| ● Annual election of directors ● 91% independent directorsAnnual advisory say-on-pay vote
● LeadAll director nominees other than our CEO are independent director
● RobustLimit on directorships a Board member can hold
● Rigorous stock ownership guidelines for directors and certain key executives ● Anti-hedging and anti-pledging policy ● Ongoing succession planning for CEO, executives,executive leadership team and directors | 44% new directors since 2021 ● Proxy access rights for shareholders | ● Board committee oversight of environmental, social, and governance (“ESG”) matters ● Annual boardBoard and committee self-assessments and individual director peer evaluations ● Resignation policy for directors not receiving a majority vote (see description below under subheading “Director Resignation Policy”) ● Active shareholder engagementsengagement (see description below under subheading “Shareholder Feedback and 2023 Say-on-Pay”) ● Clawback PolicyAdoption of Dodd-Frank compensation clawback policy and retention of existing incentive compensation clawback policy
● Worldwide Code of Business Conduct and Ethics, applicable to all directors, executive officers, and employees ● No shareholder rights plan (“poison pill”) |
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COmmitment to board diversity Arrow is committed to building the right Board that consists of the optimal mix of skills, expertise, and diversity capable of effectively overseeing the execution of our business. The Board consists of highly engaged, independent, and diverse directors that are actively involved in strategic, risk, and management oversight. TheArrow Board prioritizes diversity in its recruitment of directors and has retained a recruitment firm to assist the Board in actively recruitingidentifying and evaluating potential diverse Board candidates.candidates with the expectation that candidate slates should include women and candidates of underrepresented race/ethnicity in addition to other diverse characteristics, which both supplement and complement the existing Board. Arrow is committed to building a Board with a wide range of skills, experience, expertise, and diversity. Arrow’s Board consists of highly engaged, independent, and diverse directors that are actively involved in, among other things, strategic, risk, and management oversight.
Board Refreshment The Board believes the fresh perspectives brought by newer directors are critical to a forward-looking and strategicstrategic-minded Board when appropriately balanced with the deep understanding of Arrow’s business and independent institutional knowledge provided by longer-serving directors. Accordingly, Arrow has maintained a deliberate mix of new and tenuredlonger-tenured directors on the Board, and the Corporate Governance Committee is focused on ensuring the optimal mix of tenures, backgrounds, skills, and perspectives is optimal for Arrow. Consistent with that effort, in 2020,Since 2019, Arrow welcomed Mr.has added six new directors – Messrs. Austen, Smith, Garcia, and Mr. SmithKerins, and Mses. Lowe and McDowell – each of whom have different backgrounds and experiences to further enhance the oversight of Arrow’s strategic goals and initiatives and contribute to the Board.development and expansion of the Board’s knowledge and capabilities. As part of the Board’s active and comprehensive Board refreshment efforts, the Board has nominated a new director, Michael D. Hayford, for election to the Board at the Annual Meeting. 8 | 
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Snapshot of Director Nominees Below is a snapshot of the expected composition of Arrow’s Board immediately following the 2021 Annual Meeting, assuming the election of the ten (10) nominees named in thethis Proxy Statement. The slate of ten (10) director nominees includes three (3) female nominees and one (1) ethnically diverse nominee. Skill/Experience | Nominees | 
 
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| CEOLeadership Experience
| 810
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| “Financial Expert” for Regulatory Purposes
| 3
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|  
| Risk Management Experience | 86
| |  
| Global Business and Operations Experience | 10 | |  
| Financial Experience | 8 | | 
| Legal and Regulatory Oversight Experience | 72
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| Technology and Cybersecurity Experience | 68
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| Supply Chain Management Experience | 5 | | 
| Crisis Management Experience | 86
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| Strategy and M&A Experience | 10 | |  
| Brand and Marketing Experience | 6 | | 
| Corporate Governance Experience | 117
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| Human Capital Experience | 8 | | 
| Environmental and Climate Strategy Experience | 5 | |
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| 9 |
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ENVIRONMENTAL, SOCIAL, AND GOVERNANCE OVERVIEW At Arrow, we believe that doing good is good for business and our global community. We monitor and manage our ESG opportunities and impacts and engage with shareholders and other stakeholders with the goal of creating a better tomorrow and assuring the long-term viability of our Company. To demonstrate Arrow’s commitment to the importance of these efforts, quantitative performance objectives related to carbon emission reduction and diversity and equality-related measures were components of our executive annual cash incentive plan for 2022 and 2023. Arrow intends to continue to evolve and integrate ESG into our strategy and operations and related disclosures. To learn more, please refer to our 2023 ESG Report, available on our website at arrow.com/ESG. The 2023 ESG Report details Arrow’s ESG-related annual goals, progress updates, metrics, and initiatives. We invite you to review the 2023 ESG Report and share your thoughts with us at ESG@arrow.com. Information on the Company’s website, including our ESG Reports, is not incorporated by reference into, and does not form part of, this Proxy Statement or any other report or document Arrow files with the SEC. ENVIRONMENTAL HIGHLIGHTs
| Arrow is committed to reducing its environmental footprint. Our approach to environmental management focuses on the operation of our business. This means the use of environmentally friendly technologies, avoidance of emissions, reducing waste and the use of energy saving solutions.
| In 2020, Arrow maintained a silver EcoVadis rating for our ESG/CSR achievements globally.
Arrow is committed to continuous improvement, including releasing its SASB disclosure beginning this year, and additional disclosures guided by other standards in the coming years.
For more information on our commitment to sustainability and our ESG/CSR efforts, please see Arrow’s SASB and CSR reports that can be found on our website at www.arrow.com. Information found on our website is not incorporated by reference into this Proxy Statement.
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Environmental Management
Systems Certifications
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| Greenhouse Gas (GHG)
Emissions Reduction
| ●
Arrow voluntarily complies with internationally recognized environmental management system industry quality standards. Arrow is ISO 14001 certified in strategic global warehouse locations.
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Arrow sites in the U.K. are ISO 50001 certified, the international standard for establishing, implementing, maintaining, and improving an energy management system.
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| ●
One of Arrow’s largest sources of carbon emissions is corporate travel. Due to COVID-19, Arrow reduced its corporate travel significantly. Prior to COVID-19 disruptions, one of the avenues by which Arrow has historically reduced travel and proven efficiency is through the utilization of the Microsoft Teams platform for telecommunications and collaboration, allowing for remote work.
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Environmental Management
Arrow’s decision in North America to recycle and purchase recycled products benefited the environment in the following ways in 2020:
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| 2,123 | 621 | 497 | 39,291 | 1,546,718 | 55,041 | trees preserved | cubic yards
of landfill
space
conserved | metric tons
of GHG
emissions
avoided | kilowatt-hours
of energy
avoided | gallons of
water
avoided | gallons
of gasoline
saved |
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Award-winning orgANIZATION
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World’s Most
Admired Company
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| Over the past two decades, Arrow has been named by Fortune as a World’s Most Admired Company 20 times and has topped the “Wholesalers: Electronic and Office Equipment” category for eight consecutive years. The World’s Most Admired list recognizes companies based on nine key attributes of reputation, including innovation, quality of products/services, global competitiveness, people management, and social responsibility.
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Top 50 Most Admired Companies for HR
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| In 2020, Arrow was once again named as one of the Top 50 Most Admired Companies for HR. Management consulting firm, Korn Ferry, partners with Human Resource Executive each year to select companies for the Most Admired for HR list from Fortune’s World's Most Admired Companies list. The Most Admired for HR award focuses on four HR-related attributes: management quality, product/services quality, innovation, and people management. 2020's Most Admired for HR selection was aimed primarily at companies, and their respective HR organizations, that are enabling workforce transformation. At Arrow, our workforce transformation is powered by our common purpose: making the benefits of technology accessible to all. This, in turn, powers the personal greater good of making the benefits of career and livelihood accessible to all of our employees around the world.
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Best Place
to Work For
Equality
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| For the third year in a row, Arrow received a perfect score of 100 percent on the Human Rights Campaign Foundation’s 2021 Corporate Equality Index and was designated a “Best Place to Work for LGBTQ Equality.” The Corporate Equality Index is the nation’s top benchmarking survey and report measuring corporate policies and practices related to the LGBTQ workplace, including non- discrimination policies, employment benefits, demonstrated competency and accountability around LGBTQ diversity and inclusion, public commitment to LGBTQ equality, and responsible citizenship.
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Edison Award
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| Collaborating with Arrow to bring technology to all, a team of 40 MIT students captured the 2020 Edison Gold Award for its Hyperloop II electric hovercraft and was named the top entry in the category of Transportation/NextGen Logistics. Arrow provided engineering mentorship, components sourcing and logistics support as part of its team sponsorship. The Hyperloop II, a fully functioning high-speed, frictionless vehicle designed to carry people or freight using air levitation technology, was recognized by the Edison Award judges as “a game-changing innovation standing out among the best new products and services.” Arrow has won an Edison Award for the last three consecutive years.
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CORPORATE SOCIAL RESPONSIBILITY STORIES
Innovating Mobility: The Arrow SAM Car
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| Twenty years after he was injured in a racing accident, disabled IndyCar driver Sam Schmidt returned to auto racing with the help of Arrow. Driving a 2020 Corvette C8 modified with electronic head controls, Schmidt bested more than a dozen able-bodied drivers in a two-day competition. Schmidt had not raced competitively since crashing during a 200-mph practice lap in 2000, an accident that left him paralyzed from the shoulders down.
| | Arrow engineers modified the Corvette with a suite of electronic modifications to create a semi-autonomous motorcar (SAM) that Schmidt can safely and competitively operate at high speeds. Sensors on a headset connect to infrared cameras that track his head motions left and right to steer the car. A sip-and-puff device helps him accelerate and brake the car with his breath. His voice commands other systems. Arrow does not sell the SAM technology but makes the driving solution available to innovators for broader independent living applications.
Said Schmidt: “I never thought I would feel this freedom again. If you are able-bodied, technology makes life easier. But for people with disabilities, it gives us a level of independence and provides opportunities we haven’t seen before. This technology could eventually help a disabled person simply drive themselves to work—that's the one thing most disabled people want to do.”
| Innovating Tomorrow: Anti-Bullying App
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| Arrow honored California eighth-grader Aryan Mangal with our 2020 Innovation in Electronics Award at the fifth annual Invention Convention in association with the Henry Ford Museum. Held virtually, the worldwide competition showcased nearly 500 K-12 inventors and entrepreneurs. To participate, students were required to submit a video presentation of their invention, a prototype, an inventor’s logbook showing the journey of their invention process and a poster board highlighting key points of the invention process. Competitors were selected from more than 120,000 K-12 inventors who first highlighted their inventions at local affiliate events.
| | The program teaches students problem-identification, problem-solving, entrepreneurship and creativity skills.
Mangal’s invention, Artemis: An App for Abuse Prevention by Analyzing Sound through Machine Learning, evaluated sound samples to detect patterns that could potentially determine and deter bullying. Mangal continuously scanned incoming sound using a battery-powered tiny edge computing device. When profanity or threatening language was detected, a red LED light on the device would start blinking and recording the language, which could be sent to school officials or other authorities.
| Innovating Mobility: TrachTech wins Arrow Electronics People’s Choice Award
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| An undergraduate team from Tulane University captured the Arrow Electronics People’s Choice Award at the 2020 Collegiate Inventors Competition for developing a new device to safely clean ventilator tubes. TrachTech is specifically designed to efficiently remove biofilms and debris from the tubes and maintain continued airflow from ventilators during the cleaning process. With ventilators in high demand due to the ongoing COVID-19 pandemic, keeping these machines clean and safe is essential.
| | The Collegiate Inventors Competition is a program of the National Inventors Hall of Fame and is sponsored by the US Patent and Trademark Office (“USPTO”) and Arrow. Competing teams develop and prototype technology solutions to the world’s most pressing problems.
The TrachTech team was one of ten finalists representing nine colleges and universities from across the United States vying for the Arrow prize in the annual competition, which highlights innovation and emerging technological trends from U.S. campuses. Because of COVID-19 restrictions, the finalists – five undergraduate and five graduate teams – presented their inventions in a virtual format to an esteemed panel of final-round judges composed of Hall of Fame inductees and USPTO officials.
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PROPOSAL 1: ELECTION OF DIRECTORS THE BOARD RECOMMENDS A VOTE “FOR” ALL OF THE NOMINEES NAMED BELOW. If elected by our shareholders at the Annual Meeting, each nominee will serve for a one-year term expiring at our 2025 annual meeting of shareholders. Each nominee for election as a member of the Board is to be elected todirector will hold office until his or her successor has been elected and qualified or until the next Annual Meeting.director’s earlier resignation or removal. All nominees identified below, except Michael D. Hayford, are current members of the Board. They have been recommended for re-election to the Board by the Corporate Governance Committee and approved and nominated for re-election by the Board. In accordance with the Company’s amended corporate bylaws (“bylaws”by-laws (the “By-laws”), the eleventen (10) nominees receiving a plurality of votes cast at the Annual Meeting will be elected directors, subject to the Director Resignation Policy described below. An uncontested election of directors is not considered “routine” under the New York Stock Exchange (“NYSE”) rules. As a result, if a shareholder holds shares in “street name” through a broker, fiduciary, or other nominee,custodian, the broker, fiduciary, or nomineecustodian is not permitted to exercise voting discretion with respect to this proposal. For this reason, if a shareholder“street name” holder does not give histhe broker, fiduciary, or her broker or nomineecustodian specific instructions, the shareholder’s shares will not be voted on this proposal. If youproposal, which is referred to as a “broker non-vote.” Broker non-votes and withholding authority to vote to “abstain,” your shares will be counted as present at the meeting, and your abstentionfor a director nominee will have no effect on the effectoutcome of this proposal (though a vote againstdirector nominee that receives a greater number of “WITHHELD” votes than “FOR” votes in an uncontested election is required by the proposal.Board’s Director Resignation Policy to tender his or her resignation to the Board, as discussed in greater detail below under the heading “Director Resignation Policy”). BOARD MEMBERSHIP REQUIREMENTS In accordance with the Company’s corporate governance guidelines,Corporate Governance Guidelines, members of the Board should have the following skills and abilities: | > | the education, business experience, and current insight necessary to understand the Company’s business; |
| > | the ability to evaluate and oversee direction, performance, and guidance for the success of the enterprise;Company; |
| > | the ability to primarily represent the interests of the Company’s shareholders while being attuned to the needs of the Company’s employees, communitythe communities in which it operates, and other stakeholders;stakeholders, insofar as such conditions impact long-term shareholder value; |
| > | the ability to devote the necessary interest and time to fulfill all director responsibilities over a period of years, including committing to prepare for, attend, and meaningfully participate in substantially all scheduled Board and Board committee meetings; |
| > | independence and strength of conviction coupled with the ability to leave behind personal prejudice so as to be open to otherdifferent points of view; |
| > | the willingness and ability to appraise the performance of executive management objectively and constructively and, when necessary, recommend appropriate changes; and |
| > | avoid any activity or interest that might, or might appear to, conflict with his or her fiduciary responsibilities to the Company, except in unusual circumstances and then only with the formal approval of disinterested directors; and |
| > | all other criteria established by the Board from time to time, including functional skills corporate leadership, diversity, international experience, or other attributes which will contribute to the development and expansion of the Board’s knowledge and capabilities. |
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| 1711
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BOARD EVALUATION, NOMINATIONS AND SUCCESSION During the Company’s annual Board evaluation and nomination process, the Corporate Governance Committee evaluates the Company’s directors in light of current needs of the Board and the Company. In addition, during the course of the year, the Corporate Governance Committee discusses Board succession and reviewsevaluates potential Board candidates. The Corporate Governance Committee has retained a third partythird-party recruitment firm to assist in identifying and evaluating potential Board nominees. The Company’s annual director nomination process involves formal assessments of qualifications, skills, and attributes necessary for successful contributions at the Board, Board committee, and individual director levels under the direction of the Corporate Governance Committee Chair.levels. This process assists the Board in determining who it should nominate to stand for election based on Company and Board needs.election. In addition, the Corporate Governance Committee’s Board candidate nomination process includes the continual evaluation ofCommittee continually evaluates potential new candidates for Board membership, which is taken into account when it takes into consideration when recommending to the Board a slate ofrecommends nominees for election at each annual meeting of shareholders.election. The Corporate Governance Committee considers a number of different factors in evaluating BoardCompany uses the following process for assessing needs, identifying candidates, including:and nominating new director candidates for election. | > | diversity-enhancing qualities –age, gender,Conduct Board and diverse backgrounds;Committee Evaluations. As required by the Company’s Corporate Governance Guidelines and the charters of the Audit Committee, the Compensation Committee, and the Corporate Governance Committee, the Board and each Board committee conduct annual self-evaluations of the effectiveness of the Board and each such committee. |
| > | Review Board and Committee Composition and Establish Search Priorities. Utilizing the results of the Board and Board committee self-evaluations and taking into account the Company’s strategic interests, its industry and market, the qualifications set forth in the Company’s Corporate Governance Guidelines, and other relevant considerations, the Corporate Governance Committee, in consultation with the Board, identifies the desired skills, attributes, expertise, experience, and background that would enable one or more additional directors to add value to the Board and its committees. If the Corporate Governance Committee determines to initiate a director search, it may engage a director search firm and provide the parameters for the search. |
| > | coreReview Director Candidates. Once a director search identifies potentially suitable candidates, the Corporate Governance Committee, with input from the entire Board, makes a list of final candidates. This list also includes any candidates duly submitted by shareholders. The Board Chair, Chief Executive Officer, and selected members of the Corporate Governance Committee then meet with each candidate to evaluate his or her suitability for Board membership in relation to the skills, attributes, – independence, high integrityexpertise, experience, and ethical standards, public company service, understanding or experience with complex public companies or like organizations, and ability to work collegially and collaboratively with other directors and management; andbackground desired of a new director. |
| > | skills – financial literacy, industry experience, operational management experience, senior executive experience,Recommendation and other expertiseNomination of Candidates for Board. If, based on the above review process, the Corporate Governance Committee identifies one or more suitable potential Board candidates, the Corporate Governance Committee will recommend the candidate(s) to the Board, and the Board will determine whether to nominate such candidate(s) for election by the shareholders at the next annual shareholder meeting; provided that any vacancy on the Board may be importantfilled by a majority vote of the current Board, and any director elected by the Board to fill a vacancy will serve until the next annual shareholder meeting. |
| > | Director Election at Annual Meeting and Committee Assignments. All director nominees obtaining a plurality of the votes cast at the annual shareholder meeting will be elected to serve on the Board. At the Board meeting immediately following the annual shareholder meeting, the Corporate Governance Committee will make recommendations regarding, and the Board will ultimately approve, the committee assignments for the Company’s strategies.elected directors, including the committee chairs. |
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The below graphic summarizes the factors the Corporate Governance Committee considers in evaluating potential candidates for Board membership. 
