Gee wouldn’t you vote for your own raise?YRC loan under scrutiny; board shied away from company stock in 2019
YRC board members changed their comp plan to favor cash over the company’s stock at the end of 2019
https://www.freightwaves.com/news/yrc-loan-under-scrutiny;-board-shied-away-from-company-stock-in-2019
YRC’s board favored cash compensation over company stock
YRC’s board of directors may not have had much faith in the company’s equity either. At the end of 2019, compensation plans for directors on the board were amended to allow for a higher percentage of cash payment, minimizing the portion of stock-based compensation.
The 2019 comp plan for nonemployee directors on the board at YRC paid a $75,000 cash retainer, $125,000 for the chairman, and amounts ranging from $10,000 to $25,000 for service committee chairs. Further, directors who served on labor or strategy committees that commenced one year ahead of the ratification of the new labor deal received an additional $40,000 annually.
The director compensation plan was amended and restated on Feb. 11, 2019, when shares of YRCW closed the day at $6.80. That amendment allowed an annual fully vested restricted stock unit (RSU) award equal to $125,000 with a settlement date three years after the grant date. The amendment also provided one-time performance RSUs equal to $152,760. Those units had an additional vesting requirement that YRCW’s average share price equal or exceed $11.75 for a 30-day period prior to the end of 2020, a level not seen since early 2018.
The performance RSUs “were awarded in addition to the Annual RSUs for the directors’ oversight of Company’s management in developing a comprehensive business strategy to achieve long-term profitability and stability for the Company.”
All of 2019’s directors ended up forfeiting the performance RSUs given the unlikelihood of achieving that stock price threshold.
At the end of 2019, faced with the unlikelihood of reaching and sustaining the $11.75 share price, the board decided to adopt a new, nonemployee director compensation plan favoring cash payments versus equity.
On Dec. 9, the board adopted a new director plan paying an annual cash retainer of $190,000, $300,000 for the chairman. Equity comp was reduced from $125,000 to $60,000. The new $250,000 package, excluding the performance RSUs, represented a $50,000 increase in pay and importantly doubled the percentage of cash compensation to 76%.
YRCW’s closing share price was $3.06 on Dec. 9, a 55% decline from the February amendment.