Rush Enterprises, Inc.'s (NASDAQ:RUSH.B) CEO Compensation Looks Acceptable To Us And Here's Why

Despite strong share price growth of 69% for Rush Enterprises, Inc. (NASDAQ:RUSH.B) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 18 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Rush Enterprises

How Does Total Compensation For Rusty Rush Compare With Other Companies In The Industry?

Our data indicates that Rush Enterprises, Inc. has a market capitalization of US$2.7b, and total annual CEO compensation was reported as US$6.2m for the year to December 2020. Notably, that's a decrease of 13% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.0m. So it looks like Rush Enterprises compensates Rusty Rush in line with the median for the industry. Furthermore, Rusty Rush directly owns US$37m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$1.3m	US$1.5m	21%
Other	US$4.9m	US$5.6m	79%
Total Compensation	US$6.2m	US$7.2m	100%

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. In Rush Enterprises' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Rush Enterprises, Inc.'s Growth

Over the last three years, Rush Enterprises, Inc. has shrunk its earnings per share by 6.0% per year. It saw its revenue drop 19% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Rush Enterprises, Inc. Been A Good Investment?

We think that the total shareholder return of 69%, over three years, would leave most Rush Enterprises, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for Rush Enterprises that investors should think about before committing capital to this stock.

Switching gears from Rush Enterprises, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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