Is Arrow Electronics Inc (NYSE:ARW) Excessively Paying Its CEO?

Mike Long has been the CEO of Arrow Electronics Inc (NYSE:ARW) since 2009. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Arrow Electronics

How Does Mike Long’s Compensation Compare With Similar Sized Companies?

According to our data, Arrow Electronics Inc has a market capitalization of US$5.8b, and pays its CEO total annual compensation worth US$11m. That’s a modest increase of 6.5% on the prior year year. When we examined a selection of companies with market caps ranging from US$4.0b to US$12.0b, we found the median CEO compensation was US$7m.

It would therefore appear that Arrow Electronics Inc pays Mike Long more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Arrow Electronics has changed over time.

NYSE:ARW CEO Compensation November 1st 18
NYSE:ARW CEO Compensation November 1st 18

Is Arrow Electronics Inc Growing?

Over the last three years, Arrow Electronics Inc has not seen its earnings per share change much, though they have improved slightly. In the last year, its revenue is up 18%.

I would argue that the modest growth in revenue is a notable positive. And the modest growth in earnings per share isn’t bad, either. So while performance isn’t amazing, we think it really does seem quite respectable. So this free visualization of the analyst consensus on future earnings could help you make the right decision about whether to buy, sell, or hold.

Has Arrow Electronics Inc Been A Good Investment?

With a total shareholder return of 21% over three years, Arrow Electronics Inc shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We examined the amount Arrow Electronics Inc pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. Considering this, we wouldn’t want to see any big pay rises, although we’d stop short of calling the CEO compensation unfair. Even if a company pays the CEO quite generously, that doesn’t mean it’s a bad investment. Nonetheless, it might be wise to check if insiders have been selling.

But note: Arrow Electronics may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.