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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 August 4, 2020, the Board of Directors
(the “Board”) of P.A.M. Transportation Services, Inc. (the “Company”) appointed Joseph A. Vitiritto to
serve as the Company’s new President and Chief Executive Officer beginning August 18, 2020. Mr. Vitiritto succeeds the Company’s
former President and Chief Executive Officer, Daniel H. Cushman, who retired effective May 1, 2020, and Matthew T. Moroun, who
has served as interim CEO since May 1, 2020. Mr. Moroun will remain as Chairman of the Board of the Company.
In connection with his employment as President
of the Company, Mr. Vitiritto has been appointed by the Board as a director of the Company to fill the vacant position previously
held by Mr. Cushman, effective August 18, 2020. Mr. Vitiritto has also been appointed to the Executive Committee of the Board.
Mr. Vitiritto, age 49, has served as Senior Vice President
of Pricing and Network Design for Knight-Swift Transportation Holdings, Inc. (“Knight-Swift”) since May 2019. Prior
to assuming that role, Mr. Vitiritto served in various managerial capacities for Knight-Swift and its predecessor, Knight Transportation,
Inc., beginning in 2003, including most recently as Senior Vice President of Operations – Swift Transition Team and Senior
Vice President of Human Resources. He has over 25 years of experience in the transportation industry. Mr. Vitiritto’s significant
operational experience and expertise in the transportation industry and future knowledge of the day-to-day management of the Company
will bring valuable insight to the Company’s Board of Directors.
On August 4, 2020, the Company
entered into an employment agreement with Mr. Vitiritto pursuant to which he will serve as the Company’s President and
Chief Executive Officer (the “Employment Agreement”). Under the terms of the Employment Agreement, Mr. Vitiritto
will receive an annual base salary of $530,036 and a cash bonus for fiscal year 2020 of $328,500, payable in December 2020 or
January 2021. Mr. Vitiritto will be eligible to earn an annual bonus incentive award for 2021 in an amount up to 100% of his
then current base salary, with the actual bonus amount to be awarded based on the satisfaction of predetermined performance
criteria to be established at later date. He will also be eligible for future annual cash bonuses as determined by the Board.
Payment of any bonus for fiscal year 2021 and thereafter will be made in five annual installments of 20% each beginning in
the year following the year in which the bonus is earned, subject to his continued employment or retirement after reaching
age 65. Mr. Vitiritto’s performance will be reviewed annually for changes in base salary.
Upon commencement of his employment with
the Company, Mr. Vitiritto will also receive a grant of 40,000 restricted shares of common stock of the Company which will vest
in installments of 5,000 shares each in 2022, 2023, 2024 and 2027 and 10,000 shares each in 2025 and 2026, subject to his continued
employment or retirement after reaching age 65.
Pursuant to the Employment Agreement,
the Company may terminate Mr. Vitiritto’s employment at any time with or without cause. If his employment is terminated by the Company without “just cause” (as defined in the Employment Agreement), Mr.
Vitiritto will be entitled to receive his base salary and COBRA for a period of 60 weeks following such termination, provided
that Mr. Vitiritto signs a separation agreement with the Company. If such termination occurs in the first 24 months of his
employment with the Company, he will also be entitled to severance of $621,000 paid in three equal installments over 12
months in lieu of the vesting of his restricted stock award. The Employment Agreement also provides Mr. Vitiritto the right
to terminate his employment with the Company upon six months’ prior written notice to the Company. However, the Company
has the right to terminate Mr. Vitiritto’s employment immediately upon receipt of such notice. In the event of such
termination, Mr. Vitiritto is entitled to receive his base salary only for the six-month period following the Company’s
receipt of his notice of termination. Mr. Vitiritto’s employment with the Company will be terminated upon his death and
may be terminated by the Company upon his disability. Upon termination due to disability, Mr. Vitiritto will continue to
receive his compensation for a period of three months after the date of disability, along with any residual bonus earned but
not yet paid.
Under the Employment Agreement, Mr. Vitiritto
is subject to a covenant not to compete with the Company and certain affiliated companies under common ownership with the Company
for a period of one year following the termination of Mr. Vitiritto’s employment with the Company. Mr. Vitiritto is also
subject to covenants with respect to the confidentiality of the Company’s proprietary information and non-solicitation of
employees.
This description of the terms of the Company’s
employment of Mr. Vitiritto does not purport to be complete and is qualified in its entirety by the full text of the Employment
Agreement, which is attached hereto as Exhibit 10.1 and is incorporated by reference herein.