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In 1994 David Parker was appointed CEO of Covenant Transportation Group, Inc. (NASDAQ:CVTI). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does David Parker’s Compensation Compare With Similar Sized Companies?
Our data indicates that Covenant Transportation Group, Inc. is worth US$247m, and total annual CEO compensation is US$2.0m. (This figure is for the year to December 2018). Notably, that’s an increase of 79% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$642k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.2m.
It would therefore appear that Covenant Transportation Group, Inc. pays David Parker more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Covenant Transportation Group has changed over time.
Is Covenant Transportation Group, Inc. Growing?
On average over the last three years, Covenant Transportation Group, Inc. has grown earnings per share (EPS) by 35% each year (using a line of best fit). Its revenue is up 29% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Covenant Transportation Group, Inc. Been A Good Investment?
With a three year total loss of 20%, Covenant Transportation Group, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Covenant Transportation Group, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. So shareholders might not feel great about the fact that CEO pay increased on last year. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Covenant Transportation Group.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.