J.B. Hunt execs see raises, bigger bonuses; shareholder proposal seeks orientation, gender policy

Logistics giant J.B. Hunt Transport posted 2015 earnings growth of 14% and that helped hoist top executive pay between 8% and 15.65% from the prior year. Bonus pay also rose between 33% and 49% across the various operating segments, according to the recent Proxy statement filing with the U.S. Securities and Exchange Commission.

CEO John Roberts III, earned $5.382 million in total compensation for 2015, up 24% from the $4.346 million in 2014. His base salary of $796,132 included a 14.5% raise from the prior year, while his cash bonuses paid each quarter totaled $225,000, a gain of 42% over 2014.

David Mee, the chief financial officer, saw his annual compensation rise to $2.437 million in 2015. This included a base salary of $476,846, which was 8.9% more than the prior year. His bonuses, which are also based on company profitability and paid quarterly, totaled $135,000, up 35% year over year.

Terrence Matthews, president of J.B. Hunt Intermodal, earned $1.719 million last year. Intermodal is the largest operating segment at J.B. Hunt, but industry challenges resulted in a decline in the segment’s overall revenue. That said, operating income had positive growth of 3.54% year-over-year. Matthews saw his base salary rise to $478,946, up. 8.2% from the prior year. His cash bonus was 33% higher at $135.000 for the year.

Shelley Simpson runs two of Hunt’s operating segments, Trucking and Integrated Capacity Solutions. As president at the divisions, Simpson earned $2.015 million last year. This included a at 15.65% raise in base salary to $429,808 and a bonus of $120,000 which rose 40% over the 2014 bonus pay. The ICS or brokerage division generated 11% of the company’s overall revenue last year despite a few challenges with revenue shrinkage. The ICS operating income rose 19.5% from 2014. The biggest turnaround story at Hunt is in the Truckload segment which Simpson took over in 2014. While just 6% of the company’s overall revenue last year, its operating income improved 64.5% year-over-year.

The fastest growing segment at Hunt is the Dedicated Contract Services division which is run by Nicholas Hobbs, who took control in 2015. Hobbs earned $1.978 million last year. His base pay was $403,846 and his bonus pay was $112,500 for the year. The DCS division comprised 24% of Hunt’s overall revenue last year. Hobbs helped this segment’s revenue rise 4.16% last year, and it was the only segment to post positive revenue growth over 2014. The DCS operating income was up 39.46% to $163,511 million for the year.

DIRECTORS
J.B. Hunt Board Chairman Kirk Thompson received total compensation of $2.269 million last year, up 17.8% year over year. Thompson’s base salary as chairman was $448,077, down fractionally from the prior year. Thompson is not awarded bonus pay but he did receive stock-based pay of $1.809 million last year as well as $12,500 in other perquisites. Thompson is the former CEO between 1987 and 2010 when he became board chairman.

J.B. Hunt Transport will hold its annual shareholders meeting at 10 a.m.,  April 21 at the company’s Lowell headquarters. At that meeting shareholders will vote to elect a slate of 10 directors and consider one shareholder proposal seeking amendment of the company’s equal employment opportunity.

The directors standing re-election for one-year terms are:
• Douglas Duncan, retired CEO of FedEx Freight;
• Francesca Edwardson, retired CEO of the American Red Cross of Chicago;
• Wayne Garrison, former Hunt executive and chairman;
• Sharilyn Gasaway, former chief financial officer of Alltel Corp.;
• Gary George, chairman of George’s Inc. and Legacy Bank board chairman;
• Bryan Hunt, son of founders J.B. and Johnelle Hunt, managing member of Hunt Auto Group;
• Coleman Peterson, CEO of Hollis Enterprises and former Walmart executive;
• John Roberts III, CEO of J.B Hunt since January 2011;
• James Robo, CEO of NextEra Energy; and
• Kirk Thompson,  active board chairman, former CEO of J.B.Hunt Transport.

LARGEST SHAREHOLDERS, INSIDER ACTIONS
Co-founder Johnelle Hunt still owns a 17% stake in the company with 19,353,421 shares carrying a street value of more than $1.591 billion. She is the largest individual stakeholder at the company. She retired from active board service several years ago in compliance with age stipulations in the company’s bylaws.

Large institutional stakeholders include: 11%, FMR, LLC with 12,587,783 shares; 7.4%, Vanguard Group with 8.426,289 shares; 5.8%, T Rowe Price with 6,697,881 shares; and 5%, BlackRock Inc., with 5,749,602 shares.

Director Bryan Hunt is the son of principal stockholder Johnelle Hunt. He received compensation of $173,000 for his board service last year, most of which was paid in shares.

Two sons-in-law of board chairman Kirk Thompson are also employed by the company. They earned compensation of $333,775 and $164,093 in 2015. Shelley Simpson’s husband was also employed by the company last year earning $543,065.

J.B. Hunt also entered into a contractual service agreement with George’s Inc. which is a family business of board member Gary George. This agreement deals with Hunt hauling live birds and feed to and from George’s poultry processing plants. The company said this contract earned total revenue of $5.2 million last year.

In October 2015, the company leased office space at 5431 Pinnacle Point LLC in Rogers. Bryan Hunt, a director of the company, has a 50% ownership interest in this property. The lease has a term of 24 months and an annual base rent of $216,000. The company said it paid $67,355 under the lease agreement during 2015 and considers it part of the ordinary course of business and consistent with the same terms as those of unrelated parties for comparable lease agreements.

SHAREHOLDER PROPOSAL
A proposal seeking seeking sexual orientation non-discrimination policy be written into the company’s employment guidelines will be evaluated by shareholders at the upcoming meeting. On behalf of the Conny Lindley Revocable Trust, one of the Hunt’s shareholders, the resolution asks the company to amend its written equal employment opportunity policy to explicitly prohibit discrimination based on sexual orientation, gender identity or gender expression and to take substantial action to implement the policy.

The resolution claims that J.B. Hunt does not explicitly prohibit discrimination based on sexual orientation, gender identity or gender expression in its written employment policy. According to the Human Rights Campaign Foundation’s 2014 survey, 61% of Fortune 500 companies prohibit discrimination based on sexual orientation, gender identity or expression, an historic high.

“We believe that corporations that prohibit discrimination on the basis of gender identity or gender expression have a competitive advantage in recruiting and retaining employees from the widest talent pool,” the Proxy resolution states.

J.B. Hunt’s board of director urge shareholders to vote against the proposal because the company’s policy more than achieves the objectives in the proposal. Hunt’s response in the Proxy states that as an equal opportunity employer, the company is firmly committed to operating its business in full compliance with applicable employment laws and providing each of our employees with a workplace free from unlawful discrimination or harassment of any kind.