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Why Arrow Electronics, Inc.'s (NYSE:ARW) CEO Pay Matters To You

Simply Wall St

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. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Arrow Electronics

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

Our data indicates that Arrow Electronics, Inc. is worth US$7.1b, and total annual CEO compensation is US$11m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.4m.

Thus we can conclude that Mike Long receives more in total compensation than the median of a group of companies in the same market, and of similar size to Arrow Electronics, Inc.. However, this doesn't necessarily mean the pay 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, April 11th 2019

Is Arrow Electronics, Inc. Growing?

Arrow Electronics, Inc. has increased its earnings per share (EPS) by an average of 6.7% a year, over the last three years (using a line of best fit). Its revenue is up 12% over last year.

This revenue growth could really point to a brighter future. And the improvement in earnings per share is modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. It could be important to check this free visual depiction of what analysts expect for the future.

Has Arrow Electronics, Inc. Been A Good Investment?

Arrow Electronics, Inc. has generated a total shareholder return of 29% 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...

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

We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Arrow Electronics (free visualization of insider trades).

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

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.

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. Thank you for reading.