Air T, Inc. (AIRT) Announces New Employment Agreement for Chief Financial Officer

Key Points:

• Air T, Inc. has entered into a new employment agreement with Tracy Kennedy, its Chief Financial Officer, effective February 27, 2026.
• The agreement outlines substantial increases in base salary for the CFO over the next two years, as well as a newly structured incentive compensation plan.
• Quarterly incentive bonuses are now tied to a performance rating scale, with potential payouts reaching up to 90% of quarterly base salary.
• The contract includes strict restrictive covenants, confidentiality obligations, and detailed severance terms.

Details of the CFO Employment Agreement

Air T, Inc. (“the Company”) has continued its employment of Tracy Kennedy as Chief Financial Officer under a new agreement. Key terms of the contract include:

• Base Salary: Kennedy’s base salary is set at \$331,000 per year, rising to \$360,000 effective January 1, 2027, and to \$397,000 effective January 1, 2028. These increases represent significant compensation growth and may reflect the Company’s confidence in Kennedy’s leadership and its strategic direction.

• Quarterly Incentive Compensation: Kennedy is eligible for quarterly bonuses calculated based on a performance rating scale (1 to 5). The bonus percentages tied to these ratings are:
  • Rating of 1: 0%
  • Rating of 2: 10-30% (CEO’s discretion)
  • Rating of 3: 50%
  • Rating of 4: 70%
  • Rating of 5: 90%+ (CEO’s discretion)

  These incentive bonuses are paid in six equal installments over the following quarters, contingent on continued employment and eligibility. This introduces a direct link between executive performance and compensation, which investors may view as an alignment of interests.

• Pause Clause for Financial Distress: The Company reserves the right to pause payment of incentive compensation if it is in significant financial distress that would objectively impair its debt obligations. This clause is noteworthy, as it provides flexibility to protect cash flow during adverse conditions.

• Restrictive Covenants: Kennedy is subject to a 12-month non-compete and non-solicitation period after employment, except if terminated without cause. She is also subject to confidentiality and non-disparagement clauses, and all intellectual property created during her tenure remains with the Company.

• Severance Terms: If Kennedy’s employment is terminated without cause, or due to disability or death, severance provisions apply. However, if terminated for cause, incentive payments stop immediately, and all restrictive covenants remain enforceable.

• Legal and Compliance Provisions: The agreement is governed by Minnesota law, with exclusive jurisdiction in Hennepin County, Minnesota. It includes compliance with Section 409A of the Internal Revenue Code regarding deferred compensation.

Shareholder Implications and Price Sensitivity

Potential Share Price Impact:
The new compensation structure for the CFO, with substantial salary increases and performance-based incentives, may have several implications:

• It signals the Company’s commitment to retaining top talent and incentivizing performance, which could be viewed positively by investors and analysts.
• The pause clause for incentive payments in cases of financial distress may raise concerns about liquidity or debt coverage, depending on future financial disclosures. Shareholders should monitor future filings for any sign of financial stress at Air T, Inc.
• Performance-based compensation aligns executive interests with shareholder value, potentially improving long-term operational results.
• The enforceability of restrictive covenants and intellectual property assignments protects the Company’s competitive position.

Other Noteworthy Information:

• The Company’s securities remain listed on the NASDAQ Capital Market (Common Stock: AIRT) and NASDAQ Global Market (Alpha Income Preferred Securities: AIRTP).
• The Company is not classified as an “emerging growth company” under SEC rules, and has not elected to use extended transition periods for new accounting standards.

Conclusion

The new employment agreement for CFO Tracy Kennedy represents a significant corporate governance event for Air T, Inc. The compensation increases and incentive structure may be viewed as both a retention tool and a signal of the Company’s expectations for growth and performance. The pause clause for incentive payments in financial distress is a prudent addition in today’s uncertain macro environment. Investors and shareholders should closely monitor future Company performance and financial disclosures for any signs of distress or changes in executive compensation practices, as these could impact share value.

Disclaimer: The information in this article is provided for informational purposes only and does not constitute investment advice, solicitation, or a recommendation to buy or sell securities. Investors should perform their own due diligence and consult with a financial advisor before making any investment decisions. The author is not responsible for any losses incurred from reliance on this information.

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