James Kruger
NELNETAbout James D. Kruger
James D. Kruger, age 62, is Nelnet’s Chief Financial Officer (CFO) since January 2014 and previously served as Controller from October 1998 to December 2013, giving him over 26 years at the company and 11+ years in the CFO role as of 2025 . Nelnet’s recent performance context includes 2024 net income of $184.0 million and non-GAAP net income excluding derivative market value adjustments of $176.4 million, with cumulative TSR of $194.61 per $100 invested since 2019, and 2024 per-share book value growth (including dividends) of 6.4% — factors linked to how executive pay is assessed under Nelnet’s pay-versus-performance framework . The company emphasizes pay for performance, prohibits hedging/short sales, limits pledging with prior approval, and requires officers to trade only via Rule 10b5-1 plans — governance features that shape incentive alignment and trading behavior for the CFO .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Nelnet, Inc. | Controller | 1998–2013 | Led principal accounting functions; foundation for current CFO stewardship |
External Roles
- Not disclosed.
Fixed Compensation
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary | $813,810 | $854,501 | $870,000 |
| Annual Bonus (Paid following year) | $905,371 | $450,000 | $650,000 |
| Stock Awards | $500,016 | $500,013 | $0 |
| All Other Compensation | $36,885 | $41,962 | $196,059 (incl. $133,846 earned time off buyback) |
| Total | $2,256,082 | $1,846,476 | $1,716,059 |
- Base salary increases were broadly 1.81% in 2024 for most NEOs (market-competitive, reflecting lower 2023 book value growth) .
- Annual bonus opportunities are under the Executive Officers Incentive Compensation Plan, capped at 150% of base salary; executives may elect cash or stock for bonus payout, and bonus stock is fully vested upon issuance .
Performance Compensation
Incentive Plan Design and Metrics
- Nelnet’s Executive Officers Incentive Compensation Plan (annual performance periods) can use multiple measures including EPS, net income (including ex-derivative), ROE/ROA, fee revenue growth/diversification, operating margins/expenses, segment EBITDA/profitability, customer satisfaction/employee engagement, regulatory compliance, cash flow, and event-specific transactions .
- No specific quantitative targets or formulas were set for 2024; the Committee assessed performance holistically, awarding Mr. Kruger a $650,000 annual incentive for 2024 based on segment and corporate achievements (e.g., new Department of Education servicing contract, platform consolidation, revenue diversification, private student loan servicing introductions), while noting headwinds (renewable energy losses, modest 6.4% book value growth) .
- Bonus stock (if elected) vests immediately; restricted stock awards are issued separately under the Restricted Stock Plan with multi-year vesting .
Restricted Stock Awards and Vesting
| Grant Year | Total RS Shares Granted | 2025 Vest | 2026 Vest | 2027 Vest | 2028 Vest |
|---|---|---|---|---|---|
| 2021 | 5,386 | 2,693 | 2,693 | — | — |
| 2022 | 3,631 | 1,211 | 1,210 | 1,210 | — |
| 2023 | 4,378 | 1,095 | 1,094 | 1,095 | 1,094 |
- Stock vested in 2024: 4,999 shares; value realized $441,712 (vest price $88.36 on Mar 11, 2024) .
- As of Dec 31, 2024, unvested RSUs for Mr. Kruger: 13,395 shares (market value $1,430,720 at $106.81 close) .
- Nelnet does not grant stock options to NEOs; long-term equity is delivered via restricted stock .
2024 Performance Assessment Inputs (Company/Segments)
- Strong earnings in Nelnet Business Services; execution of new long-term DOE servicing contract; platform enhancements; consolidation to single platform; asset diversification and growth (including Nelnet Bank); new private student loan servicing contracts; and revenue diversification .
- Headwinds: negative earnings impact from renewable energy EPC; modest per-share book value growth (6.4% including dividends) .
