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A Quick Analysis On Arrow Financial's (NASDAQ:AROW) CEO Compensation

Simply Wall St
·4 mins read

Tom Murphy became the CEO of Arrow Financial Corporation (NASDAQ:AROW) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Arrow Financial pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Arrow Financial

How Does Total Compensation For Tom Murphy Compare With Other Companies In The Industry?

According to our data, Arrow Financial Corporation has a market capitalization of US$428m, and paid its CEO total annual compensation worth US$1.4m over the year to December 2019. That's a modest increase of 7.0% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$540k.

For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.2m. From this we gather that Tom Murphy is paid around the median for CEOs in the industry. Moreover, Tom Murphy also holds US$1.4m worth of Arrow Financial stock directly under their own name.

Component

2019

2018

Proportion (2019)

Salary

US$540k

US$490k

38%

Other

US$889k

US$846k

62%

Total Compensation

US$1.4m

US$1.3m

100%

Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. It's interesting to note that Arrow Financial allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Arrow Financial Corporation's Growth Numbers

Arrow Financial Corporation's earnings per share (EPS) grew 10% per year over the last three years. Its revenue is up 4.0% 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Arrow Financial Corporation Been A Good Investment?

Arrow Financial Corporation has not done too badly by shareholders, with a total return of 4.5%, over three years. 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.

To Conclude...

As we noted earlier, Arrow Financial pays its CEO in line with similar-sized companies belonging to the same industry. However, it's admirable that over the last three years, earnings growth for the company has been impressive, though the same can't be said for investor returns. So considering these factors, we think the compensation is probably quite reasonable, but investor returns need a boost moving forward.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Arrow Financial that investors should think about before committing capital to this stock.

Important note: Arrow Financial 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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.