As a result of our comprehensive recruitment efforts, in 2023, the Company welcomed one new director to the Board, Ms. McDowell, who was elected to the Board at the 2023 annual shareholder meeting. In February 2024, the Corporate Governance Committee also recommended for nomination, and the Board nominated, Michael D. Hayford for election to the Board at the Annual Meeting. Mr. Hayford was identified by the Company’s third - party executive recruitment firm and, if elected to the Board at the Annual Meeting, will bring deep public - company and technology industry experience to the Company’s Board, as further described below under the heading “Biographies of Director Nominees.” The Corporate Governance Committee considers allshareholder recommendations of these relevant attributes of each Board candidate, withnominees as well as those recommended by current directors, officers, employees, and others. Such recommendations may be submitted to Arrow’s Chief Governance, Sustainability, and Human Resources Officer, Gretchen Zech, at Arrow Electronics, Inc., 9151 East Panorama Circle, Centennial, Colorado 80112, who will forward them to the goal of putting forth a diverse slate ofCorporate Governance Committee. Possible candidates with a combination of skills, experience, and personal qualities that will servesuggested by shareholders are evaluated by the Board and its committees,Corporate Governance Committee in the Company, and its shareholders well.same manner as other candidates. DIVERSITY Whenever the Corporate Governance Committee evaluates a potential candidate for Board membership, it considers that individual in the context of the composition of the Board as a whole. While we dothe Company does not have a formal diversity policy, that limits the selection of director candidates by the Corporate Governance Committee, the Board believes that its membership should reflect diversity in its broadest sense to include, among other factors, age, gender, geography, ethnicity/race, and consistentcultural viewpoints. Consistent with that philosophy, the Board has taken measures to diversify its makeup: | > | All but one of the Company’s director nominees (i.e., Mr. Kerins) are independent and they have a broad range of experience in varying fields, including, among others, software programmingdevelopment and sales, chemical distribution, business strategy consulting, hospitality services, semiconductor manufacturing, consumer products, electronics and energy.computer hardware manufacturing and distribution, business services, and telecommunication products and cloud services. |
| > | Three30% of the Company’s directors, or 27%, of the entire Boarddirector nominees are women.women, and 10% are racially/ethnically diverse. |
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| > | A majority of the Company’s directorsdirector nominees hold or have held directorships at other U.S. public companies. |
| > | SevenEight of the director nominees, in addition toincluding the Company’s Chairman and CEO, have served as chief executive officers, and all have demonstrated superb leadership, and intellectual, and analytical skills gained from deep experience in management, finance, and corporate governance. |
| > | The Board has retained a recruitment firm to assist the BoardCorporate Governance Committee in actively recruitingidentifying and evaluating potential diverse Board candidates.candidates and sets clear expectations that candidate slates should include women and candidates of underrepresented race/ethnicity in addition to other diverse characteristics, which both supplement and complement the existing Board. |
The Corporate Governance Committee is focused on continued diversity on the Board as it believes that the varied perspectives and experiences resulting from having a diverse Board enhance the quality of decision making. In particular, the Board is committed to identifying and evaluating highly qualified Board candidates who are women and/or are from an under-represented community as well as candidates with other diverse backgrounds, industry experience, and other unique characteristics. For example, three recent additions to the Board, Mary T. McDowell, Carol P. Lowe, and Fabian T. Garcia, have collectively added valuable gender, ethnic, and geographic/cultural diversity. The Corporate Governance Committee recognizes the evolving support for boards to achieve a target of 30% women representation. The Board currently has 33% gender diversity. If all of the Company’s director nominees are elected at the Annual Meeting, the Board would have 30% gender diversity. Over the course of 2024, the Board expects to continue to work closely with the Corporate Governance Committee to identify potential additions to the Board and expects to consider in its evaluation potential candidates’ diversity characteristics that may supplement and complement the existing Board. None of the Company’s director candidates are discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability, or any other basis proscribed by law. | | | | 18 14
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Director Nominee Diversity and Experience Matrix* | | | | | | | | | | | |
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10 Director Nominees: | William
Austen | Fabian
Garcia | Steve
Gunby | Gail
Hamilton | Michael
Hayford | Andrew
Kerin | Sean
Kerins | Carol
Lowe | Mary
McDowell | Gerry
Smith |
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Experience and Skills | | | | | | | | | | | Leadership | Leadership experience facilitates effective oversight of management, informs development of Company strategy, and enhances the Board’s succession planning process. | | 
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| Risk Management | Experience assessing and managing risk enables directors to effectively oversee and mitigate the most significant risks facing Arrow. | |
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| Global Business and Operations | Background and experience managing global relationships and engaging with international stakeholders supports the Board’s oversight of key risks involving our global customer and supplier bases and of strategic decision-making relating to our complex worldwide business. | |
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| Financial | Demonstrated financial experience enables in-depth analysis of our financial statements and informed decision-making regarding our capital structure, financial transactions, and financial reporting processes. | |
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| Legal and Regulatory | Experience with legal and regulatory oversight enables directors to effectively oversee compliance with legal and regulatory requirements and the related policies, procedures, and controls for ensuring such compliance. | | | |
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| | | | | | Technology and Cybersecurity | Experience navigating the ever-changing technology landscape enables sharpened oversight of the innovative products, services, and systems central to our business and supports the Company’s long-term strategic planning. Experience with privacy and information security and cybersecurity oversight is critical to helping Arrow manage and plan to defend against significant cybersecurity risks. | |
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| Supply Chain Management | Substantial knowledge of supply chain management enables enhanced oversight of our product and service offerings and sharpens focus on our business strategy to be the premier, technology-centric, go-to-market, and supply chain services company on the planet. | | | | | |
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| Crisis Management | In conjunction with the Board’s oversight of Arrow’s overall enterprise risk management, crisis management experience allows the Board to assist the Company in mapping out a crisis response plan and navigating a crisis in the rare event one should occur. | |
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| Strategy and M&A | Experience in strategic planning and mergers and acquisitions is critical in formulating and implementing Arrow’s continued growth strategy. | |
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| Brand and Marketing | Brand and marketing experience enables the Board to provide valuable insight into the alignment of brand definition with Arrow’s long-term strategy as a driver of value. | | | 
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| | Corporate Governance | Directors with experience in corporate governance assist the Company in implementing effective and compliant corporate governance practices for the benefit of our various stakeholders in the continually evolving corporate governance landscape. | |
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| Human Capital | Human capital management experience supports the Board’s oversight of the development, implementation, and effectiveness of practices, policies, and strategies relating to Arrow’s workforce, including talent attraction and development, corporate culture, and diversity and inclusion. | |
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| Environmental and Climate Strategy | Experience in climate change risk management strategies and other climate-related issues enables enhanced Board oversight of environmental and climate related policies, strategies, compliance, and priorities. | |
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10 Director Nominees: | William
Austen | Fabian
Garcia | Steve
Gunby | Gail
Hamilton | Michael Hayford | Andrew
Kerin | Sean
Kerins | Carol
Lowe | Mary
McDowell | Gerry
Smith | Background | | | | | | | | | | | Gender Identity | | | | | | | | | | | Male | 
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| Female | | | |
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| | Non-binary | | | | | | | | | | | Race | | | | | | | | | | | American Indian or Alaska Native | | | | | | | | | | | Asian | | | | | | | | | | | Black or African American | | | | | | | | | | | Hispanic or Latino | |
| | | | | | | | | Native Hawaiian or other Pacific Islander | | | | | | | | | | | White |
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| Age/Tenure | | | | | | | | | | | Age | 65 | 64 | 66 | 74 | 64 | 60 | 62 | 58 | 59 | 60 | Years on the Board | 4 | 3 | 7 | 16 | 0 | 14 | 2 | 3 | 1 | 4 |
* This matrix illustrates the experience, skills, qualifications, and characteristics of the individuals nominated for election to the Board at the Annual Meeting, based on information self-reported to the Company by each applicable individual. 16 |
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BIOGRAPHIES OF DIRECTOR NOMINEES Based on each nominee’s experience, attributes, and skills, which exemplify the sought-after characteristics described above, the Corporate Governance Committee has concluded that each nominee possesses the appropriate qualifications to serve as a director of the Company.
 
Independent DirectorBoard Chair
Committees:
Compensation
| Barry W. PerrySteven H. Gunby
| Age: 7466 Director Since: 19992017 | | CAREER HIGHLIGHTS | | Lead Director of the CompanyFTI Consulting, Inc., a business advisory firm
● President, Chief Executive Officer, and a director (a public company) since 20112014. Englehard CorporationThe Boston Consulting Group
● Chief Executive OfficerSenior Partner and Global Leader of Transformation from 2010 to 2014.
● Senior Partner and Chairman, North and South America from 2003 to 2009. ● Held other major managerial roles in his capacity as a Senior Partner and Managing Director, such as serving as a member of the Board of Engelhard Corporation, a surface and materials science company, from 2001 to his retirement in 2006.BCG’s Executive Committee. | Albemarle Corporation (a private company) and Ashland Global Holdings Inc.Breakthru Beverage Group LLC
● A director of Albemarle Corporation(a private company) from 20102016 to 2018, and Ashland Global Holdings Inc. from 2007 to 2019.2018. | | REASONS FOR NOMINATION While he was Chief Executive OfficerAt FTI, Mr. Gunby’s focus as President and CEO has been turning FTI into a vibrant, profitable growth engine, through significant operational, strategy, cultural, and leadership changes. At BCG, Mr. Gunby also focused on transformative growth, helping move the Americas operation from a period of Engelhard Corporation,flat headcount growth and diminished profitability to double-digit headcount and revenue growth, and substantially higher profit growth. The Board believes that Mr. Perry established the company’s vision and strategy, selected key management personnel, and evaluated the risks of participating in various markets. Further, hisGunby’s experience as a directorPresident and CEO of a number of public multinational companies providescompany, which has given him with the skills to objectively and accurately evaluate the financial performanceextensive experience in human capital management and corporate strategiesgovernance (among other things), and his proven record of accomplishments make him a large company.valuable member of the Board. As Board Chair, Mr. Gunby has demonstrated strong leadership and effective functioning and governance of the Board.
CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW)
●FTI Consulting, Inc. |
 
Independent Director
Committees: AuditCompensation & Corporate Governance (Chair)
| William F. Austen | Age: 6265 Director Since: 2020 | | CAREER HIGHLIGHTS | | Bemis Company, Inc., a global manufacturer of flexible packaging products and pressure-sensitive materials ● President, Chief Executive Officer, and CEO since 2014. ●
A director from 2014 until Bemis was acquired by Amcor Limited in 2019.
● Executive Vice President and Chief Operating Officer from 2013 to 2014. ● Group President of Global Operations from 2012 throughto 2013. ● Vice President of Operations from 2004 to 2012.
| Morgan Adhesives Company ● President and Chief Executive Officer from 2000 to 2004. General Electric Company ● Various positions from 1980 untilto 2000. Tennant Company ● A director since 2007.(a public company) from 2007 to 2022. Arconic Corporation ● A director since 2020.(a public company) from 2020 to 2023. | REASONS FOR NOMINATION As President and CEO of Bemis, a complex global material science and manufacturing company, Mr. Austen gained expertise in global manufacturing and operations, together with experience in international mergers and acquisitions and business integration. The Board believes that Mr. Austen’s experience with building high-performance, cross-functional teams coupled with his engineering background will make him particularly valuable in guiding strategy for the Company’s engineering services. OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW)
●Tennant Company ●Arconic Corporation
None |
| | |
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| 1917
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Independent Director
Committees: Audit &
Compensation | Steven H. GunbyFabian T. Garcia
| Age: 6364 Director Since: 20172021 | | CAREER HIGHLIGHTS | | FTIUnilever PLC., a British multinational consumer goods company
● President, Personal Care, and member of the Unilever Leadership Executive since 2022. ● President, Unilever North America, and member of the Unilever Leadership Executive from 2020 to 2022. The Boston Consulting Group, an American global management consulting firm ● Senior Advisor for consumer-packaged goods from 2018 to 2019. Revlon, Inc. (“FTI”) ● President, Chief Executive Officer, and a director since 2014.from 2016 to 2018. The Boston Consulting Group (“BCG”)Colgate-Palmolive Company
● Various positions from 2003 to 2016, beginning as President, Asia Pacific & Greater Asia Division, continuing as President, Latin America & Global Leader of Transformation from 2010 to 2014.Sustainability, and culminating as Chief Operating Officer, Global Innovation and Growth. | The Timberland Company ● Senior Partner and Chairman, North and South AmericaVice President, International Relations, from 20032002 to 2009.2003. Chanel Ltd. ● Held other major managerial rolesPresident, APAC and Member of the Executive Committee from 1996 to 2001.
