Southland Holdings, Inc. (NYSE American:SLND), a company specializing in heavy construction, announced on Monday significant changes to its executive compensation structure. The adjustments, which were approved by the Board of Directors on June 25, 2024, affect the company's named executive officers (NEOs) and involve modifications to both salary and incentive plans.
The Board, after consulting with an independent third party, has decided to make market adjustments to the base compensation for certain NEOs. Additionally, all NEOs will have their incentive compensation governed by the company's Short-Term Incentive Plan (STIP) and Long-Term Incentive Plan (LTIP), along with corresponding award agreements.
Under the STIP, NEOs are eligible for a cash bonus between 75% and 100% of their base salary, with the actual payout contingent on company and individual performance. The plan stipulates that 70% of the bonus is based on specific performance metrics, while the remaining 30% is discretionary.
The LTIP, on the other hand, sets an equity target ranging from 85% to 200% of the base salary, depending on the NEO's role. Half of the LTIP is allocated in time-based Restricted Stock Units (RSUs) that are scheduled to vest annually over three years starting from June 25, 2024, provided the NEO remains employed with Southland Holdings. The other half of the LTIP consists of Performance Stock Units (PSUs), which are contingent on achieving certain Adjusted EBITDA targets over a three-year period from January 1, 2024, to December 31, 2026.
The Board has approved specific RSU and PSU awards for several executives. For instance, Frank Renda, the President and CEO, received 166,298 RSUs and an equal number of PSUs, each set valued at $750,000, assuming target performance levels are met. Other executives, including Tim Winn, Rudy Renda, and Cody Gallarda, were also granted RSUs and PSUs, with their awards proportionate to their respective positions.
In other recent news, Southland reported a 5% increase in revenue to $288 million for the first quarter of 2024, despite registering a net loss of $400,000 for the quarter. The Civil segment of the business performed well, with a 21% gross profit margin, while the Transportation segment posted a mere 1% gross profit margin. The company's backlog is significant, standing at $2.64 billion, with expectations of growth in the second quarter due to strong demand and potential new awards. Southland is also eyeing expansion into the Canadian public infrastructure market. The company has plans to pay down $46 million of debt in the next 12 months and is considering replacing its equipment notes. Southland anticipates more cash burn in Q2 and Q3, but predicts positive cash flows in the second half of the year. There is also optimism for healthy margins from the Shands Bridge and U.S. 19 Project, particularly in the Civil segment. These are the recent developments in the company's operations.
InvestingPro Insights
As Southland Holdings, Inc. (NYSE American:SLND) restructures its executive compensation to better align with performance, investors may find the latest data from InvestingPro particularly enlightening. The company's market cap stands at a modest $219.96 million, reflecting its position in the heavy construction industry. Notably, the firm's P/E ratio has improved from -15.74 to -6.76 over the last twelve months as of Q1 2024, suggesting a potential shift in investor sentiment as the market anticipates growth in net income this year, as indicated by one of the InvestingPro Tips. Moreover, while Southland Holdings has struggled with weak gross profit margins, currently at 3.18%, the company's liquid assets exceed its short-term obligations, which may provide some financial flexibility in implementing its new incentive plans.
Investors should also be aware of the recent performance of Southland's stock, which has seen a significant downturn over the past month with a price total return of -22.24%. This could be an important consideration for those looking at the timing of their investments relative to the company's strategic compensation changes. For a deeper analysis and additional InvestingPro Tips, such as the prediction that the company will be profitable this year and the fact that it does not pay dividends, investors can visit https://www.investing.com/pro/SLND. To access these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are six more InvestingPro Tips available that could further guide investment decisions.
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