What Can We Learn About Knight-Swift Transportation Holdings’ (NYSE:KNX) CEO Compensation?

Dave Jackson became the CEO of Knight-Swift Transportation Holdings Inc. (NYSE:KNX) in 2015, and we think it’s a good time to look at the executive’s compensation against the backdrop of overall company performance. This analysis will also assess whether Knight-Swift Transportation Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Knight-Swift Transportation Holdings

Comparing Knight-Swift Transportation Holdings Inc.’s CEO Compensation With the industry

Our data indicates that Knight-Swift Transportation Holdings Inc. has a market capitalization of US$7.6b, and total annual CEO compensation was reported as US$4.6m for the year to December 2019. Notably, that’s a decrease of 10% over the year before. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$800k.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$2.6m. Accordingly, our analysis reveals that Knight-Swift Transportation Holdings Inc. pays Dave Jackson north of the industry median. What’s more, Dave Jackson holds US$1.9m worth of shares in the company in their own name.

Component 2019 2018 Proportion (2019)
Salary US$800k US$749k 17%
Other US$3.8m US$4.4m 83%
Total Compensation US$4.6m US$5.2m 100%

Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. Knight-Swift Transportation Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.

Knight-Swift Transportation Holdings Inc.’s Growth

Over the past three years, Knight-Swift Transportation Holdings Inc. has seen its earnings per share (EPS) grow by 20% per year. In the last year, its revenue is down 12%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Knight-Swift Transportation Holdings Inc. Been A Good Investment?

Knight-Swift Transportation Holdings Inc. has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude…

As we noted earlier, Knight-Swift Transportation Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven’t been bad. So, considering the EPS growth we do not wish to criticize CEO compensation, though we’d recommend further research on management.

CEO compensation can have a massive impact on performance, but it’s just one element. We’ve identified 1 warning sign for Knight-Swift Transportation Holdings that investors should be aware of in a dynamic business environment.

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.

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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