Procter & Gamble Company ● Various positions in his capacity as a Senior Partnerthe U.S., Japan, Taiwan, Venezuela, and Managing Director, such as serving as a member of BCG’s Executive Committee.Colombia, from 1980 to 1994. | Kimberly-Clark Corporation
● A director (a public company) from 2011 to 2019. | REASONS FOR NOMINATION At FTI, Mr. Gunby’s focus has been turning FTI intoGarcia is a vibrant, profitableglobal business leader with a strong track record and deep experience, including his tenure as a public company CEO, with a keen understanding of global business strategy, international innovation and growth, engine, throughgeopolitical sensitivities, and financial, operational, changes, changes in strategy, and significant changes in culture and leadership. At BCG, Mr. Gunby also focused on transformative growth, helping move the Americas operation from a period of flat headcount growth and diminished profitability to double digit headcount and revenue growth, and substantially higher profit growth.strategic leadership skills. The Board believes that Mr. Gunby’sGarcia’s multicultural and global experience as a Presidentis especially valuable in guiding the Company’s international strategy and CEO offostering sustainable business practices and an international consulting firm, which includes extensive human capital management experience, and his proven record of accomplishments make him a valuable member of the Board.inclusive corporate culture.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW)
●FTI Consulting, Inc.None |
18 |
| |
Independent Director
Committees: Audit & Corporate Governance | Gail E. Hamilton | Age: 7174 Director Since: 2008 | | CAREER HIGHLIGHTS | | Symantec Corporation (“Symantec”) ● Executive Vice President from 2000 tountil her retirement in 2005. Compaq Computer Corporation ● Vice President and General Manager of the Communications Division from 1997 to 2000. Hewlett-Packard Company ● General Manager of the Telecom Platform Division from 1996 to 1997. | OpenText Corporation ● A director (a public company) since 2006. Ixia (acquired by Keysight Technologies in 2017) ● A director (a public company) from 2005 to 2017. Westmoreland Coal Company ● A director (a public company) from 2011 to 2019. | REASONS FOR NOMINATION Ms. Hamilton was responsible for designing, manufacturing, and selling electronic systems for more than 20 years. While at Symantec, a leading software company, Ms. Hamilton oversaw the profit and loss and operations of the enterprise and consumer business. In that role, she was also responsible for business planning and helped steer the company through an aggressive acquisition strategy. She also oversaw Symantec’s cybersecurity function and services. The Board believes that Ms. Hamilton’s experience at Symantec a leading software company, makes her particularly valuable in providing guidancehelping to guide the direction and strategy of Arrow’s Enterprise Computing Solutions business with regardas well as brings to its direction and strategy.the Board insight into oversight of cybersecurity matters. OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW)
●Open Text Corporation |
| | | | 20
|
|
|
Independent Director
Committees:
Compensation &
Corporate Governance
| Richard S. HillMichael D. Hayford
| Age: 6964 Director Since: 2008-- | | CAREER HIGHLIGHTS | | SymantecNCR Corporation, a public global payments and technology platform company
● Chief Executive Officer from 2018 to 2023. ● A director (public company) from 2018 to 2023. Motive Partners ● Interim Chief Executive OfficerFounder and a director in 2019.Senior Advisor from 2015 to 2018.
Novellus Systems,Fidelity National Information Services, Inc.
● Executive Vice President and Chief Financial Officer from 2009 to 2013. National Infrastructure Advisory Council, an executive-branch council focused on critical infrastructure security and resilience ● Member since 2022 (appointed by the President of the United States). | Metavante Technologies, Inc. ● A director (public company) from 19932007 to 2012, Chief Executive Officer and Chairman of the Board from 2006 until 2012.2009. Marvell Technology Group Ltd.
● Chairman of the Board since 2016.President and Chief Operating Officer from 2007 to 2009.
Xperi Corporation (formerly Tessera Technologies, Inc.)
● Chairman of the BoardChief Financial Officer from 20122001 to 2020 and as interim Chief Executive Officer in 20132006.
CMC Materials, Inc.
● Lead director since 2012.Other senior positions of increasing seniority from 1992 to 2001.
| Yahoo! Inc.Endurance International Group Holdings
● A director (public company) from 20162013 to 2017.2018. Autodesk, Inc.West Bend Mutual Insurance Company
● A director (private company) from 20162006 to 2018. Planar Systems, Inc.
●
A director from 2013 to 2015.
University of Illinois Foundation
●
Chairman and executive committee member from 2002 to 2014.
SemiLEDs Corporation
●
A director from 2010 to 2012.
| REASONS FOR NOMINATION
Mr. Hill has had a broad base of experience as the Chief Executive Officer of Novellus. In that role, he set the strategy by evaluating market risks to determine the ultimate direction of that company. Novellus was in the business of developing, manufacturing, and selling equipment used in the fabrication of integrated circuits. As a result, Mr. Hill has a thorough understanding of the semiconductor market in which Arrow operates. He also has experience in the international marketplace as a result of serving on a number of boards for companies with global operations.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS
●CMC Materials, Inc.
●Marvell Technology Group, Ltd.
|
Independent Director
Committees:
Audit
| M. F. (Fran) Keeth
| Age: 74
Director Since: 2004
| | CAREER HIGHLIGHTS
| | Royal Dutch Shell plc
●
Executive Vice President from 2005 to 2006.
Shell Chemicals Ltd.
●
Chief Executive Officer and President from 2005 to 2006.
●
Executive Vice President of Customer Fulfillment and Product Business Units from 2001 to 2006.
| Shell Chemical LP
●
Served as President and Chief Executive Officer from 2001 to 2006.
Verizon Communications Inc.
●
A director from 2006 to 2019.
| REASONS FOR NOMINATION Mrs. Keeth’s knowledge and expertise helped guide the direction, culture,Mr. Hayford has strong strategic and operational excellenceleadership experience developed over an extensive career in technology, payments, and financial services. Mr. Hayford previously served as a public-company chief executive officer and chief financial officer and on multiple public-company boards of Shell Chemicals Limited. She helddirectors. Mr. Hayford also currently serves on a numberfederal advisory council to which he was appointed by the President of senior financialthe United States. The Board believes that Mr. Hayford’s experience in leading strategy, operational execution, and finance at large organizations positions including Principal Accounting Officer and Controller. As a result of this experience and associated expertise, Mrs. Keeth is considered an “audit committee financial expert” as the term is defined in Item 407(d) of Regulation S-K. In additionhim to her extensive financial expertise, Mrs. Keeth bringsbring valuable insight to the Board executive leadership experience as a Chief Executive Officer and a global business perspective from her service as an executive officer of a large multinational companyassist the Board in its focus on the Company’s operational efficiency, strategic execution, and her service on other public company boards.transformation.
CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW) ●None |
|
| 19 |
| | |
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| 21
|
 
Independent Director
Committees: Compensation & Corporate Governance | Andrew C. Kerin | Age: 5760 Director Since: 2010 | | CAREER HIGHLIGHTS | | Towne Park,a hospitality and healthcare parking solutions provider ● Chief Executive Officer since 2017. The Brickman Group, Ltd. ● Chief Executive Officer and a director (a private company) from 2012 until 2016. | Aramark Corporation ● Executive Vice President and Group President, Global Food, Hospitality and Facility Services from 2009 to 2012. ● Executive Vice President and Group President, North America Food from 2006 to 2009. ● Elected as an executive officer as Senior Vice President in 2004. ● President, Aramark Healthcare and Education from 1995 to 2004. ● A number of other management roles within Aramark Corporation. Under his leadership were all of Aramark’s food, hospitality, and facilities businesses, including the management of professional services in healthcare institutions, universities, schools, business locations, entertainment and sports venues, correctional facilities, and hospitality venues. | REASONS FOR NOMINATION Mr. Kerin brings over 30 years of experience leading business service companies and building service teams across the globe. The Board believes that Mr. Kerin’s deep operational and strategic expertise in the service industry as the CEO of Towne Park and formerly at the Brickman Group, along with his more than 17-year career with Aramark, makes him a valuable asset to the Company’s board,Board, particularly as the Company continues to build its services businesses. CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW) ●None |
20 |
| |
Independent DirectorPresident and Chief Executive Officer
Committees:
Audit
| LaurelSean J. KrzeminskiKerins
| Age: 6266 Director Since: 20222018 | | CAREER HIGHLIGHTS | | Arrow Electronics, Inc. ● President, Chief Executive Officer, and director since 2022. ● Chief Operating Officer from 2020 to 2022. ● President, Global Enterprise Computing Solutions from 2014 to 2020. ● President, North American Enterprise Computing Solutions from 2010 to 2014. ● Vice President, Storage and Networking from 2007 to 2010. | Granite Construction IncorporatedEMC Corporation
● Several sales, marketing, and professional services roles around the world from 1997 to 2007. Other Experience ● Various roles with Coopers & Brand Consulting and General Motors. | REASONS FOR NOMINATION Mr. Kerins has served for 17 years at the Company in progressively more senior leadership and executive roles. The Board believes Mr. Kerins brings value to the Board from his comprehensive understanding of the Company’s business and deep institutional knowledge of the Company. The Board believes that in Mr. Kerins’ role as CEO of the Company, Mr. Kerins can effectively communicate Board priorities to Company management and provide insight and feedback to the Board on behalf of Company management. CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW) ●None |
Independent Director Committees: Audit (Chair) & Corporate Governance | Carol P. Lowe | Age: 58 Director Since: 2021 | | CAREER HIGHLIGHTS | | FLIR Systems, Inc., a thermal imaging company ● Executive Vice President and Chief Financial Officer from 2015 until 2018.2017 to 2021. Sealed Air Corporation ● Senior Vice President and Chief Financial Officer from 20132011 to 2015.2017. Carlisle Companies Incorporated ● President, Carlisle Food Service Products in 2011. ● President, Trail King Industries from 2008 to 2011. ● Vice President and Chief Financial Officer from 20102004 to 2013. ●
Vice President and Corporate Controller from 2008 to 2010.
| Gillette Company (merged into Procter & Gamble (“P&G”))
●
Several corporate and operational finance positions that included Finance Director for the North American business units of P&G’s subsidiaries, Duracell and Braun from 1995 to 2007.2008.
| Terracon (a private company)TCW Special Purpose Acquisition Corp.
● A director since 2017.(a public company) from 2021 to 2022. Limbach Holdings,EMCOR Group, Inc.
● A director (a public company) since 2018.2017. Other Experience ● A director of Duravant (a private company) since 2023. ● A director of Novolex (a private company) since 2021. ● Member of the Board of Visitors and Finance Committee, Fuqua School of Business since 2017. | REASONS FOR NOMINATION Ms. Krzeminski’sLowe has valuable experience as the chief financial officerand a depth of a listed company,knowledge in many aspects of finance, as well as business services, strategic planning, business development, and information technology. The Board believes that her in-depth knowledge and understandingrecord of generally accepted accounting principles, experience in preparing, auditing, and analyzing financial statements, understanding of internal controls over financial reporting, andinstilling knowledge-based, performance-driven cultures throughout her understanding of audit committee functions are highly valued qualities as a director.career enables her to provide insightful contributions to the Company. Ms. KrzeminskiLowe is considered an “audit committee financial expert” as the term is defined in Item 407(d) of Regulation S-K. OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW)
●Limbach Holdings,EMCOR Group, Inc. |
 
Chairman, President, and Chief Executive OfficerIndependent Director
Committees:
Audit
| Michael J. LongMary T. McDowell
| Age: 6259 Director Since: 20082023 | | CAREER HIGHLIGHTS | | Arrow Electronics, Inc.Mitel Networks Corporation, a global provider of telecommunication products and cloud services
● Chairman of thePresident and Chief Executive Officer from 2019 to 2021.
● A director (private company) from 2019 to 2022, and Board since 2010.Chair from 2021 to 2022. Polycom, Inc., an audio and video technology developer ● Chief Executive Officer and President since 2009. ●
President and Chief Operating Officer of Arrowa director (private company) from 20082016 to 2009.
●
Senior Vice President from 2006 to 2008, and, prior thereto, Vice President for more than five years.
| Arrow Global Components
●
President since 2006.2018.
Arrow Enterprise Computing Solutions
●
President, North America and Asia/Pacific Components in 2006.
●
President, North America in 2005.
●
President and Chief Operating Officer from 1999 to 2005.
AmerisourceBergen CorporationThe Informa Group plc
● A director (UK public company) since 2006.2018. ● Senior Independent Director since 2021. | UCHealthBazaarvoice, Inc.
● A director (public company) from 2014 to 2016, and Compensation Committee Chair from 2015 to 2016. UBM plc. ● A director (UK public company) from 2014 to 2018. Autodesk, Inc. ● A director (public company) since 2019.2010. ● Compensation Committee Chair since 2012. Other Experience: ● Served as Executive Vice President at Nokia from 2004 to 2012. ● Served in various executive, managerial, and other positions with Compaq Computer Corporation and Hewlett-Packard Company. | REASONS FOR NOMINATION AsMs. McDowell has strong strategic and operational leadership experience developed over an extensive career in the technology industry, owing to her previous roles as chief executive officer of two global technology-focused organizations and the chair of a resultcorporate board of his numerous yearsdirectors. The Board believes that this background allows Ms. McDowell to effectively contribute to the Board’s overall leadership structure and provide valuable insights into the Company’s core businesses and the markets in leadership roles atwhich they operate. Ms. McDowell also has a proven track record leading strategic transformations and implementing cutting-edge innovation in the fast-moving technology space, including for global businesses with diverse product lines and extensive distribution networks, which the Board believes will help the Company develop, refine, and inimplement the distribution industry, Mr. Long understands the competitive nature of the business and has an in-depth knowledge of the Company, a strong management background, and broad executive experience.Company’s growth strategy.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW)
●Autodesk, Inc. ●AmerisourceBergen CorporationThe Informa Group plc (London Stock Exchange) |
22 |
| |
Independent Director
Committees: Audit & Corporate Governance
| Stephen C. Patrick
| Age: 70
Director Since: 2003
| | CAREER HIGHLIGHTS
| | Colgate-Palmolive Company
●
Vice Chairman in 2011 until his retirement.
●
Chief Financial Officer for approximately 14 years.
●
In his more than 25 years at Colgate-Palmolive, he held positions as Vice President, Corporate Controller, and Vice President of Finance for Colgate Latin America.
|
| REASONS FOR NOMINATION
Mr. Patrick’s experience and education make him an expert in financial matters. As the Chief Financial Officer of a successful public company, Mr. Patrick was responsible for assuring that all day-to-day financial transactions were accurately recorded, processed, and reported in all public filings. All of this requires a thorough understanding of finance, treasury, and risk management functions. In addition to his extensive financial expertise, Mr. Patrick brings to the Board executive leadership experience as a chief financial officer of a large multinational company. Mr. Patrick is considered an “audit committee financial expert” as the term is defined in Item 407(d) of Regulation S-K.
|
| | |
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| 23
|
Independent Director
Committees:
Corporate GovernanceCompensation (Chair)
| Gerry P. Smith | Age: 5760 Director Since: 2020 | | CAREER HIGHLIGHTS | | The ODP CorpCorporation, an American office supply holding company ● Chief Executive Officer and director (a public company) since 2017. Zero100, a global coalition accelerating progress to zero-percent carbon and 100% digital supply chains ● Founding member of advisory board in 2022, and member of advisory board since 2022 Lenovo Group Limited ● Executive Vice President and Chief Operating Officer from 2016 to 2017. ● Executive Vice President and President of Data Center Group in 2016. ● Chief Operating Officer of the Personal Computing Group and Enterprise Business Group from 2015 to 2016. ● President of the Americas from 2013 to 2015. | Lenovo Group Limited (continued) ● President, North America and Senior Vice President, Global Operations from 2012 to 2013. ● Senior Vice President of Global Supply Chain from 2006 to 2012. Dell Inc. ● Served in a number of roles from 1994 to 2006. | REASONS FOR NOMINATION Mr. Smith has industry-specifictechnology-industry specific strategic, operational, and managerial expertise gained through a more than 25-year career with Lenovo and Dell. Additionally, the Board believes that Mr. Smith’s expertise in positioning companies for future growth and success, extensive leadershipglobal business management experience, and strong track record in increasing operating profit and managing complex integrations for corporations are valuable qualifications on the Board. OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS (OTHER THAN ARROW)
●The ODP Corp.Corporation |
DIRECTOR RESIGNATION POLICY The Board has adopted a Director Resignation Policy which provides that in an uncontested election, any director nominee that receives a greater number of votes “WITHHELD” from his or her election than votes “FOR” his or her election must tender a letter of resignation to the Board within five days of the certification of the shareholder vote.vote for consideration by the Corporate Governance Committee. The Corporate Governance Committee must then consider whether to recommend that the Board accept or reject the director’s resignation and promptly make such a recommendation to the Board.recommendation. The Board willmust then considertake action with respect to the resignation within 90 days following the date of the shareholders’ meeting at which the election occurred and then shall publicly disclose its decision.decision in a Form 8-K filed with the SEC. A director whose resignation is under consideration may not participate in any deliberationthe deliberations of the Corporate Governance Committee or Board regarding his or her resignation. The Director Resignation Policy can be found under “Governance Documents” at the “Leadership &and Governance” sub-link of the InvestorsInvestor Relations drop-down menu on investor.arrow.com. 24 |
| |
THE BOARD AND ITS COMMITTEES TheIn 2023, the Board meets inmet in: (i) general sessions withpresided over by the Chairman ofExecutive Chair (for sessions prior to the 2023 annual shareholder meeting) and independent Board presiding, inChair (for sessions after the 2023 annual shareholder meeting), (ii) meetings limited to non- management directors (which aremeetings were presided over by the Lead Director)Independent Director prior to the 2023 annual shareholder meeting and presided over by the independent Board Chair after the 2023 annual shareholder meeting), and (iii) in its three various committees. Committee meetings are open to all members of the Board.Board other than management directors during the sessions of the non-management directors of such committee meetings.
