Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(1)
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On September 16, 2019, Protective Insurance Corporation (the “Company”) announced that John R. Barnett has been appointed as the Company’s new Chief Financial Officer (“CFO”), effective September 30, 2019. Mr. Barnett will also become
the Company’s principal financial officer and principal accounting officer, effective as of September 30, 2019. Mr. Barnett replaces William Vens as the Company’s CFO. As previously disclosed in the Company’s Current Report on Form 8-K
filed on June 6, 2019, Mr. Vens planned for his resignation as CFO to be effective in August 2019, and his last day of employment with the Company was August 30, 2019.
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Mr. Barnett, age 52, has most recently served as Chief Financial Officer and Executive Vice President of First Acceptance Corporation, a non-standard auto insurance underwriter (“First Acceptance”), since October 2018
and served as Senior Vice President, Finance of First Acceptance from May 2007 to March 2013. Mr. Barnett’s responsibilities at First Acceptance Corporation included financial reporting, accounting,
planning and analysis, investments, actuarial, and treasury operations. From March 2013 to October 2018, Mr. Barnett served as Vice President, Finance of Broadcast Music, Inc., a music rights management company. Prior to his time at
First Acceptance, Mr. Barnett served in various management and manufacturing roles during his career, including as Senior Manager, Planning and Analysis of Anheuser-Busch Companies from 1999 to 2007. Mr. Barnett holds a B.S. from the United
States Military Academy, a Master of Science in Engineering Management from the University of Missouri, and an M.B.A. from the University of Illinois.
There are no arrangements or understandings between Mr. Barnett and any other person pursuant to which Mr. Barnett was selected as an officer of the Company. There are no transactions in which the Company and/or its
subsidiaries were a party and in which Mr. Barnett has a direct or indirect material interest that would require disclosure under Item 404(a) of Regulation S-K. There is no family relationship between Mr. Barnett and any director or officer of the
Company.
In connection with his appointment, the Compensation and Employee Benefits Committee (the “Committee”) of the Board of Directors (the “Board”) adopted and approved an annual base salary for Mr. Barnett of $385,000. Mr. Barnett will receive $200,000 worth of restricted shares of the Company’s Class B common stock (the “Stock Grant”) on October 1, 2019, of which 40% of the shares will vest as of December 31, 2020, 30% of the
shares will vest as of December 31, 2021, and the remaining 30% of the shares will vest as of December 31, 2022. The Committee also designated Mr. Barnett as an eligible participant under the
Company’s incentive bonus plans, including an annual award under the Short-Term Incentive Plan (“STIP”) with a target value of $39,238 for 2019, and awards under the Long-Term Incentive Plan (“LTIP”) with a target value of $29,118 for 2019. The
amount of the bonus that may be earned under the bonus plans for 2019 will be determined using a preset formula consisting of two components: 80% dependent upon the Company’s achievement of underwriting income compared to the target approved by the
Board and 20% dependent on an evaluation of Mr. Barnett’s performance and responsibilities. In addition, Mr. Barnett will receive a $120,000 cash sign-on bonus and a $100,000 cash relocation benefit. The Company and Mr. Barnett entered into an
offer letter dated September 6, 2019 setting forth the terms of his initial compensation as described above, a copy of which will be filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.
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(2)
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In connection with his appointment as CFO, the Company entered into a Non-Compete, Severance and Confidentiality agreement (the “Agreement”) with Mr. Barnett, effective as of October 1, 2019. The Agreement includes provisions requiring Mr. Barnett to maintain the confidentiality of the Company’s confidential information and subjects Mr. Barnett to
non-competition and non-solicitation provisions during the term of the Agreement and for 12 months thereafter. The Company may terminate Mr. Barnett’s employment at any time with or without cause. Under the Agreement, if (i) Mr. Barnett is terminated by the Company without cause (as defined in the Agreement), (ii) he resigns for good reason (as defined in the Agreement), or (iii) Mr. Barnett’s employment is terminated by the Company without cause and in anticipation of a change in control (as defined in the Agreement) to be effectuated within 120 days of the termination date or by either the Company or
by Mr. Barnett on or before the 24-month anniversary of a change in control, he will receive a cash payment equal to his annual base salary in effect at the time of termination plus his target STIP and LTIP awards applicable to
the year in which the termination occurs, the vesting of any unvested equity awards, including any unvested portion of the Stock Grant, and the reimbursement of his costs associated with the continuation of certain health and welfare
benefits for a period of up to 12 months. If prior to April 1, 2020, Mr. Barnett’s employment is terminated by the Company for cause or he resigns without good reason, the Agreement provides that Mr. Barnett will be required to repay the
Company his full $100,000 cash relocation package.
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The preceding description of the Agreement is a summary of its material terms, does not purport to be complete, and is qualified in its entirety by reference to the Agreement, a copy of which will be filed with the
Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.