David Parker, who along with his wife is the largest shareholder in Covenant Logistics (NASDAQ: CVLG), is remaining as CEO of the company but as one part of a newly created three-person “Office of the CEO.”
The office will also include Joey Hogan as president of the company and Paul Bunn as senior executive vice president and COO. Both will report to Parker.
One name that might have been seen as being part of any sort of office or CEO succession is John Tweed. He had been appointed co-president and COO of Covenant in April 2020 after coming to Covenant through the acquisition of Landair Holdings, where he had been CEO. But earlier this year, he shifted to a consultant’s role. Tweed at one point had been seen as a possible successor to Parker, who is 63.
Although Parker continues to hold the CEO role, the prepared statement on the changes said Bunn “will assume daily responsibility for all operations, sales and operational improvement of Covenant.”
“He has excelled as a leader within the financial and administrative side of Covenant, particularly leading the due diligence and transition team for the Landair acquisition,” the statement said. “The respect and relationships already built with the sales and operations teams will allow a quick and seamless transition for Paul, keeping our team focused on our strategic plan.”
As for Hogan, he will “continue focusing on mentoring our leadership team while leading the financial and administrative side of Covenant,” the statement said. He also is the company’s “principal financial officer,” a term not usually heard in corporate hierarchies. Bunn had been CFO.
Tweed had been co-president with Hogan and will remain co-president until July 3.
Parker and his wife, Jacqueline, have the largest control of the company’s equity. In Covenant’s latest 10-K filing to the Securities and Exchange Commission, Covenant said the couple has 100% of the company’s class B stock and 10% of the class A stock. On issues put to a vote before shareholders, each class B share is worth two votes, with each class A share worth one.
Additionally, the class B shares are convertible to class A shares at the discretion of the Parkers, the 10-K said. The end result is that the Parkers control 32% of the voting power of all the company’s stock.
In standard language for such a company structure, Covenant said that “this concentration of ownership could limit the price that some investors might be willing to pay for the Class A common stock, and could allow the Parkers to prevent or could discourage or delay a change of control, which other stockholders may favor.”
That has always been seen as a possible limiting factor to the upside of companies controlled by an individual or small group of individuals, particularly if they are all of the same family: A takeover is virtually impossible, so it’s hard for the stock price to reflect that possibility.
There is no sign of that in the current stock performance. In the past year, stock in Covenant is up just over 150% as it undertakes a restructuring. Meanwhile, other truckload carriers have fared far weaker: Werner (NASDAQ: WERN) is up 24.08%, Knight Swift (NYSE; KNX) is up 42.51% and Heartland Express (NASDAQ: HTLD) is down 2.62%.