Committee memberships and chair assignments are reviewed no less than annually by the Corporate Governance Committee, which makes appointmentcommittee appointments and chair recommendations to the Board. The table below reflectsshows current committee memberships for calendar year 2020.as of the date of this Proxy Statement. | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
| Committee | Name |
| Independent |
| Audit |
| Compensation |
| Corporate
Governance | Barry W. Perry
|
| X
|
|
|
| M
|
|
| William F. Austen (1) | | X | | | | M | | C
| Fabian T. Garcia | | X | | | | M | | | Steven H. Gunby (1) | | X | | M
| | C
| | | Gail E. Hamilton | | X | | M | | | | M | Richard S. Hill
|
| X
|
|
|
| M
|
| M
| M. F. (Fran) Keeth
|
| X
|
| C
|
|
|
|
| Andrew C. Kerin | | X | | | |
|
| C
| Laurel J. Krzeminski
|
| X
|
| M | |
|
|
| Michael J. Long
|
|
|
|
|
|
|
|
| Stephen C. Patrick
|
| X
|
| M
|
|
|
| M | Gerry P. Smith (2)Sean J. Kerins
| | | | | | | | | Carol P. Lowe | | X | | C
| | | | M | Mary T. McDowell | | X | | M | | | | | Gerry P. Smith | | X | | | | C | | |
C= Chair M= Member | (1) | Mr. AustenGunby was appointed to serve as independent Board Chair at the Audit Committee on May 13, 2020.meeting of the Board immediately following the 2023 annual shareholder meeting. |
BOARD LEADERSHIP STRUCTURE The Board annually elects a Chair after taking into account the recommendation of the Corporate Governance Committee following its annual review of the Board’s leadership structure, which typically takes place immediately after the annual shareholder meeting. Among other responsibilities, the Board Chair: | ● | acts as the key liaison between the Board and management; |
| (2)● | Mr. Smith was appointed tosets timing, location, and agendas for meetings of the Board (in consultation with senior management of the Company and committee chairs); |
| ● | sets the agenda and chairs all executive sessions of the independent directors; |
| ● | presides over Board and shareholder meetings; |
| ● | works closely with the Corporate Governance Committee on September 17, 2020.to recommend committee chairs and committee assignments; |
|
| 25 |
| ● | assists the Corporate Governance Committee in evaluating whether to nominate additional directors for Board membership; and |
| ● | may call special meetings of the Board. |
In accordance withThe Company does not require the Company’s corporate governance guidelines,separation of its Chair and CEO positions, but they are currently separate. The Board believes it is in the best interests of the Company to determine the separation of its Chair and CEO position based upon the circumstances at the time. As described under “Proxy Statement Highlights – Board Leadership Transition” above, in 2023 Mr. Long concluded his service as Executive Chair and a member of the Board at the conclusion of the 2023 annual shareholder meeting on May 17, 2023, and the Board appointed Mr. Perry to serveGunby as independent Board Chair immediately following the Lead Director. The Lead Director chairs2023 annual shareholder meeting.
In situations where the Board meetings when the Chair is not present. He also chairsindependent, the sessions of the non-management directors held in connection with each regularly scheduled Board meeting. The Lead Director serves as a liaison between the Chair and the independent, non-management directors, and reviews and approves Board agendas and meeting schedules. The Lead Director has the authority to call meetings of the non-management directors. Additionally, as a matter of practice,Company’s Corporate Governance Guidelines suggest the Board holds executive sessions chaired by theappoint a Lead Director at every in-person Board meeting.Independent Director. | | | | 26
|
|
|
CHIEF EXECUTIVE OFFICER AND CHAIRMAN POSITIONS
The Company’s CEO currently serves as Chairman of the Board. In his position as CEO, Mr. Long has primary responsibility for the day-to-day operations of the Company and provides consistent leadership on the Company’s key strategic objectives. In his role as the Board Chair, he sets the strategic priorities for the Board, presides over its meetings, and communicates the Board’s findings and guidance to management. The Board believes that the combination of these two roles is the most appropriate structure for the Company at this time because: (i) this structure provides more consistent communication and coordination throughout the organization, which results in a more effective and efficient implementation of corporate strategy; (ii) it unifies the Company’s strategy behind a single vision; (iii) the CEO is the most knowledgeable member of the Board regarding risks the Company may be facing and, in his role as Chairman, is able to facilitate the Board’s oversight of such risks; (iv) the structure has a long-standing history of serving the Company’s shareholders well through many economic cycles, business challenges, and succession of multiple leaders; (v) the Company’s current corporate governance processes, including those set forth in the various Board committee charters and corporate governance guidelines, preserve and foster independent communication amongst non-management directors as well as independent evaluations of and discussions with the Company’s senior management, including the Company’s CEO; and (vi) the role of the Lead Director, which fosters better communication among non-management directors, fortifies the Company’s corporate governance practices, making the separation of the positions of Chairman of the Board and CEO unnecessary at this time.
COMMITTEES Each of the committees of the Board operates under a charter, copies of which are available under “Governance Documents” at the “Leadership &and Governance” sub-link of the InvestorsInvestor Relations drop-down menu on investor.arrow.com.investor.arrow.com. 26 |
| |
Audit Committee | | | Current Members | | Key Responsibilities | M. F. (Fran) Keeth,Carol P. Lowe, Chair *
William F. Austen
Steven H. Gunby
Gail E. Hamilton Laurel J. KrzeminskiMary T. McDowell
Stephen C. Patrick
| | > reviews with management and the Company’s independent auditor the Company’s annual and quarterly financial statements and recommends to the Board whether such financial statements should be included in the Company’s periodic reports filed with the SEC > reviews and evaluates Arrow’s financial reporting process and other matters, including its accounting policies, reporting practices, and internal accounting and disclosure controls > reviews Arrow’s sustainability disclosures, including relevant environmental, social, and governanceESG metrics > overseasoversees Arrow’s data privacy and cybersecurity programs
> reviews the independent auditor’s qualifications and independence and monitors the scope and reviews the results of the audit conducted by Arrow’s independent registered public accounting firmauditor > exercises oversight of related-person transactions > oversees Arrow’s ethics and compliance program and reporting > reviews ongoing assessments of the Company’s risk management processes and reviews material risks and contingent liabilities > oversees and monitors compliance with legal and regulatory requirements > reviews the Company’s disclosures containing ESG metrics and monitors the appropriateness of internal control procedures and methodologies used to prepare or develop ESG metrics > reviews the following with the Corporate Audit Department (which reports to the Audit Committee) and management: o>
the scope of the annual corporate audit plan; o>
the results of the audits carried out by the Corporate Audit Department, including its assessments of the adequacy and effectiveness of disclosure controls and procedures, and internal control over financial reporting;Department; and o>
the sufficiency of the Corporate Audit Department’s resources.resources |
The Board has determined that Mrs. Keeth, Ms. Krzeminski, and Mr. Patrick are qualified as “audit committee financial experts,” as the term is defined in Item 407(d) of Regulation S-K.
| | |
|
| 27
|
Compensation Committee
| | | Key Activities in 2023 |
| | ● Supervised Arrow’s ethics and compliance program, including regular review of whistleblower hotline complaints ● Received regular cybersecurity updates from management and discussed cybersecurity risk ● Reviewed and recommended to the Board expansion of the Company’s share repurchase program and approval of other financing transactions ● Reviewed and recommended to the Board updates to its committee charter ● Received regular updates from management on legal and regulatory developments ● Adopted improvements to the Company’s disclosure controls and procedures, including relating to evaluation of cybersecurity incidents for required disclosure |
* | The Board has determined that Ms. Lowe is qualified as an “audit committee financial expert,” as the term is defined in Item 407(d) of Regulation S-K. |
|
| 27 |
Compensation Committee | | | Current Members | | Key Responsibilities | Steven H. Gunby,Gerry P. Smith, Chair
Richard S. HillWilliam F. Austen
Barry W. PerryFabian T. Garcia
Andrew C. Kerin | | > develops and reviews Arrow’s executive compensation philosophy > implements compensation philosophy through compensation programs and plans to further Arrow’s strategy, drive long-term profit growth, and increase shareholder value > reviews and approves the corporate goals and objectives relevant to executive compensation > subject to review and ratification by all non-management Board members, reviews and approves the base salary, annual cash incentives, performance and stock-based awards, retirement, and other benefits for the Company’s principal executives > reviews the performance of each of the NEOs and the Company as a whole > overseasoversees the development, implementation, effectiveness, and disclosurereview of Arrow’s programs, practices, risks and strategiesopportunities, measures, objectives, and performance relating to human capital management and related disclosure
|
| | | Key Activities in 2023 |
| | ● Managed compensation-related decisions to facilitate successful leadership transitions ● Received regular updates from management on the Company’s human capital strategy and oversaw the development of the human-capital related disclosures in Arrow’s ESG report ● Reviewed and recommended to the Board the adoption of a Dodd-Frank compensation clawback policy, updates to its existing incentive compensation clawback policy, and updates to its committee charter |
The Compensation Committee may delegate authority from time to time to a subcommittee of one or more members of the Compensation Committee or to the CEO, if and when the Committee deems appropriate and in accordance with its charter and applicable rules and regulations. In 2020,2023, the Compensation Committee directly engaged Pearl Meyer & Partners (“Pearl Meyer”) as a consultant to examine and report to the Compensation Committee on best practices in the alignment of compensation programs for the CEO and other members of senior management by providing competitive benchmarking data, analyses, and recommendations with regard to plan design and target compensation. In addition, Pearl Meyer provides guidance to the Corporate Governance Committee regarding non-management director compensation. Pearl Meyer does not provide any other services to the Company. TheseThe Company has determined that the services rendered by Pearl Meyer have not raisedand do not raise any conflicts of interest. 28 |
| |
Corporate Governance Committee | | | Current Members | | Key Responsibilities | William F. Austen, Chair Gail E. Hamilton Andrew C. Kerin Chair Gail E. HamiltonCarol P. Lowe
Richard S. Hill
Stephen C. Patrick
Gerry P. Smith
| | > develops, the corporate governance guidelines for Arrowimplements, and monitors Arrow’s Corporate Governance Guidelines > makes recommendations with respect to committee assignments, Company officer appointments, and other governance issues > identifies and evaluates each director nominees and candidates before recommending him or hernominees for election to the Board as nominees for re-electionor to fill existing or expected director vacancies > reviews and makes recommendations to the Board regarding the compensation of non-management directors > identifies and recommends new candidatesengages in succession planning for nomination to fill existing or expected director vacanciesthe Company’s CEO
> overseasreviews and assesses the adequacy of Arrow’s code of business conduct and ethics
> oversees the self-evaluation processes of the Board and its committees > oversees significant shareholder engagement matters > oversees Arrow’s programs, policies, practices, risks and practicesopportunities, measures, objectives and performance relating to corporate social responsibilityESG matters and sustainabilityrelated disclosures to the extent not specifically delegated to other committees
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| | | | Key Activities in 2023 |
| | ● Recommended the appointment of an independent Board Chair ● Identified, reviewed, and recommended for the Board’s nomination, a new independent director in 2023, Mary T. McDowell ● Reviewed the Company’s ESG developments and oversaw the preparation and publication of the Company’s ESG report ● Reviewed and recommended to the Board approval of updates to the Company’s Worldwide Code of Business Conduct and Ethics, Corporate Governance Guidelines, its committee charter, and various other internal policies and procedures ● Helped facilitate certain management changes during 2023 by recommending such changes to the Board ● Reviewed and recommended to the Board modifications to the compensation of the Company’s independent Board Chair to ensure the compensation for such position remains competitive |
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The Corporate Governance Committee considers shareholder recommendations of nominees for membership on the Board as well as those recommended by current directors, officers, employees, and others. Such recommendations may be submitted to Arrow’s Corporate Secretary, Carine L. Jean-Claude, at Arrow Electronics, Inc., 9201 East Dry Creek Road, Centennial, Colorado 80112, who will forward them to the Corporate Governance Committee. Possible candidates suggested by shareholders are evaluated by the Corporate Governance Committee in the same manner as other possible candidates.
The Corporate Governance Committee has retained the services of a third-party executive recruitment firm to assist its members in the identification and evaluation of potential nominees for the Board. The Corporate Governance Committee’s initial review of a potential candidate is typically based on any written materials provided to it. The committee then determines whether to interview the nominee. If warranted, the Corporate Governance Committee, the Chairman of the Board and CEO, the Lead Director, and others, as appropriate, interview the potential nominees.
The Corporate Governance Committee’s expectations as to the specific qualities and skills required for directors, including those nominated by shareholders, are set forth in Section 4 of Arrow’s corporate governance guidelines (available under “Governance Documents” at the “Leadership & Governance” sub-link of the Investors drop-down menu on investor.arrow.com).
