Increases to CEO Compensation Might Be Put On Hold For Now at Avnet, Inc. (NASDAQ:AVT)

Key Insights

• Avnet to hold its Annual General Meeting on 16th of November
• Salary of US$1.15m is part of CEO Phil Gallagher's total remuneration
• The overall pay is 38% above the industry average
• Avnet's EPS grew by 70% over the past three years while total shareholder return over the past three years was 75%

CEO Phil Gallagher has done a decent job of delivering relatively good performance at Avnet, Inc. (NASDAQ:AVT) recently. As shareholders go into the upcoming AGM on 16th of November, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Avnet

How Does Total Compensation For Phil Gallagher Compare With Other Companies In The Industry?

At the time of writing, our data shows that Avnet, Inc. has a market capitalization of US$4.1b, and reported total annual CEO compensation of US$9.7m for the year to July 2023. We note that's an increase of 20% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

On examining similar-sized companies in the American Electronic industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$7.1m. Accordingly, our analysis reveals that Avnet, Inc. pays Phil Gallagher north of the industry median. What's more, Phil Gallagher holds US$5.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.1m	12%
Other	US$8.6m	US$7.0m	88%
Total Compensation	US$9.7m	US$8.1m	100%

Speaking on an industry level, nearly 32% of total compensation represents salary, while the remainder of 68% is other remuneration. Avnet pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Avnet, Inc.'s Growth Numbers

Avnet, Inc. has seen its earnings per share (EPS) increase by 70% a year over the past three years. It achieved revenue growth of 2.6% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Avnet, Inc. Been A Good Investment?

Boasting a total shareholder return of 75% over three years, Avnet, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Avnet (2 are a bit concerning!) that you should be aware of before investing here.

Important note: Avnet is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.