J.B. Hunt executives cash in after strong corporate profits in 2014

Logistics giant J.B. Hunt Transport Services posted healthy revenue and profits in 2014 which translated to hefty bonuses for the company’s top executives, according to the company’s Proxy filing with the federal Securities and Exchange Commission.

Hunt CEO John Roberts III earned total 2014 income of $4.346 million, roughly 7% more than in 2013. Roberts’ base salary of $695,000 increased 8% year-over-year and the stock awards of $3.465 million were also 7% higher than in 2013.

Roberts received quarterly performance bonuses totaling $157,550, compared to $146,050 in the prior year. Other compensation which includes retirement contributions and personal benefits were valued at $28,044 last year. Benefit costs rose 12% year-over-year.

The second highest paid executive at the company is former CEO and now Board Chairman Kirk Thompson who received a total compensation package of $2.091 million, which included a base salary of $450,000 and stock awards valued at $1.636 million and $5,000 in other benefits.

Other executives who also received annual cost-of-living raises in 2014 were:
• David Mee, chief financial officer, base salary of $437,845, up 9.16%;
• Terrence Matthews, president of intermodal, base salary of $442,589, up 8.36; and
• Shelley Simpson, president of ICS brokerage and truckload, base salary of $371,635, up 8%.

These executives also received stock awards which ranged from two to four times the amounts of their base salaries. 

For 2014, the established matrix consisted of earnings per share ranging from $2.85 to $4.05, translating to annual bonus payout percentages ranging from 5% to 170% of an executive’s base salary. The $3.16 earned per share in 2014 garnered the executives the following bonus pay: Mee $99,935, up 10%; Matthews $101,200, up 10%; and Simpson $80,000, up 10%.

SLATE OF DIRECTORS
Also noted in the Proxy filing were the details of the company’s upcoming shareholder meeting slated for April 23 at its Lowell headquarters. Shareholders are asked to by the board to approve a slate of 11 officers for the coming year including Roberts and Thompson, who are employees. Each of the non-employee directors served on the board last year and was compensated accordingly. The nominated members and board service compensation are:
• $185,939: Douglas Duncan, retired CEO of FedEx Freight;
• $177,008: Francesca Edwardson, CEO of the American Red Cross of Chicago;
• $158,000: Wayne Garrison, retired CEO at J.B.Hunt;
• $182,500: Sharilyn Gassaway, former chief financial officer of Alltel Corp.;
• $177,500: board chair and former CEO of George’s Inc.;
• $158,000: Bryan Hunt, son of founder and managing member of Hunt Auto Group;
• $187,148: Coleman Peterson, CEO of Hollis Enterprises, retired Wal-Mart executive;
• $203,900: James Robo, CEO of NextEra Energy; and
• $190,000: John White, chancellor emeritus / professor of the University of Arkansas.

SHAREHOLDER PROPOSAL
Shareholders are asked to vote against Proposal No. 3 which was introduced by the Calvert Social Index Fund, an institutional investor based in Bethesda, Md. The proposal asked the board to adopt corporate-wide goals for reducing greenhouse gases and to report on the company’s plans to achieve these goals by September 2015.

“In 2012, the U.S. experienced 11 extreme weather events resulting in an estimated $110 billion in total damages and 377 fatalities. Drought in the U.S. Midwest in 2012 affected 80 percent of agricultural land, particularly corn and soybean production, costing approximately $30 billion,” the proposal noted.

Calvert also cites some analysis by McKinsey & Co., Deloitte Consulting, and Point380 found that U.S. companies could reduce emissions 3% annually between now and 2020 and realize savings up to $780 billion.

They also cite some highlights from the Climate Action and Profitability Report 2014 which looked at companies in the S&P 500 that are actively managing and planning for  climate noting that they have a 67% higher return-on-equity than companies that do not disclose on climate change. The climate conscious companies also report a 50% lower earnings volatility over the past decade and a 21% stronger dividend growth than lower-ranking peers.

The J.B. Hunt board responded to the proposal by asking shareholders to vote against it noting that the company is well aware of the need to reduce greenhouse gasses.

“Increasingly, our customers are making environmental responsibility a priority in their business decision-making, and the same is true for the company. We strive to offer transportation solutions that help the company and our customers reduce both costs and carbon emissions while meeting or exceeding our customers’ operational needs. As such, environmental considerations like those identified in the above proposal are built into the company’s core modeling as it relates to our mission to provide customized freight movement, revenue equipment, labor and systems services tailored to meet the customer’s specific requirements,” the board noted in the filing.

J.B. Hunt officials also said 60% of total revenue last year came from 1.7 million intermodal loads which prevented nearly 2.4 million tons of carbon dioxide equivalent from entering the atmosphere.