SUCCESSION PLANNING The Board takes a proactive approach toward succession planning and talent management. TheIn conjunction with the Corporate Governance Committee, the independent directors meet multiple times a year in executive sessionsessions to evaluate succession planning for the CEO. The Board also reviews the annual performance of each member of the senior management team as well as succession planning for these executive roles with the CEO. Additionally, the CEO provides meaningful in- person opportunities for the Board to interact with key members of management beyond the Company’s executive officers on no less than a quarterlyregular basis. The Board has a confidential plan to address any unexpected short-term absence of the CEO and other members of the senior management team.executives. The Board considers diversity as an important factor in the Company’s succession plans and supports management’s efforts to enhance all aspects of diversity throughout the Company. As of January 1, 2021, forty- five percent2024, 50% of the members of the Company’s executive committee (“Executive Leadership wasCommittee”), which is the Company’s senior leadership team, who identified their gender or race/ethnicity, were diverse based on gender andor race/ethnicity. The Board, in conjunction with the Corporate Governance Committee, also performs ongoing succession planning for directors. The Corporate Governance Committee meets routinely to discuss board composition, including Board recruitment efforts, and identifies and evaluates potential director nominees. If the Board’s director nominees included in this Proxy Statement are elected at the Annual Meeting, 50% of the Company’s directors will be new since 2021. The Corporate Governance Committee also actively considers rotation of independent directors through the Board’s committees to introduce fresh perspectives and broaden and diversify the views and experiences represented on the Board’s committees. ENTERPRISE RISK MANAGEMENT Board Oversight of Risk Management The roleBoard, as a whole and through its committees, is responsible for oversight of risk management, as provided in the Company’s Corporate Governance Guidelines. The oversight responsibility of our Board and its committees is enabled by management reporting processes, including an annual Company-wide risk assessment, which are designed to provide visibility to the Board and its committees isabout the identification, assessment, and management of critical risks and management’s risk mitigation strategies. In order to promotemost effectively evaluate the best interestsvarious categories of risks facing the Company, andthe Board has delegated to its shareholders by overseeing the management of Arrow’s business, assets, and affairs, which includescommittees oversight of ESG matters, including human capitalrisks associated with each committee’s respective area of responsibility, as summarized below. Each committee meets in executive sessions with key management personnel and cybersecurityrepresentatives of outside advisors, as needed, to discuss identified risks and evaluate anticipated future risks. For example, each year the Compensation Committee engages Pearl Meyer to conduct a risk assessment on the Company’s executive compensation programs. 30 |
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| | Board/Committee | Primary Areas of Risk Oversight | Board | On an ongoing basis, the full Board oversees enterprise-level risks, including strategic, operational, compliance, financial, and other matters that may present material risk to Arrow’s financial performance, operations, plans, prospects, or reputation. | Audit Committee | > internal control over financial reporting > legal and regulatory compliance > data privacy and cybersecurity > financial management, tax, and treasury | Compensation Committee | > executive compensation programs > human capital management | Corporate Governance Committee | > Board recruitment, composition, and succession planning | Management’s Role | Members of the Executive Committee and other senior management regularly report to the Board regarding the Company’s risks and opportunities (see additional detail immediately below). |
Arrow’s Approach to Enterprise Risk Management Our enterprise risk management (“ERM”) framework is designed to identify risks that may impact the enterprise and manage those risks and opportunities to ensure we are able to execute our short- and long-term strategy. Management is responsible for the day-to-day analysisdesign and reviewexecution of the risks facing the Company, including timely identification of risks (including by a company-wide enterpriseCompany’s ERM framework, implementing risk management survey)strategies, and developing policies, controls, processes, and procedures to identify and manage risks. The Board has delegated to the Audit Committee the primary responsibility for overseeing the ERM framework designed by management. The Audit Committee’s charter provides that it will, at least annually, review and discuss with management the Company’s ERM function, including related policies, processes, and systems of internal control, as well as material risks and management’s mitigation plan. An important element of our Board’s oversight involves regular interaction among our Board, its committees, and senior management regarding the Company’s risk controls related to significant business activities,exposures and development of programs and recommendations to determine the sufficiency of risk identification, the balance of potential risk to potential reward, and the appropriate manner in which to control risk. Arrow’smitigation efforts. Our CEO has the ultimate management authority for enterprise risk management,ERM, including responsibility for capability development, risk identification and assessment, and policies and governance, as well as strategies and actions to address enterprise risk. Management providesThe CEO communicates regularly with the Board on such matters. In addition, our internal audit department periodically reports to the Audit Committee on its evaluation of management’s effectiveness in addressing risks by providing a comprehensive review of certain business and related risks. The internal audit department also conducts an annual survey of employees and of the Executive Committee to assist in identifying and evaluating risks. These surveys are reviewed by the Board and appropriate committees ofassist the Board regular briefingin its conduct of an annual review of strategic and information sessions onenterprise risks, which covers risks experienced over both the significant risks that the Company facesshort- and how the Company seeks to control those risks when appropriate. Risk oversight in certain areas is the responsibility of a Board committee, such as: the Audit Committee’s oversight of issues related to internal controls over financial reporting and regulatory compliancelong-term as well as anticipated future risks. Our Chief Compliance Officer, who reports to our Chief Legal Officer, also regularly updates the Audit Committee on legal and compliance matters and risks. More information about specific risks facing the Company is set forth in the Company’s information security;other SEC filings, including under the Corporate Governance Committee’s oversight ofsection entitled “Risk Factors” in the Board’s succession planning and governance; and the Compensation Committee’s oversight of risks related to compensation programs and strategies relating to human capital management.Company’s most recent Annual Report on Form 10-K. | | |
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COMPENSATION RISK ANALYSIS The Company believes that its executive compensation program reflects an appropriate mix of compensation elements and balances currentannual and long-term performance objectives, cash and equity compensation, and risks and rewards associated with executive roles. The following features of the Company’s executive incentive compensation program illustrate this point: | > | performance goals and objectives reflect a balanced mix of performance measures to avoid excessive weight on a certainany specific goal or performance measure; |
| > | annual and long-term incentives provide a defined range of payout opportunities (ranging from 0% to 170% of target for annual cash incentives for the NEOs and 0% to 185% for long-term incentives); |
| > | total direct compensation (“TDC”) levels are heavily weighted on long-term, equity-based incentive awards that vest over a number of years; |
| > | equity incentive awards that vest over a number of years are granted annually so executives always have unvested awards that could decrease significantly in value if the business is not managed for the long-term; |
| > | the Company has executive stock ownership guidelines so that thea component of an executive’s personal wealth that is derived from compensation from the Company is tied to the long-term success of the Company; and |
| > | the Compensation Committee retains negative discretion to adjust certain compensation based on the quality of Company and individual performance and adherence to the Company’s ethics and compliance programs, among other things. |
Based on the above combination of program features, the Company believes that: (i) its executives are encouraged to manage the Company in a prudent manner;prudently and (ii) its incentive programs are not designed in a manner that encourages executives to take risks that are inconsistent with the Company’s or its shareholders’ best interests. Further, at the Compensation Committee’s request, Pearl Meyer annually performs an assessment ofassesses the risks associated with the Company’s short-termannual and long-term incentive programs,incentives, the results of which are discussed by the Compensation Committee. In 2020, the2023, Pearl Meyer did not recommend any plan design changes to mitigate risk exposure further. The Compensation Committee concluded that the overall design of the Company’s compensation programs maintained an appropriate level of risk. Pearl Meyer did not recommend any plan design changes to further mitigate risk exposure. It is the Company’s opinion that its compensation policies and practices for all employees do not create risks that could have a material adverse effect on the Company. The Company delivers to its entire employee base, in the aggregate, most of its compensation in the form of base salary with smaller portions delivered in the form of cash incentives and long-term incentives. The Company’s cash incentive compensation plans, which represent the primary variable component of compensation, have been designed to drive the performance of employees working in management, sales, and sales-related roles. These plans are typically tied to the achievement of sales/financial and strategic goals that include maximums designed to prevent “windfall” payouts. 32 |
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ENVIRONMENTAL, SOCIAL, AND GOVERNANCE OVERSIGHT The Board, through its committees, oversees the Company’s ESG programs, policies, practices, risks and opportunities, measures, objectives and performance, as summarized below: Committee | Areas of Responsibility | Audit Committee | > Reviews disclosures containing ESG metrics > Monitors appropriateness of internal control procedures and methodologies used to prepare or develop ESG metrics | Compensation Committee | > Oversees human capital management matters and related disclosures > Reviews human capital-related ESG goals and targets | Corporate Governance Committee | > Primarily responsible for ESG oversight > Makes recommendations to the Board regarding integration of ESG matters into the Company’s business strategy and operations (to the extent not delegated to other committees) > Coordinates with Audit Committee and Compensation Committee to ensure ESG disclosures comply with applicable law |
For additional information on oversight of Arrow’s ESG program by the Board, Board committees, and management, including Arrow’s 2023 ESG Report, please refer to the Environmental, Social, and Governance section of our website at arrow.com/company/purpose/environmental-social-governance. Information on the Company’s website, including our ESG Reports, is not incorporated by reference into, and does not form part of, this Proxy Statement or any other report or document Arrow files with the SEC. INFORMATION SECURITY, PRIVACY, AND COMPLIANCE OVERSIGHT The Audit Committee oversees Arrow’s management of privacy, security, and cybersecurity risks. The Audit Committee receives and reviews cybersecurity reports from Corporate Audit, Legal and Compliance, Information Technology, and Enterprise Security on a regular basis. These reports include updates on cybersecurity risks, technical developments in addressing cybersecurity risks, regulatory updates, and the results of recent audits and reviews. The Company’s Chief Information Officer and Chief Security Officer regularly report to the Audit Committee on the current state of the Company’s cybersecurity program. The Company has established written policies and procedures to ensure that significant cybersecurity incidents are immediately investigated, addressed through the coordination of various internal departments, and publicly reported (to the extent required by applicable law). If management determines a material cybersecurity incident has occurred, the Company’s policies require management to promptly inform the Board. For more information regarding the Company’s cybersecurity program, see Item 1C of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. BOARD AND COMMITTEE ASSESSMENTS In accordance with the Company’s Corporate Governance Guidelines, the Board assesses its processes and performance at least annually. During this assessment, the directors evaluate the Board’s contribution and review areas where the Board and/or management believe a better contribution could be made. If desired by any director, the independent directors will meet in executive session to discuss Board processes and performance without the CEO or any management directors in attendance. The Corporate Governance Committee oversees the Board’s self-assessment process. Pursuant to the Company’s Corporate Governance Guidelines and the committee charters, the Audit Committee, Corporate Governance Committee, and Compensation Committee each conduct an annual performance evaluation of their respective committees. |
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DIRECTORS’ ADDITIONAL BOARD SERVICE The Company believes that directors may broaden their experience by serving on other boards, which may be a benefit to the Company, provided that service on additional boards does not detract from a director’s ability to fulfill their obligations to the Company and its Board. In identifying individuals for potential nomination to the Board, the Corporate Governance Committee considers an array of factors outlined in the Corporate Governance Guidelines, specifically including whether such person would have the interest and time available to fulfill his or her responsibilities as a director over a period of years and be able to attend substantially all scheduled Board and committee meetings and the annual shareholder meeting and be fully prepared at such meetings. Under the Corporate Governance Guidelines, the Corporate Governance Committee will not nominate a director candidate who serves, or would serve, on more than four (4) public company boards (including the Company’s Board). The Corporate Governance Guidelines also require the Chief Executive Officer to inform the Board in advance of a desire to accept a position on another company’s board of directors, and the Corporate Governance Committee will determine if such board service is appropriate under the circumstances. In any event, the Chief Executive Officer may not serve on more than two (2) public company boards of directors (including the Company’s Board). Additionally, under the Audit Committee Charter, no member of the Audit Committee may serve on more than three (3) public company audit committees (including the Company’s Audit Committee). All of our 2024 director nominees are compliant with the Company’s limitations on other public company board service, as described above. INDEPENDENCE
The Company’s corporate governance guidelines provideCorporate Governance Guidelines state that the Board should consist primarily of independent non-management(non-management) directors. For a director to be considered independent under the guidelines, the Board must determine that the director does not have any direct or indirect material relationshipsrelationship with the Company. Further, the Board determines whether any director is involved in any activity or interest that conflicts with or might appear to conflict with his or hertheir fiduciary duties. A non-management director must also meet the independence standards in the New York Stock ExchangeNYSE listing rules,standards, which the Board has adopted as its standard, as set forth in Section 5 of Arrow’s corporate governance guidelines (available under “Governance Documents” at the “Leadership & Governance” sub-link of the Investors drop-down menu on investor.arrow.com).Corporate Governance Guidelines. The Board evaluated the independence of each current director and each director nominee, and has determined that all of its directors and nominees,such persons, other than Mr. Long,Kerins, satisfy both the New York Stock Exchange’sNYSE’s independence requirements and the Company’s guidelines. | | | | 30
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As required by the Company’s corporate governance guidelinesCorporate Governance Guidelines and the New York Stock Exchange’sNYSE’s listing rules, all members of the Audit, Compensation, and Corporate Governance Committees are independent. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No member of the Compensation Committee is a present or former employee of the Company. Additionally, no member of the Compensation Committee has a relationship that requires disclosure of a Compensation Committee interlock. 34 |
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MeetingsandAttendanceMEETINGSANDATTENDANCE
Consistent with the Company’s corporate governance guidelines,Corporate Governance Guidelines, it is the general practice of the Board for all its non- management directors to meet separately (without Company management present) either prior to or after each regularly scheduled Board meeting, with the Lead Director presiding.meetings. In 2020,2023, these non-management director meetings totaled fourfive in number. During 2020,2023, there were five meetings of the Board, eight meetings of the Audit Committee, four meetings of the Compensation Committee, and four meetings of the Corporate Governance Committee. All the directors attended 75% or more of all of the meetings of the Board and the committees on which they served. The companyCompany encourages its directors to be present at the Annual Meeting. For 2020,Company’s annual meetings of shareholders. In 2023, all directors standing for reelection attended the Annual Meeting telephonically.annual meeting of shareholders telephonically or in person. DIRECTOR COMPENSATION TheFor 2023, the non-management members of the Board (that is, all members except Mr. Long)Messrs. Kerins and Long, who did not receive any compensation for their Board service) received cash fees at the following fees in cash:below annualized rates. After considering market data and the input from Pearl Meyer, during 2023, the Corporate Governance Committee approved adjustments to the director compensation program, also set forth below:
| | | | | | | 2023 Non-Management Director Compensation | | 2023 Non-Management Director Compensation | | | | | | Prior to May 17 | | | On or after May 17 | | | | | | | | | | Annual fee | | $ | 100,000 | $ | 100,000 | | $ | 110,000 | Annual fee for service as Corporate Governance Committee Chair | | $ | 10,000 | $ | 10,000 | | $ | 15,000 | Annual fee for service as Compensation Committee Chair | | $ | 20,000 | $ | 20,000 | | $ | 25,000 | Annual fee for service as Audit Committee Chair | | $ | 25,000 | $ | 25,000 | | $ | 30,000 |
In addition to the cash fees for 2023, our non-management directors received restricted stock unit (“RSU”) awards during 2023. On May 16, 2023, each non-management director receivesserving on such date who also served on the Board for the 2021-2022 service year received a special grant of RSUs valued at $175,000, based on the fair market value of Arrow common stock on such date, with immediate vesting. The individuals receiving such grant were Messrs. Austen, Gunby, Kerin, Patrick, Perry, and Smith and Mses. Hamilton and Krzeminski. In light of Mr. Perry’s service as Lead Independent Director for the 2021-2022 service year, he received an additional award amount of $30,000. These additional RSU grants were made due to a change in the timing of the annual RSU grant to directors. Until 2022, Arrow directors received the stock-award component of their compensation as a fully vested RSU grant following each year's annual meeting of shareholders for the director's service over the prior year. As a result of this practice, directors who did not stand for re-election at the end of the year did not receive their full and intended compensation for their service. Starting in February 2022, the Board adopted a new compensation practice of granting unvested stock awards at the beginning of each service year, with that service year starting the day following the annual meeting of shareholders and continuing until the day of the next annual meeting of shareholders. In 2023, the Board noted that in the process of making this switch, non-management directors who served during the 2021-2022 service year had not received the equity compensation for their service during that period and issued the one-time corrective RSU awards to the non - management directors who were then-serving and impacted by the prior non-payment. On May 17, 2023, each non-management director serving on such date, received a standard annual grant of restricted stock units (“RSUs”)RSUs valued at $185,000 (increased from $175,000 in 2022), based on the fair market value of Arrow common stock on the date of grant. Further, as the Lead Director receives anotherindependent Board Chair, Mr. Gunby, received an additional |
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aggregate annual award of RSUs valued at $30,000$150,000 (as a sum of two separate awards on May 17, 2023, and September 13, 2023) with such grants made in recognition of the additional responsibilities associated with such position.position and to bring the Company’s independent Board Chair compensation closer in line with the Company’s peers. | | |
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TableThe annual grant of ContentsRSUs as well as the grants to Mr. Gunby are scheduled to vest and become non-forfeitable on the day before the annual meeting of shareholders the year following grant. The awards will be distributed based on an annual election made by each non-management director that is either (i) the earlier of May 7, 2024, or the day before the Company’s 2024 annual shareholder meeting (which day shall in any event occur during the 2024 calendar year), or (ii) following the grantee’s separation from service provided that he or she continuously served on the Board from the grant date through the vesting date. If the grantee’s service with the Board is terminated for any or no reason prior to the vesting date (other than death, disability, or involuntary termination without cause following a change of control), the RSUs will be forfeited.
