Tom Murphy became the CEO of Arrow Financial Corporation (NASDAQ:AROW) in 2013. 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Tom Murphy’s Compensation Compare With Similar Sized Companies?
Our data indicates that Arrow Financial Corporation is worth US$478m, and total annual CEO compensation is US$1.3m. (This number is for the twelve months until December 2018). Notably, that’s an increase of 64% over the year before. While we always look at total compensation first, we note that the salary component is less, at US$490k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.6m.
That means Tom Murphy receives fairly typical remuneration for the CEO of a company that size. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at Arrow Financial, below.
Is Arrow Financial Corporation Growing?
Over the last three years Arrow Financial Corporation has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit). In the last year, its revenue is up 7.6%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has Arrow Financial Corporation Been A Good Investment?
Boasting a total shareholder return of 50% over three years, Arrow Financial Corporation has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
Tom Murphy is paid around what is normal the leaders of comparable size companies.
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. So you may want to check if insiders are buying Arrow Financial shares with their own money (free access).
If you want to buy a stock that is better than Arrow Financial, this free list of high return, low debt companies is a great place to look.
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