuation and COBRA continuation coverage for twenty-four months; (vii) is entitled to severance pay, if the Company terminates his employment without Cause or he terminates his employment for Good Reason, in either case, within six months prior to, or twelve months following, a Change in Control, equal to 200% of his annual base salary, 200% of the target amount of his annual cash bonus, COBRA continuation coverage for twenty-four months, and accelerated vesting of equity awards to the extent so provided in the applicable award notices; and (viii) is subject to certain nonsolicitation, noncompetition, nondisparagement, and confidentiality covenants. The terms “Cause,” “Good Reason,” and “Change in Control” are further defined in the A&R Employment Agreement.
The A&R Employment Agreement provides that Mr. Donargo’s aggregate bonus opportunity for fiscal 2020 will be $318,750 (75% of his annual base salary), of which (i) $159,375 (50% of the bonus opportunity) will be earned upon remediating the Company’s existing material weaknesses in internal control over financial reporting by September 30, 2019, completing the Company’s audit of its financial statements for the fiscal years ended June 30, 2017 and 2018 and for the fiscal year ending June 30, 2019, and filing such financial statements with the Securities and Exchange Commission in a Form 10-K (the “Audit Goal”); and (ii) $159,375 (50% of the bonus opportunity) will be earned based upon annual financial goals such as pretax income, ROIC, and strategic goals, as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”).
In connection with his appointment, the Company granted Mr. Donargo stock options covering an aggregate of 400,000 shares of the Company’s common stock with an exercise price of $2.53, the publicly reported closing price on the date of the grant. The options will vest as follows: (i) 100,000 upon the Compensation Committee’s certification that the Audit Goal has been achieved; (ii) 100,000 upon the Compensation Committee’s certification that the Company’s common stock has been relisted on the New York Stock Exchange, NASDAQ, or comparable nationally recognized exchange; (iii) 66,667 on May 1, 2021; (iv) 66,667 on May 1, 2022, and (v) 66,666 on May 1, 2023.
The foregoing summary of the A&R Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the A&R Employment Agreement and related Award Notice, which are filed herewith as Exhibits 10.1 and 10.2, respectively. There is no arrangement or understanding between Mr. Donargo and any other person pursuant to which Mr. Donargo was appointed Executive Vice President, Chief Accounting Officer, and Chief Financial Officer. There are no transactions in which Mr. Donargo has an interest requiring disclosure under Item 404(a) of Regulation S-K other than the A&R Employment Agreement.
Mr. Donargo succeeds Thom Albrecht as Chief Financial Officer. Effective May 1, 2019, Mr. Albrecht ceased to serve as the Company’s Chief Financial Officer and was appointed as the Company’s Chief Commercial Officer. Mr. Albrecht continues to serve as the Company’s Chief Strategy Officer. The transition from Mr. Albrecht to Mr. Donargo was not a result of any disagreement between Mr. Albrecht and the Company, its management, or the Board on any matter relating to the Company’s operations, policies, or practices.