| | | PROXY STATEMENT
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The following table shows the total dollar value of compensation receivedgranted or earned by all non-management directors in or in respect of 2020.to 2023. Mr. Kerins and Mr. Long did not receive any compensation for their Board service during 2023 and have been excluded from the table. Please see the “2023 Summary Compensation Table” for the compensation received by Messrs. Kerins and Long with respect to 2023. | | | | | | | | | | | | | | | | | | Non-Management Director Compensation | Name | | Fees Earned
($)(1) | | Stock Awards
($)(2) | | All Other
Compensation
($) | | Total
($) | Barry W. Perry | | 100,000 | | 205,000 | | — | | 305,000 | William F. Austen | | 50,833 | | — | | — | | 50,833 | Steven H. Gunby | | 110,167 | | 175,000 | | — | | 285,167 | Gail E. Hamilton | | 100,000 | | 175,000 | | — | | 275,000 | Richard S. Hill | | 100,000 | | 175,000 | | — | | 275,000 | M. F. (Fran) Keeth | | 125,000 | | 175,000 | | — | | 300,000 | Andrew C. Kerin | | 110,000 | | 175,000 | | — | | 285,000 | Laurel J. Krzeminski | | 100,000 | | 175,000 | | — | | 275,000 | Stephen C. Patrick | | 100,000 | | 175,000 | | — | | 275,000 | Gerry P. Smith | | 16,304 | | — | | — | | 16,304 |
| | | | | | | 2023 Non-Management Director Compensation | | | Fees Earned | | | | | Name | | or Paid in Cash
($)(4) | | Stock Awards
($)(5) | | Total
($) | William F. Austen | | 117,500 | | 360,000 | | 477,500 | Fabian T. Garcia | | 105,000 | | 185,000 | | 290,000 | Steven H. Gunby | | 115,000 | | 510,000 | | 625,000 | Gail E. Hamilton | | 105,000 | | 360,000 | | 465,000 | Andrew C. Kerin | | 105,000 | | 360,000 | | 465,000 | Laurel J. Krzeminski (1) | | 50,000 | | 175,000 | | 225,000 | Carol P. Lowe | | 115,000 | | 185,000 | | 300,000 | Mary T. McDowell | | 55,000 | | 185,000 | | 240,000 | Stephen C. Patrick (2) | | 85,837 | | 360,000 | | 445,837 | Barry W. Perry (3) | | 50,000 | | 205,000 | | 255,000 | Gerry P. Smith | | 117,500 | | 360,000 | | 477,500 |
| (1) | Laurel J. Krzeminski served as a non-management director in 2023 from January 1 to May 17, 2023. |
| (2) | Stephen C. Patrick served as a non-management director in 2023 from January 1 to June 5, 2023. |
| (3) | Barry W. Perry served as a non-management director in 2023 from January 1 to May 17, 2023. |
| (4) | Messrs. Perry, Gunby, and Kerin, and Perry and Ms. KrzeminskiLowe deferred 100% of their retainers in deferred stock units;units, and Mr. Patrick deferred 25% of his retainer in deferred stock units. |
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| (5) | Amounts shown under the heading “Stock Awards” reflect the aggregate grant date fair valuesvalue of the restricted stock unitsRSUs granted to each director during 2020in 2023, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation—Stock Compensation — Stock Compensation.(“FASB ASC Topic 718”), based on the closing stock price on the date of grant. The balances of each non-management director’s equity-based awards as of December 31, 2023 (including vested and deferred RSUs) are set forth in the table below: |
| | | | | | | 2023 Non-Management Directors | | | Unvested
Restricted
Shares | | | | | Name | | or
Restricted
Stock Units | | Deferred
Restricted
Stock Units | | Unexercised
Stock
Options | William F. Austen | | 1,520 | | 1,469 | | — | Fabian T. Garcia | | 1,520 | | 2,720 | | — | Steven H. Gunby | | 2,722 | | 17,614 | | — | Gail E. Hamilton | | 1,520 | | 22,119 | | — | Andrew C. Kerin | | 1,520 | | 25,674 | | — | Laurel J. Krzeminski | | — | | — | | — | Carol P. Lowe | | 1,520 | | 4,216 | | — | Mary T. McDowell | | 1,520 | | — | | — | Stephen C. Patrick | | — | | 20,007 | | — | Barry W. Perry | | — | | 23,753 | | — | Gerry P. Smith | | 1,520 | | 3,896 | | — |
Under the terms of the Non-Employee Director Deferred Compensation Plan, non-management directors may defer the payment of all or a portion of their annual retainers until the end of their service on the Board. Unless the director chooses a different amount, is chosen by the director, 50% of the director’s annual retainer fee is automatically deferred and converted tointo units of Arrow common stock. The units held by each director are included under the heading “Common Stock Units” in the Sharestable labeled “Shares of Common Stock Beneficially Owned Table.Owned.” The amounts deferred by each director for 2020,2023, to the extent there arewere any amounts deferred, are included under the headingcolumn “Fees Earned” onin the table labeled “2023 Non- Management Director Compensation Table.Compensation” above. All deferrals under the plan will be paid upon separation of service from the Board. For stock awards outlined in the table labeled “2023 Non-Management Director Compensation, Table,” each director is given the option to have histheir RSUs converted to shares (i) on the first anniversary of the grant date or her RSUs(ii) following the grantee’s separation from service provided that they continuously served on the Board from the grant date through the vesting date. Messrs. Austen, Kerin, and Patrick and Mses. Hamilton and McDowell elected to have their 2023 RSU awards converted to shares one year after the grant. Mses. Hamilton and Krzeminski and Messrs. Hill and Kerin have selected that option for their 2020 grants. DIRECTOR STOCK OWNERSHIP BY DIRECTORSGUIDELINES The Board believes that stock ownership by its directors strengthens their commitment to the long-termCompany’s long - term future of the Company and further aligns their interests with those of the shareholders generally. As a result, the corporate governance guidelinesCorporate Governance Guidelines specifically state that directors are expected, over time, to own beneficialbeneficially shares of the Company’s common stock having a value of at least three times their annual retainer fee (including shares owned outright, vested shares of restricted stock or RSUs, and common stock units in a deferred compensation account). AllAs of the Record Date, all directors either own the required number of shares or, in the case of recently appointed directors, are accumulating and retaining shares at a pace sufficient to meet the requirement.
AUDIT COMMITTEE REPORT The Audit Committee represents and assists the Board by overseeing: (i) the Company’s financial statements and internal controls; (ii) the independent registered public accounting firm’s qualifications and independence; and (iii) the performance of the Company’s corporate audit function and of its independent registered public accounting firm. On the date of the adoption of this Report, the Audit Committee consisted of sixthree directors, all considered independent in accordance with New York Stock ExchangeNYSE listing standards and other applicable regulations. The Board has determined that committee members Mrs. Keeth,member Ms. Krzeminski, and Mr. Patrick areLowe is an “audit committee financial experts”expert” as defined by the SEC. Company management has the primary responsibility for the preparation of the financial statements and for the reporting process, including the establishment and maintenance of Arrow’s system of internal controls over financial reporting. The Company’s independent registered public accounting firm is responsible for auditing the financial statements prepared by management, expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles (“GAAP”), and auditing the Company’s internal controls over financial reporting. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with both management and the independent registered public accounting firm the Company’s quarterly earnings releases, Quarterly Reports on Form 10-Q, and the 20202023 Annual Report on Form 10-K. Such reviews included a discussion of critical or significant accounting policies, the reasonableness of significant judgments, the quality (not just the acceptability) of the accounting principles, the reasonableness and clarity of the financial statement disclosures, and such other matters as the independent registered public accounting firm is required to review with the Audit Committee under the standards promulgated by the Public Company Accounting Oversight Board. The Audit Committee also discussed with both management and the Company’s independent registered public accounting firm the design and efficacy of the Company’s internal control over financial reporting. In addition, the Audit Committee received from and discussed with representatives of the Company’s independent registered public accounting firm the written disclosure and the letter required by the applicable requirements of the Public Company Accounting Oversight Board (regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence) and considered the compatibility of non-audit services rendered to Arrow with the independence of the Company’s independent registered public accounting firm. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board.Board and the SEC. The Audit Committee also discussed with the independent registered public accounting firm and Arrow’s corporate audit group the overall scope and plans for their respective audits. The Audit Committee periodically met with the independent registered public accounting firm, with and without management present, to discuss the results of their work, their evaluations of Arrow’s internal controls, and the overall quality of Arrow’s financial reporting. In reliance on these reviews and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 20202023, for filing with the SEC. Carol P. Lowe, Chair | | Gail E. Hamilton | | Mary T. McDowell | |
M.F. (Fran) Keeth, ChairGail E. Hamilton
William F. Austen Laurel J. Krzeminski
Steven H. GunbyStephen C. Patrick
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PRINCIPAL ACCOUNTING FIRM FEES The aggregate fees billed by Arrow’s principal accounting firm, Ernst & Young LLP (“EY”), for auditing the annual financial statements and the Company’s internal controlscontrol over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and related regulations included in the Annual Report on Form 10-K, the reviews of the quarterly financial statements included in the Quarterly Reports on Form 10-Q, statutory audits, assistance with and review of documents filed with the SEC, and consultations on certain accounting and reporting matters for each of the last two fiscal years are set forth as “Audit Fees” in the table below. Also set forth for the last two fiscal years are “Audit-Related Fees.” Such fees are for services rendered in connection with employee benefit plan audits and other accounting consultations. “Tax Fees” relate to assistance with tax return preparation, tax audits, and compliance in various tax jurisdictions around the world. “All Other Fees” referrefers to advice, planning, and consultingservices other than as set forth above. Ernst & Young LLPDuring 2023 and 2022, all other fees primarily included accounting publication and online accounting research subscriptions. EY did not provide any services to the Company related to financial information systems design or implementation, nor did it provide any personal tax work or other services for any of the Company’s executive officers or members of the Board.implementation. | | | | | | | | | | | | | | | | | | | | | | | 2020 | | 2019 | | 2023 | | 2022 | Audit Fees | | $ | 11,311,483 | | $ | 11,387,815 | | $ | 12,072,893 | | $ | 11,396,015 | Audit-Related Fees | | | 236,304 | | | 46,468 | | | 438,108 | | | 456,799 | Tax Fees | | | 1,144,786 | | | 1,060,054 | | | 726,902 | | | 292,490 | All Other Fees | | | 2,262 | | | 5,785 | | | 8,000 | | | 8,473 | Total | | $ | 12,694,835 | | $ | 12,500,122 | | $ | 13,245,903 | | $ | 12,153,777 |
The amounts in the table above do not include fees charged by Ernst & Young LLPEY to Marubun/Arrow, a joint venture between the Company and the Marubun Corporation. Audit fees for Marubun/Arrow totaled $497,207$521,609 in 2020,2023, and $498,049$510,935 in 2019.2022. ConsistentThe Audit Committee’s policy is to pre-approve all audit, audit-related, and permissible non-audit services to be performed by Arrow’s independent registered public accounting firm. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget by category. In accordance with the Audit Committee charter, audit, audit-related,audit - related, tax, and other services performed by EY during 2023 and 2022 were approved by the Audit Committee, or by a designated member thereof. The Audit Committee has determined that the provision of the non-audit services described above is compatible with maintaining Ernst & Young LLP’sEY’s independence.
PROPOSAL 2: RATIFICATION OF
APPOINTMENT OF AUDITORSINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE AUDIT COMMITTEE AND THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP. Shareholders are asked to ratify the appointment of Ernst & Young LLP (“EY”) as Arrow’s independent registered public accounting firm for the fiscal year ending December 31, 2021.2024. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, as a matter of good corporate governance, the Board submits its selection to our shareholders for ratification. If the shareholders shoulddo not ratify Ernst & Young LLP,EY, the Audit Committee will reconsider the appointment. Arrow expects that representatives of Ernst & Young LLPEY will be present at the Annual Meeting with the opportunity to make a statement if they desire to do so and that they will be available to answer appropriate inquiries raised at the Annual Meeting.inquiries. Receipt of a majority of votes cast is required to approve this proposal. For purposes of determining the number of votes cast with respect to Proposal 2, only those votes cast “FOR” or “AGAINST” are included. Abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the Annual Meeting. Because Proposal 2 is considered a “routine” proposal under NYSE rules, no broker non-votes are expected on this proposal. As required by its charter, the Audit Committee annually reviews the qualifications, performance, and independence of EY in determining whether to retain EY or engage another independent registered public accounting firm as our Company’s independent auditor. As part of that review, the Audit Committee considers, among other things: | > | The quality and efficiency of the current and historical services provided by EY; |
| > | EY’s capability and expertise in handling the breadth and complexity of our Company’s global operations; |
| > | The quality and candor of EY’s communications with the Audit Committee; |
| > | EY’s reputation for integrity and competence in the fields of accounting and auditing; |
| > | EY’s independence from our Company, including EY’s rigorous process for monitoring and maintaining independence and partner rotations, and Arrow’s own evaluation of EY’s independence and our pre-approval policies and controls; |
| > | The appropriateness of EY’s fees; and |
| > | EY’s tenure as our Company’s independent accountants, including the benefits of having a long-tenured auditor. |
Benefits of Long-tenured Auditor | > | Higher audit quality – Through more than 48 years of experience with our Company, EY has gained deep institutional knowledge of and expertise regarding Arrow’s global operations and businesses, accounting policies and practices, and internal control over financial reporting. |
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| > | Competitive fee structure – EY’s aggregate fees are competitive with peer companies, in part because of EY’s efficiencies and familiarity with our Company. |
| > | Avoids costs associated with a new independent accountant – Onboarding a new independent accountant is costly and requires a significant time commitment that could distract from management’s focus on financial reporting and controls. |
Based on this evaluation, the Audit Committee believes that EY is independent and well-qualified to serve as our Company’s independent registered public accounting firm. Further, the Audit Committee and the Board believe it is in the best interests of Arrow and our Company’s shareholders to retain EY as our Company’s independent registered public accounting firm for fiscal 2024. |
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PROPOSAL 3: ADVISORY VOTE ON
TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT. As required by SEC rules,In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Board is asking shareholders to approve the following advisory resolution at the 2021 Annual Meeting:
“RESOLVED that the shareholders of the Company approve, on an advisory basis, the compensation of the Company’s Named Executive Officers disclosed in the Compensation Discussion and Analysis,CD&A, the Summary Compensation Table and the related tables, notes, and narrative in the Proxy Statement for the Company’s 2021 Annual Meeting.”
The Company holds a say-on-pay vote every year. Although the vote is not binding, the Compensation Committee values the opinions expressed by the Company’s shareholders and will carefully consider the outcome of the vote when making future compensation decisions for the Company’s NEOs.
Receipt of a majority of the votes cast is required to approve this proposal. For purposes of determining the number of votes cast with respect to Proposal 3, only those votes cast “FOR” or “AGAINST” are included. Abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the Annual Meeting.
The Company asks that you review in detail the disclosuredisclosures contained in this Proxy Statement regarding compensation of the Company’s NEOs (including the Company’s Compensation Discussion and Analysis,CD&A), the compensation tables, and the narrative disclosures that accompany such tables) and indicate your support for the compensation of the Company’s NEOs that is described in this Proxy Statement. In accordance with the advisory vote cast by shareholders at the annual meeting of shareholders held in 2023, the Board determined that we will hold this advisory vote to approve the compensation paid to the Company’s NEOs every year until the next required frequency vote is held. Accordingly, it is expected that the next say - on - pay vote following the Annual Meeting will occur at the 2025 annual meeting of shareholders. | | | | 36 42
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REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION DISCUSSION AND ANALYSIS EXECUTIVE COMPENSATION The substantive discussion of the material elements of all of the Company’s executive compensation programs and the determinations by the Compensation Committee with respect to compensation and executive performance for 2020 are contained in theThis Compensation Discussion and Analysis that follows below. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with the management representatives responsible for its preparation and the Compensation Committee’s advisors. In reliance on these reviews and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the definitive Proxy Statement on Schedule 14A for Arrow’s 2021 Annual Meeting for filing with the SEC and be incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Steven H. Gunby, Chair
Richard S. Hill
Barry W. Perry
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A LETTER FROM THE COMPENSATION COMMITTEE
Dear Fellow Shareholders,
Arrow has always maintained open communications with the shareholder community. Seeking feedback from our shareholders on a regular basis is a critical part of our approach to managing our executive compensation program. After an unexpected decline in our historically strong say-on-pay results at our 2020 Annual Meeting, we expanded our shareholder outreach efforts, reaching out to investors representing 75% of our shareholder base and engaging with investors owning approximately 54% of our shares outstanding. Mr. Gunby, the Chair of the Compensation Committee, was a key participant in all the discussions along with key members of senior management.
From the feedback, we learned that our shareholders continue to broadly support the philosophy, objectives, and design of our executive compensation program. They also provided us with important perspectives on potential refinements to our program and disclosures, many of which have been implemented and are described in further detail on the following pages of the Compensation Discussion & Analysis (“CD&A”).
Our CD&A also shares how the global COVID-19 pandemic impacted our performance and compensation decisions, which included a cap on 2020 annual incentive awards for our NEOs. Our priorities during this time have been keeping our employees and their families safe and our customers operational, while continuing to protect the long-term interests of our shareholders. The structure of our executive compensation program, despite the unprecedented and unpredictable market conditions, proved to support these priorities.
We are proud of Arrow’s efforts and continued commitment to our guiding principles in the face of tremendous challenges and appreciative of the ongoing support and insights we receive from our investor community. We thank you for continuing to include Arrow in your portfolio and look forward to what’s ahead.
