In 2008 Jayshree Ullal was appointed CEO of Arista Networks, Inc. (NYSE:ANET). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Jayshree Ullal's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Arista Networks, Inc. has a market cap of US$15b, and reported total annual CEO compensation of US$7.6m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$300k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
A first glance this seems like a real positive for shareholders, since Jayshree Ullal is paid less than the average total compensation paid by other large companies. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at Arista Networks, below.
Is Arista Networks, Inc. Growing?
On average over the last three years, Arista Networks, Inc. has grown earnings per share (EPS) by 38% each year (using a line of best fit). It achieved revenue growth of 12% over the last year.
This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Arista Networks, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Arista Networks, Inc. for providing a total return of 56% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It looks like Arista Networks, Inc. pays its CEO less than the average at large companies.
Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Jayshree Ullal deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. The cherry on top would be if company insiders are buying shares with their own money. Shifting gears from CEO pay for a second, we've spotted 2 warning signs for Arista Networks you should be aware of, and 1 of them makes us a bit uncomfortable.
If you want to buy a stock that is better than Arista Networks, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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