In 2008 Jayshree Ullal was appointed CEO of Arista Networks, Inc. (NYSE:ANET). First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of 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?
Our data indicates that Arista Networks, Inc. is worth US$19b, and total annual CEO compensation is US$7.6m. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$300k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
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. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Arista Networks has changed over time.
Is Arista Networks, Inc. Growing?
Over the last three years Arista Networks, Inc. has grown its earnings per share (EPS) by an average of 32% per year (using a line of best fit). Its revenue is up 24% over last year.
This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Arista Networks, Inc. Been A Good Investment?
Boasting a total shareholder return of 187% over three years, Arista Networks, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that Arista Networks, Inc. remunerates its CEO below most large companies. Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Jayshree Ullal deserves a raise!
It's not often we see shareholders do so well, and yet the CEO is paid modestly. The cherry on top would be if company insiders are buying shares with their own money. Shareholders may want to check for free if Arista Networks 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.
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