Steven H. Gunby, Chair
Richard S. Hill
Barry W. Perry
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COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE COMPENSATION
This CD&A explains the executive compensation program for the Company’s NEOsNamed Executive Officers (“NEOs”) listed below. The CD&A also describes how the Compensation Committee’s process for making pay decisions, as well as its rationale for specific decisions related to fiscal 2020.Committee determined 2023 executive compensation, the elements of our executive compensation program, and the compensation of each of our NEOs.
| | Named Executive Officers | Name | | Title | MichaelSean J. LongKerins
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| Chairman, President and Chief Executive Officer
| Christopher D. StansburyRajesh K. Agrawal
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| Senior Vice President, Chief Financial Officer | Sean J. Kerins (1)
| | Chief Operating Officer
| Andrew D. King (2)
| | President, Global Components
| Gretchen K. Zech | | Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer | Kristin D. Russell | | President, Enterprise Computing Solutions | Carine L. Jean-Claude |
| Senior Vice President, Chief Legal Officer and Secretary | Michael J. Long (1) |
| Former Executive Chair | Kirk D. Schell (2) | | Former President, Global Components |
| (1) | Mr. Kerins was named Chief Operating Officer ofLong concluded his term as Executive Chair following the Company2023 annual shareholder meeting and remained as a non-executive employee assisting on December 28, 2020.transition matters until July 5, 2023. |
| (2) | Effective December 31, 2020, Mr. King retired from the position of President, Global Components and was no longerSchell ceased being an executive officer.officer of the Company effective August 16, 2023, and left the Company effective August 31, 2023. |
EXECUTIVE SUMMARY 20202023 Business Strategy and Performance Highlights
Arrow guides innovation forward by driving demand and expanding addressable markets for itsour suppliers and customers via our technology-centric focus, go-to-market expertise, and supply chain services capabilities. We enable our suppliers to distribute their technologies and help our customers to source, build upon, and leverage these technologies to grow their businesses and enhance their overall competitiveness. We are a trusted partner in the areas of industrial automation, edge computing, cloud computing, smarta complex value chain, and connected devices, homes, cities, and transportation. Our strategy to be the foremost technology solutions provider positions us well to take advantage of these opportunities. Through a network of more than 300 locations serving over 85 countries, the Company aggregates disparate sources ofwe believe that we are uniquely positioned through our electronics components infrastructure software, and IT hardwarecontent portfolios to increasingly provide completeincrease value for stakeholders. |
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Financial Performance Results Following a record year in 2022, Arrow experienced a market environment of excess inventory throughout the supply chain in 2023 leading to softer demand in our components business and a mixed IT-spending environment for our enterprise computing solutions forbusiness. Despite this backdrop, we executed well and remain optimistic that longer-term technology trends will benefit Arrow. Throughout the year, Arrow helped customers on behalf of its suppliers. Our goal is to leave no segments of the market underserved in terms of thenavigate supply chain challenges so they could optimize their production schedules, bring new electronic products offered and services provided. We aim to accelerate our customers’ time to market, assure secure and consistent supply chains,securely manage their applications and drive growth on behalf of our suppliers. Responsedata as they transitioned to COVID-19
During 2020, the COVID-19 pandemic presented significant challenges for Arrow’s business; however, the resiliency of our business modelan IT as-a-service model. In doing so, Arrow deepened customer and dedicated employees allowed us to produce strongsupplier relationships and solidified its position as a trusted partner. 2023 financial results and further strengthen our position as the world’s leading enabler of technologies and solutions. As a global company doing business in more than 85 countries, and with the Asia Pacific region contributing more than 30% of Company sales, under the leadership of our NEOs, the Company was early to recognize the breadth and severity of the pandemic. Despite significant restrictions on business activities, the essential use of electronic components and information technology solutions provided a level of consistent demand for products and solutions. The diversity of the Company’s products and solutions, with no overreliance on any particular technology, and the size and diversity of the Company’s customer base, with no one customer contributing more than 2% of 2020 sales, and no significant customer concentration by industry, were significant contributors to the Company’s stability and success. In fact, Arrow was a key enabler of work-from-home information technology deployments by providing the software and hardware needed to allow applications to be utilizedinclude:
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remotely in a secure manner. Through the contributions and commitment of our entire workforce to keep safe while staying focused on driving operations, we successfully managed through 2020 without the need for Company-wide pay cuts or job reductions.
Financial Performance Achievements
Business conditions were extremely challenging this year and global components customers in all regions faced restrictions on their operations and uncertainty in terms of securing supply of the electronic components they need to manufacture their products. Our commitment to solving customers’ engineering, design, and supply chain needs minimized disruptions and allowed for continuous production. This, in turn, helped us deliver record cash provided by operating activities of $1.36 billion for the year and to produce stable sales and Earnings Per Share (“EPS”) results.
2020 financial highlights include:
> | Sales totaled $28.7$33.1 billion for theyear, EPS on a diluted basis totaled $7.43 |
>down 11% from 2022 | Reduced debt by $715 | 
| $750 M Returned approximately $750 million |
> | Returned record excess in cash to shareholders by repurchasing 6.4approximately 6.1 million shares of common stock for approximately $475 million reducing shares outstanding by 7% |
> | Organic investments, strong execution and financial discipline resulted in 5.7% three-year Relative EPS Growth(1); this growth was fourth highest | | 
| $4.1 b Gross profit of the six companies among Arrow and its Peer Group$4.1 billion, down 14% from 2022 | | 
| $1.5 B Operating income of $1.5 billion, down 29% from 2022 |
> | Three-year average Return on Invested Capital (“ROIC”)(1) was 2.32 percentage points above the three-year Weighted Average Cost of Capital (“WACC”) |
> | Total Shareholder Return (“TSR”) for the five-year period was 80% compared to 57% for the Peer Group and 79% for the S&P 400 Midcap Stock Index |
By remaining nimble and flexible during the year, the Company is positioned for future reacceleration and improved profitability performance.
(1) | See the Appendix at the end of this Proxy Statement for the details of the three-year average return on invested capital and three-year relative EPS growth calculations. |
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Earnings per share (“EPS”) on a diluted basis of $15.84, down 27% from 2022 |
Strategic Performance Results We believe that our investments in key strategic growth areas create opportunities for long-term shareholder value for the Company and further enhance Arrow’s value proposition in helping customers create and manage their products. Key strategic performance highlights in 2023 include: | > | In demand creation, we added engineering resources throughout 2023, which helped demand creation revenue outpace the rest of the portfolio; |
| > | Our engineering services have been gaining traction across attractive verticals such as renewable energy, automotive, and medical devices. As a result, full-year engineering services revenue grew meaningfully; |
| > | In supply chain services, we expanded our customer base in 2023 with further penetration in the data center and automotive verticals. Looking ahead, we see additional opportunities to extend this offering to other verticals and original equipment manufacturers; |
| > | We’ve maintained our differentiated focus on interconnects, passives, and electromechanical components, a margin accretive growth area within our components business; and |
| > | In our ECS business, over the course of the year, we enhanced our digital distribution platform, ArrowSphere, while onboarding new channel partners and supplier lines, demonstrating our commitment to the market’s transition to IT-as-a-Service. |
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Strategic Performance Achievements
Our NEOs’ investments in key strategic growth areas point to a bright future for the Company, and are helping customers create, make, and manage their products at unprecedented scale.
Key strategic performance highlights in 2020 include:
> | Served over 180,000 customers and no customer contributed more than 2% of sales |
> | Entered into several significant new distribution agreements intended to help the Company maintain its leadership position in the electronic component and information technology solutions markets |
Our NEOs’ investments in people and software tools have enabled us to quickly adjust to industry corrections and economic conditions, while remaining laser-focused on the opportunities that will enhance long-term value for our stakeholders.
Board Response to Shareholder Feedback on 2020and 2023 Say-On-Pay
We regularly engage with our shareholders to listen tohear their views on business performance, corporate governance, and sustainability. We also consider the input of our shareholders, along with emerging best practices, to ensure alignment with our executive compensation programs. In 2020, our compensation program received the support of 67% of the total votes cast at our Annual Meeting. As a result of this sudden decline in historically strong support (which averaged over 90% in the last five years), we increased the focus and intensity of our regular shareholder engagement activities to better understand investors’ perspectives on our executive compensation program and any concerns that motivated the lower level of support for our 2020 say-on-pay proposal. Between June and November 2020, we reached out to our top 25 shareholders representing collectively more than 75% of our shareholder base. The Chairman of the Compensation Committee,consider their input, along with the CHRO and other key senior management, led 12 meetings with shareholders who collectively held 54% ofemerging best practices each year, as we evaluate our outstanding common stock. We sought to understand the views of investors who voted “FOR”executive compensation program. Our say-on-pay proposal at our 2023 annual shareholder meeting received approximately 93% support, reflecting shareholder confidence in addition to those who voted “AGAINST” to ensure that we had a comprehensive set of perspectives on our approach.
These meetings helped validate that our shareholders continue to be broadly supportive of the overall philosophy objectives, and design of our executive compensation program. They also provided us
In the fall of 2023, we conducted broad shareholder outreach, requesting meetings with important perspectives on how to improve35 shareholders representing approximately 72% of shares then outstanding, and better explainengaging in meetings with shareholders representing approximately 17% of shares then outstanding. Our independent Board Chair, Steve Gunby, participated in meetings with shareholders representing approximately 11% of shares then outstanding. Shareholder engagement acceptance was lower than in prior years, with shareholders representing an additional 27% of our program as we continue to move forward. Based onthen-shareholder base declining an engagement meeting and noting that they were satisfied with Arrow’s profile. 
During these learnings, we made meaningful modifications to ourengagements, shareholders expressed their continued support for Arrow’s executive compensation program, effectivenoting appreciation for fiscal 2020the pay-for-performance alignment. We emphasized that Arrow’s executive compensation program did not change year over year and 2021, as summarized below.conveyed that the Compensation Committee’s objective is to maintain a program that advances the Company’s strategy and is aligned with shareholders’ interests. Additionally, shareholders were interested in understanding the Committee’s approach to setting executive targets and evaluating performance in a more cyclical business, and given the macroeconomic environment, we have enhanced the disclosure related to 2023 in the CD&A. As a result of shareholder feedback, we enhanced our disclosure regarding PSU performance metrics in the year of the award (see chart “Performance Metrics for 2023 PSU Grants” under subheading “Long-Term Incentive Awards” section later in this CD&A). Effective Date of Changes Implemented
| What We Heard
| What We Did
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2020
| Clarify use of special, one-time equity award
| >
The Compensation Committee evaluated this feedback, agrees with shareholders that one-time awards should be used sparingly for strategic hires, and will very carefully scrutinize any special award recommendations before approving any onboarding or other such awards in the future
>
No one-time awards were granted in 2020
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Effective Date of Changes Implemented
| What We Heard
| What We Did
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| Review and expand our Peer Group, understanding the challenges that we face in identifying peers given recent consolidation in our industry
| >
Retained Pearl Meyer to conduct a thorough analysis of our Peer Group, with the goal of expanding our Peer Group
>
Expanded the compensation Peer Group for fiscal 2021 to a total of nine companies (see “The Role of Peer Companies – 2021 Peer Group” on page 55)
| 2020
| Adopt a clawback policy
| >
Implemented a clawback policy for incentive pay that provides for the recoupment of certain executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws or in the event an executive has been involved in any misconduct
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| Strengthen the anti-hedging and anti-pledging policy
| >
Eliminated the ability of the Company’s Chief Legal Officer to pre-approve exceptions to the policy (this discretion had never been used previously)
| 2021
| Further clarify the performance metrics in the incentive plans, including rationale for utilizing two different approaches to EPS as a metric for annual cash and long-term incentives
| >
Enhanced disclosure in the CD&A that summarizes the performance metrics and their rationale for inclusion in the incentive plans see “2020 Executive Compensation Program At-A-Glance – Incentive Plans: A Closer Look at the Performance Metrics” (page 44)
| | Consider eliminating stock options from the executive compensation program
| >
Eliminated stock option awards and rebalanced the mix of equity grants in our Long-Term Incentive Program (“LTIP”) to 50% Performance Stock Units (“PSUs”) and 50% Restricted Stock Units (“RSUs”)
| | Consider restricting payout of PSUs if three-year average ROIC does not exceed WACC
| >
Revised the design of the PSUs starting in 2021 so that no payout can be earned in an event that three-year ROIC does not exceed WACC
>
The Compensation Committee continues to have the authority to review ROIC versus WACC results and apply negative discretion to align pay for performance outcomes, if necessary
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20202023 Executive Compensation Program At-A-Glance
Our executive compensation program emphasizes performance-based compensation and is tieddesigned to tie directly to the drivers of value creation for the Company’s shareholders, as summarized below.
Key Elements | Pay Element | Key Elements for Fiscal 2020
| | Form | Performance Metric | Base Salary | Cash None of the NEOs received base salary increases for fiscal 2020
| > Base salary is set at market competitivemarket-competitive levels and does not have an additional performance metric | Annual Cash Incentives | Cash Given COVID-19 uncertainty, overall award was capped at 100% for 2020
| > 30% Strategic Sales Growth Goals | LTIP | 50%- PSUs | > 60% three-year Relative EPS Growth(1) > 40% three-year average Average Return on Invested Capital (“ROIC”) minus the Weighted Average Cost of Capital (“WACC”)(1) | | 25%50%- RSUs
| | | 25%- Stock Options*
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* Stock options have been eliminated from the LTIP equity mix effective fiscal year 2021.
