David Parker became the CEO of Covenant Transportation Group, Inc. (NASDAQ:CVTI) in 1994. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. 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?
At the time of writing our data says that Covenant Transportation Group, Inc. has a market cap of US$265m, and is paying total annual CEO compensation of US$2.0m. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$642k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Covenant Transportation Group, below.
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). It achieved revenue growth of 27% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. 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?
Given the total loss of 28% over three years, many shareholders in Covenant Transportation Group, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Covenant Transportation Group, Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark 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. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Covenant Transportation Group shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.