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Is Arrow Financial Corporation's (NASDAQ:AROW) CEO Paid Enough Relative To Peers?

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  • AROW

Tom Murphy became the CEO of Arrow Financial Corporation (NASDAQ:AROW) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Arrow Financial

How Does Tom Murphy's Compensation Compare With Similar Sized Companies?

According to our data, Arrow Financial Corporation has a market capitalization of US$529m, and paid its CEO total annual compensation worth US$1.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$490k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.7m.

So Tom Murphy receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Arrow Financial has changed from year to year.

NasdaqGS:AROW CEO Compensation, February 7th 2020
NasdaqGS:AROW CEO Compensation, February 7th 2020

Is Arrow Financial Corporation Growing?

On average over the last three years, Arrow Financial Corporation has grown earnings per share (EPS) by 12% each year (using a line of best fit). In the last year, its revenue is up 3.8%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.

Has Arrow Financial Corporation Been A Good Investment?

Arrow Financial Corporation has generated a total shareholder return of 23% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Tom Murphy is paid around the same as most CEOs of similar size companies.

The company is growing EPS but shareholder returns have been sound but not amazing. So upon reflection one could argue that the CEO pay is quite reasonable. Shareholders may want to check for free if Arrow Financial insiders are buying or selling shares.

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.