Shareholders May Not Be So Generous With Arrow Financial Corporation's (NASDAQ:AROW) CEO Compensation And Here's Why

Under the guidance of CEO Tom Murphy, Arrow Financial Corporation (NASDAQ:AROW) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 05 May 2021. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Arrow Financial

Comparing Arrow Financial Corporation's CEO Compensation With the industry

According to our data, Arrow Financial Corporation has a market capitalization of US$535m, and paid its CEO total annual compensation worth US$1.7m over the year to December 2020. Notably, that's an increase of 18% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$560k.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$1.1m. This suggests that Tom Murphy is paid more than the median for the industry. Moreover, Tom Murphy also holds US$2.0m worth of Arrow Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$560k	US$540k	33%
Other	US$1.1m	US$889k	67%
Total Compensation	US$1.7m	US$1.4m	100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. Arrow Financial sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Arrow Financial Corporation's Growth

Arrow Financial Corporation has seen its earnings per share (EPS) increase by 13% a year over the past three years. In the last year, its revenue is up 13%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Moving away from current form for a second, 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?

Arrow Financial Corporation has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Arrow Financial that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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