Business Context and Reporting Period
This Form 8-K Current Report was filed by Construction Partners, Inc. on April 3, 2020, covering events occurring on April 1, 2020. The filing primarily addresses the execution of new employment agreements with key executive officers.
Key Financial Metrics
This filing does not report operational financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation arrangements.
Material Changes and Executive Compensation
On April 1, 2020, the Company entered into five-year Employment Agreements with Senior Vice Presidents F. Julius Smith, III and John L. Harper. Key terms include:
- Base Salary: A minimum annual base salary of $430,000 for each officer.
- Term: Five years, with automatic one-year renewals unless notice is provided 60 days prior to the anniversary.
- Severance (Termination without Cause/Good Reason):
- Lump sum payment of accrued amounts.
- Severance equal to 1.5 times the average of combined base salary and cash bonus from the prior two fiscal years (or 1.5 times base salary if employed less than two years).
- Severance payable over 18 months.
- 18 months of health insurance premiums.
- Up to $10,000 for outplacement services.
- Equity and Bonuses: Eligibility for cash bonuses and equity awards under the 2018 Equity Incentive Plan, determined by the Compensation Committee.
- Restrictive Covenants: Non-compete and non-solicitation provisions during employment and potentially for 18 months post-termination.
- Right of First Refusal: The Company retains a right of first refusal on Class B common stock transfers by the officers during the term and for 18 months post-termination.
Guidance, Outlook, and Risks
The filing contains no financial guidance, outlook, or management commentary regarding business operations. The primary risk disclosed relates to the potential financial obligation of severance payments should the officers be terminated without cause or resign for good reason, subject to reduction under Internal Revenue Code Sections 280G and 4999.
Investor Verification Checklist
- Verify the total potential severance liability for both officers based on their actual prior two-year compensation history.
- Review the attached Exhibit 10.1 for the full legal definitions of "Cause" and "Good Reason."
- Confirm the impact of these agreements on the Company's total executive compensation expense for the fiscal year.
- Check for any subsequent filings regarding the vesting schedules of the equity awards mentioned.