Equity Ownership & Alignment
| Ownership Item | Detail |
|---|---|
| Total Beneficial Ownership | 194,734 Class A shares; <1% of outstanding |
| Trust/Indirect Holdings | Union Bank trustee holds 43,020 shares in GRATs/irrevocable trusts established by Mr. Kruger and spouse; included in his beneficial ownership |
| Vested vs Unvested | Unvested 13,395 RS shares (Dec 31, 2024); 2024 vest 4,999 shares valued $441,712 |
| Options | None (company does not grant options to NEOs) |
| Hedging/Pledging | Hedging and short sales prohibited; pledging discouraged and limited to ≤25% of total holdings, subject to prior approval |
| Trading Plans | Officers required to transact only via Rule 10b5-1 plans |
| Ownership Guidelines | Board member guidelines disclosed; executive officer ownership guidelines not disclosed |
Employment Terms
| Term | Provision |
|---|---|
| Employment Start (Nelnet) | Controller (Oct 1998–Dec 2013); CFO (Jan 2014–present) |
| Employment Contracts | None; company does not use employment contracts for NEOs |
| Severance | No individual change-in-control or severance arrangements for NEOs |
| Change-of-Control | No special payments; restricted stock accelerates only upon death, disability, or retirement after 65 |
| Clawback | Recovery of incentive/equity/severance compensation for restatements due to misconduct, other misconduct, or breaches of restrictive covenants; 2024 immaterial corrections required no recovery |
| Non-Compete/Solicit | Not specifically disclosed; clawback references breaches of restrictive covenants |
| Trading Requirements | Rule 10b5-1 plans required for officer trading |
| Hedging/Short Sales | Prohibited for officers/directors/employees |
| Perquisites | Standard benefits; perquisites disclosed in “all other compensation”; aircraft personal use permitted for select execs with incremental cost accounting; no aircraft usage recorded for Mr. Kruger in 2024 |
Performance & Track Record
| Year | Company TSR ($100 initial) | Net Income ($000s) | Net Income excl. Derivative Adj. ($000s) |
|---|---|---|---|
| 2020 | 124.04 | 352,443 | 373,832 |
| 2021 | 172.04 | 393,286 | 322,748 |
| 2022 | 161.65 | 406,899 (restated immaterially) | 231,262 |
| 2023 | 159.00 | 89,826 (restated immaterially) | 121,573 |
| 2024 | 194.61 | 184,045 | 176,351 |
- Most important pay-linked measures: Non-GAAP net income (ex-derivative MVA) and annual growth in per-share book value (with dividends included) .
- 2024 per-share book value growth (with dividends): 6.4% .
Compensation Committee Analysis
- People Development and Compensation Committee (independent): Members Bansal, Rath (Chair), Van Deun; four meetings in 2024; mandates pay-for-performance, minimum vesting, clawback, hedging ban, 10b5-1 trading, and no stock options .
- Consultant: Towers Watson (2022 review across general industry/financial services/high-tech); Nelnet’s executive compensation found “conservative” relative to market perspectives; consultant deemed independent with no conflicts .
Say-On-Pay & Shareholder Feedback
- 2024 say-on-pay approval: 99.7% of votes cast; Committee saw no need for significant changes based on strong support .
Investment Implications
- Alignment and governance: No employment contracts, no individual severance/change-in-control arrangements; clawback is comprehensive; hedging prohibited; pledging constrained; officers trade only via 10b5-1 plans — collectively supportive of disciplined pay and trading alignment .
- Equity exposure: Mr. Kruger’s beneficial ownership is <1% of outstanding shares (194,734 Class A), with multi-year unvested RS (13,395 as of Dec 31, 2024). Known vesting cadence through 2026–2028 creates identifiable supply windows; however, 10b5-1 requirements reduce signaling risk of routine sales tied to diversification or taxes .
- Performance linkage: Incentives tied to non-GAAP net income and book value growth, plus diversified operating/segment measures; absence of stock options lowers leverage to share price volatility and emphasizes long-term restricted equity — beneficial in aligning with TSR trends and capital discipline .
- Key monitoring: DOE servicing execution and platform consolidation, revenue diversification (incl. Nelnet Bank, private student loan servicing) vs. renewable energy EPC drag; these themes informed 2024 payouts and remain central to forward execution risk under CFO stewardship .
- Ownership concentration context: Executive Chairman Michael S. Dunlap controls ~80.6% of combined voting power; governance decisions (including compensation) occur within this ownership structure — relevant for minority investor expectations and change-in-control economics (which are minimal for NEOs) .