| (1) | | |
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Represents a non-GAAP measure; for further detail and reconciliation to the closest GAAP measure, refer to the Appendix to this Proxy Statement. |
Incentive Plans: A Closer Look at the Performance Metrics The Compensation Committee discusses metric selection on a regular basis.regularly. The focus of our annual and long-term incentive plansincentives is achieving profitable growth and driving long-term shareholder value creation by supporting the following key objectives: | > | To generate EPS growth in excess of our competitors’ EPS growth and market expectations; |
| > | To grow EPS at a rate that provides the capital necessary to support the Company’s business strategy; and |
| > | To focus on strategic goals that will differentiate Company performance over time; and |
| > | To allocate and deploy capital effectively so that ROIC exceeds the Company’s cost of capital.WACC. |
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As such, we use a carefully balanced mix of quantifiable absolute and relative financial, metrics, and strategic, and operational metrics across our incentive plans ─ with a heavier emphasis on EPS because of its strong alignment with shareholder value. Recognizing that EPS is used as a metric in both the annual and long-term incentives, the Compensation Committee balances EPS with other metrics designed to shareholders. However,support the Company’s business strategy and align with shareholder interests. In addition, the way EPS is measured and balanced with other performance metrics in order to support our goals works differently under each of the incentive plans, as outlined below: | | Annual Cash Incentives | LTIPLong Term Incentives
| Absolute EPS Weighted 70% > Defined as a pre-determined range of Company performance targets for the fiscal year > Driven by specific Company initiatives designed to improve financial performance results > Easily understood by stakeholderstakeholders Strategic Goals: Focus on GrowthGoals Weighted 30% > Places focus on business segmentsgoals that are critical to our strategic growth > For 2023, underscores our commitment to managing our environmental and sustainability objectivessocial impacts in operations and measured against: o For 2020, measured against 10-15% sales growth targets for these business segmentsEnvironmental Strategy: reduction of Scope 1 and 2 emissions of Arrow’s EMEA fleet and at specified facilities
o Human Capital Strategy – diversity and equality measures: goals linked to the Company’s diversity and inclusion principles > Are dynamic and expected to change on an annual basis depending on the relevant business priorities for the performance year o The Compensation Committee determines specific, measurable targets that are aligned with expected market growththe Company’s strategy > Provides balance to Absolute EPS | Three-Year Relative EPS Growth Weighted 60% > Defined as Arrow’s three-year EPS growth as compared to the EPS growth of Arrow’s Peer Group > Holds management accountable to outperform peers over the performance period > CreatesSupports the creation of long-term shareholder value
Operational Metrics: Focus on Efficiency Weighted 40% > Measures performance based on Arrow’s three-yearthree-year average ROIC in excess of its three-yearthree-year WACC > Helps mitigate variance from economic cycles, which market-based metrics would introduce > Incentivizes prudent use of capital and rewards value creation Threshold Trigger: Net Income Vesting contingent upon a net incomeNet Income threshold of greater than zero |
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WHAT GUIDES OUR PROGRAM As a large global provider of technology solutions operating in a highly competitive market, we view our people as critical assets and key drivers of our success. The executive compensation program is designed to attract, retain, and motivate talented executives who are capable of successfully leading the Company’s complex global operations and creating shareholder value. The program is structured to support Arrow’s strategic goals and reinforce high performance with a clear emphasis on accountability and performance-based pay for achievement ofachieving established targets. As such, a significant portion of TDCtotal direct compensation (“TDC”) is directly linked to the Company’s short- and long-term performance in the form of cash and equity-based incentive awards. This providesallows executives with an opportunity to earn above median | | | | 44
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above-median compensation if the Company delivers desired results orin excess of performance targets and below - median compensation when performance targets are not achieved. The portion of pay tied to performance is consistent with Arrow’s executive compensation philosophy and market practices. The Principal Elements of Pay The Company’s compensation philosophy is supported by the following principal elements of pay:pay support the Company’s compensation philosophy: | | | Pay Element | Form | What It Does | Base Salary | Cash
(Fixed) | Provides a competitive rate relative to comparable jobs at similar companies and enables the Company to attract and retain critical executive talent. | Annual Cash Incentive AwardsAward | Cash
(Variable) | Rewards individuals for performance if they attain pre-established financial and strategic targets that are set by the Compensation Committee at the beginning of the year. | Long-Term Incentive AwardsAward | Equity
(Variable) | Promotes a balanced focus on driving performance, retaining talent, and aligning the interests of the Company’s executives with those of its shareholders. |
Target Total Direct Compensation Pay Mix The charts below show the target TDC of the Company’s CEO and the other NEOs foractive at the end of fiscal 2020.2023. Annual and long-term incentives play a significant role in the executives’NEOs’ overall compensation at Arrow. TheyWe believe that annual and long-term incentives are essential to linking pay to performance, aligning compensation with organizational strategies and financial goals, and rewarding executives for the creation of shareholder value. For fiscal 2020,2023, in the aggregate, 82%81% of the NEOs’ target TDC was variableat risk and tied to corporate performance, measured by Absolute EPS, ROIC, WACC, and strategic sales growthESG goals (87%(86% for the Company’s CEO and an average of 77%78% for the other continuing NEOs). 48 |
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The following charts reflect the weighted average distribution of the elements of the CEO’s and remainingother NEOs’ target TDC based on grant date values. Target Total Direct Compensation 
Note: The “Other NEOs” chart excludes Messrs. Long and Schell as they were not executive officers of the Company at year-end. | | |
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Best Compensation Practices and Policies | | | | What We Do | What We Do Not Do | √ | Heavy emphasis on variable compensation | × | No guaranteed salary increases or incentive guarantees | √ | Balance of annual and long-term compensation to discourage short-term risk-takingat the expense of long-term results | × | No employment contracts containing multi-year guarantees for salary increases, non-performance-based bonuses, or equity compensation | √ | All long-term stock unit incentives vest based on performance | × | No “single trigger” change in control cash payments | √
| Clawback policy covering cash and or equity incentive compensation
| ×
| No tax gross-ups on equity compensationvesting
| √ | Rigorous stock ownership guidelines | × | No option backdating or repricingincentive plan payouts without justifiable performance linkage | √ | IndependentMeaningful quantitative goals for performance-based annual and long-term compensation consultant
| × | No hedgingoption backdating, repricing, or pledgingcash-out of underwater options | √ | Clawback policies covering cash and equity incentive compensation | × | No dividends or dividend equivalents paid on unvested PSUs or RSUs | √ | Annual compensation risk assessmentssay-on-pay advisory vote | × | No discretionary incentivesgolden parachute tax gross-ups | √ | Quantitative strategic goals in annual cash incentive plan | × | No speculative trading, hedging on derivative transactions, or pledging of Company stock | √ | Limited perquisites | × | No tax reimbursements on executive perquisites | √ | Annual market comparison of executive compensation against a relevant peer group | × | No stock options granted with an exercise price at less than fair market value |
THE 20202023 EXECUTIVE COMPENSATION PROGRAM IN DETAIL This sectionpart of the CD&A provides details about the three principal elements of pay — base salary, annual cash incentive awards, and long-term incentive awards. Arrow’s pay-for-performance focusculture is evident indemonstrated by the substantially greater weight given to incentive-based compensation compared to fixed compensation. Base Salary | | Pay Element | 2020
| | Form | Performance Metric | Base Salary | Cash None of the NEOs received base salary increases for fiscal 2020
| > Base salary is set at market competitivemarket-competitive levels and does not have an additionalconsiders individual and Company performance, metricamong other factors |
In making base salary decisions for the NEOs other than the CEO, the Compensation Committee considers its independent compensation consultant’s guidance, the CEO’s recommendations, each NEO’s position and its importance to the success of the Company, the NEO’s level of responsibility within the Company, as well as a number of other factors, including: | > | Individualindividual performance; |
| > | Company or business unit performance; |
| > | Jobjob responsibilities; |
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| > | Relevantrelevant benchmarking data, which includes Peer Group and third-party general industry survey data. |
Subject to ratification by the Board, the CEO’s base salary is determined by the Compensation Committee in executive session based on its evaluation of the CEO’s individual performance, the Company’s performance, and relevant benchmarking data. | | | | 46
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The Compensation Committee, inIn consultation with its independent compensation consultant, the Compensation Committee met in December 20192022 to conduct its annual review of base salaries and determineddetermine the appropriate annual2023 base salary rate for each then current NEO. As a result of its review, the Compensation Committee approved a 13% increase to Ms. Jean-Claude’s base salary, effective January 1, 2023, based on individual performance, time in the role, and relevant benchmarking data. None of the other NEOs received base salary increases foradjustments.
The table below provides an overview of the base salaries of the NEOs as of the fiscal 2020, as shownyear end (or, in the table below:case of Messrs. Long and Schell, as of their departure dates): | | | | | | | | | Name | | 2022 | | 2023 | | % Change | Sean J. Kerins | | $ | 1,000,000 | | $ | 1,000,000 | | 0% | Rajesh K. Agrawal | | $ | 700,000 | | $ | 700,000 | | 0% | Gretchen K. Zech | | $ | 675,000 | | $ | 675,000 | | 0% | Kristin D. Russell | | $ | 550,000 | | $ | 550,000 | | 0% | Carine L. Jean-Claude (1) | | $ | 400,000 | | $ | 450,000 | | 13% | Michael J. Long | | $ | 1,000,000 | | $ | 1,000,000 | | 0% | Kirk D. Schell | | $ | 500,000 | | $ | 500,000 | | 0% |
| (1) | Ms. Jean-Claude received a 13% increase effective January 1, 2023, as a result of the Compensation Committee's annual review, as described above. |
| | | | | | | | | | | | | | | | | | Name | | 2019 | | 2020 | | % Change | Michael J. Long | | $ | 1,320,000 | | $ | 1,320,000 | | 0% | Christopher D. Stansbury | | $ | 700,000 | | $ | 700,000 | | 0% | Sean J. Kerins | | $ | 650,000 | | $ | 650,000 | | 0% | Andrew D. King | | $ | 650,000 | | $ | 650,000 | | 0% | Gretchen K. Zech | | $ | 500,000 | | $ | 500,000 | | 0% |
Annual Cash Incentives | | | Pay Element | 2020
| | Form | Performance Metric | Annual Cash Incentives | Cash Given COVID-19 uncertainty, overall award is capped at 100%
| > 30% Strategic Sales Growth Goals |
The Company’s annual cash incentives awarded under the Management Incentive Compensation Plan (“MICP”), are designed to reward individuals for performance against pre-establishedpre - established metrics set by the Compensation Committee at the beginning of the year. Each NEO is assigned an annual cash incentive target established based uponon the NEO’s level of responsibility, ability to impact overall results, and marketrelevant benchmarking data. Actual annual cash incentive awards may be higher or lower than the market since awards are based on results against establishedpre-established performance metrics and can range from 0% to 170% of the annual cash incentive target. |
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In consultation with its independent compensation consultant, the Compensation Committee met in December 2022 to conduct its annual review of annual cash incentives and determine the 2023 annual cash incentives for each NEO. As a result of its review and commensurate with the adjustment to her base salary, the Compensation Committee approved a 13% increase to Ms. Jean-Claude’s annual cash incentive target, effective January 1, 2023, based on individual performance, time in the role, and relevant benchmarking data. There were no other changes to annual cash incentive targets. The table below provides a summary of the annual cash incentive targets for each NEO for fiscal 2022 and 2023: | | | | | | | | | Name | | 2022 | | 2023 | | % Change | Sean J. Kerins | | $ | 2,000,000 | | $ | 2,000,000 | | 0% | Rajesh K. Agrawal | | $ | 700,000 | | $ | 700,000 | | 0% | Gretchen K. Zech | | $ | 675,000 | | $ | 675,000 | | 0% | Kristin D. Russell | | $ | 550,000 | | $ | 550,000 | | 0% | Carine L. Jean-Claude (1) | | $ | 400,000 | | $ | 450,000 | | 13% | Michael J. Long (2) | | $ | 2,000,000 | | $ | 2,000,000 | | 0% | Kirk D. Schell | | $ | 500,000 | | $ | 500,000 | | 0% |
| (1) | Ms. Jean-Claude’s annual cash incentive target increased effective January 1, 2023, as a result of the Compensation Committee’s annual review, as described above. |
| (2) | Mr. Long’s annual cash incentive target above represents his opportunity at the beginning of 2023. His actual payout was prorated for his period of service from January 1, 2023 to July 5, 2023 and determined based on the Company’s achievement of the relevant performance goals. |
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| 2020 MICP Performance Goals and Results
For fiscal 2020, the annual cash incentive for each of the NEOs was based on a combination of financial and strategic goals weighted at 70% and 30% respectively. Given the uncertainty due to COVID- 19 when goals were approved, the Compensation Committee chose to set realistic-at-the-time performance goals but capped the overall annual cash incentive award at 100%, in the event the Company’s ability to withstand the turbulence greatly exceeded expectations or the return to normalcy occurred sooner than expected.
The 2020 annual cash incentive metrics and results against the targets of those metrics are summarized below.PROXY STATEMENT
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2023 Annual Cash Incentive Performance Goals and Results For fiscal 2023, the annual cash incentive for each of the NEOs was based on a combination of financial and strategic goals weighted at 70% and 30%, respectively. The 2023 annual cash incentive metrics and results against the targets of those metrics are summarized below. 
Financial Goals. Each NEO can earn between 0% and 200% of the target award linked to our financial goals based on actual performance against annual financial targets. For 2020, the financial performance metric was Absolute EPS. The Compensation Committee selected Absolute EPS to reinforce the Company’s overall profit objectives based on the rationale that Absolute EPS is a primary driver of shareholder value.value creation. The 2020Coming off a record performance year in 2022, the 2023 Absolute EPS target setting process was informed by the likelihood of substantial disruption frommacroeconomic indicators and market forecasts for a global recessionary environment impacting Arrow’s business at the COVID-19 pandemic to the business. time, including:
| ● | general market conditions in the Asia region; |
| ● | IT spend softness in North America; |
| ● | industry concerns about supply chain normalization resulting in elevated customer inventory levels; |
| ● | declines in the shortage market from its peak; |
| ● | rising geo-political tensions; and |
The Compensation Committee had direct knowledge of the potential significant economic consequences thatdisruption such factors could be caused globally by shutdowns and other efforts to moderate the spread of the virus due to the fact thathave on the Company does a substantial amount of business in the Asia region, 33% of | | |
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2020 sales, with China as the biggest contributor. To help provide guidance as to the extent of the impact to the business, the Compensation Committee reviewed past sales and earnings declines from prior exogenous events such as the financial crisis of 2008-2009 and the technology market correction from 2000-2001. While these prior events helped inform projections, there was no way to accurately predict the ultimate impact of the pandemicbased on the Company’s business. Given this uncertainty, the Compensation Committee set target EPS at $5.23 which was selected as a rigorous goal in the context of the uncertain macroeconomic environment resulting from the COVID-19 pandemic. As the impacts from virus-related lockdowns spread globally, the Compensation Committee was concerned about the potential for a major economic recession and market correction in the demand for electronic components and information technology solutions.similar historical cyclical downturns. With these factorsconsiderations in mind, the Compensation Committee set athe 2023 Absolute EPS target for 2020 profitability that was approximately one-third17% below the prior year earnings per share.prior-year Absolute EPS results. This reduction was similar in relative size to the profit reductionsdecline that occurred during the global financial crisisrecent semiconductor market slowdown in the 2008-2009 timeframe, and the technology market collapse in the 2000- 2001 timeframe. In light of these uncertainties, at the time2019. While the target was approved,set below prior-year actuals, it was aligned with the annual business plan and set well ahead of market expectations at that time, reflecting the Compensation Committee’s commitment to setting challenging performance goals. The Compensation Committee capped payouts underbelieved that the annual cash incentive program at 100% for 2020.targets were rigorous and would appropriately incentivize our executives.
At the end of the performance period, the actual Absolute EPS result declined 26% relative to the prior year, confirming the difficult market environment anticipated by the Compensation Committee when setting 2023 targets. The Compensation Committee evaluated the resulting payachievement outcomes, which were below target and concludeddetermined that the financial goals had appropriately aligned incentives with the actual performance of the companyCompany and the leadership team in a challenging market environment.environment and concluded that pay and performance were reasonably aligned. | | | | | | | | | Performance Range | | | | | (% of Target Payout) | | Payout | | | Threshold | Target | Maximum | Actual | as a % of | Metric | Weighting | (25%) | (100%) | (200%) | Result | Target | Arrow EPS | 70% | $3.92 | $5.23 | $6.54 | $7.92 | 200% |
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| | | | | | | | | | | Performance Range | | | | | | (% of Target Payout) | | Payout | | | | Threshold | Target | Maximum | Actual | as a % of | Metric | | Weighting | (25%) | (100%) | (200%) | Result | Target | Absolute EPS | | 70.0% | $14.41 | $19.21 | $24.01 | $17.06 | 66.41% |
Note: Payouts are linearly interpolated for performance between threshold and maximum. For performance below threshold, there is no payout earned. Strategic Sales Growth Goals. Each NEO can earn between 0% and 100% of the target award for these metrics based on actual performance against the annual strategic sales growth goals. Strategic metrics and goals are intended to be dynamic and expected to change on an annual basisannually depending on the relevant business priorities for the performance year. TheEach year, the Compensation Committee then determines specific measurable targetsperformance objectives that are aligned with expected market growth. For 2020, performance on strategic goals was measured against 10-15% sales growth targets for business segments that are criticaldesigned to the Company’s growthbe rigorous and sustainability objectives. The Compensation Committee agreed with Management’s assessment that the highest near-term priority forsupport the long-term success of the Company in 2020Company’s strategy.
We believe our ESG strategy and achievements can enhance the long-term sustainability and financial performance of our Company. To demonstrate Arrow’s commitment to the importance of these efforts, the Compensation Committee established performance objectives related to carbon emissions reduction and the Company’s diversity and equality measures as components of our executive annual cash incentive plan for 2023. Our environmental strategy goal was to gain greater scalereduce carbon emissions by 5% across Arrow’s EMEA fleet and at ten specified facilities in 2023 (representing 40% of key strategic efforts. These engagements are highly complex with long sales and implementation cycles but deliver much higher than corporate average returns on workingArrow’s square footage). Our human capital investments. These engagements are also likelystrategy goals measured success in our efforts towards fostering a diverse talent pipeline to be long-termgrow diverse representation in nature lasting multiple years. Growth of 10-15% reflected a high level of conversion on these new opportunity pipelines at the beginning of the year and was multiple times higher than any market projection for GDP growth, electronic component sales growth, or IT spending growth, thus were stretch targets to measure performance.Company leadership. | | | | | | | | | | | | | | | Performance Range | | | | | | | | | (% of Target Payout) | | | | Payout | | | | | Threshold | | Target/Maximum | | Actual | | as a % of | Metric | | Weighting | | (75%) | | (100%) | | Result | | Target | Environmental Strategy: | | | | | | | | | | | Reduction of Metric Tons of CO2 Equivalent (1) (2) | | 15.0% | | 0.0% | | -5.0% | | -40.0% | | 100% | Human Capital Strategy - diversity and equality measures: | | | | | | | | | | | Leadership Global: Growth in Gender Representation (1) (3) | | 7.5% | | 0.0 points | | 0.25 points | | -0.73 points | | 0% | Leadership US: Growth in Underrepresented Race/Ethnicity Representation (1) (3) | | 7.5% | | 0.0 points | | 0.25 points | | 0.12 points | | 87% |
| (1) | Payouts are linearly interpolated for performance between threshold and target, with no payout for performance below the threshold and no additional award for achieving above-target performance. |
| (2) | Payout at cut-in is 75% of the incentive target for maintaining the prior year's carbon emissions level; up to 100% of the incentive target for achieving a 5.0% reduction in the metric tons of CO2 equivalent. |
| (3) | Payout at cut-in is 75% of the incentive target for maintaining the prior year's diversity and equality percentages; up to 100% of the incentive target for growing representation of women leaders globally and leaders who are of underrepresented race/ethnicity in the U.S. by 0.25 points. |
| | | | | | | | Performance Range | | | | | (% of Target Payout) | | Payout | | | Threshold | Target/Maximum | Actual | as a % of | Metric | Weighting | (75%) | (100%) | Result | Target | Strategic Sales Growth Goals | 30% | 8-11% | 10-15% | 7-34% | 50% |
Note: Payouts are linearly interpolated for performance between threshold and target. For performance below threshold, there is no payout earned. No additional award is earned for achieving sales growth greater than 15% ─ maximum payout is capped at 100%. Performance on the individual strategic sales growth metrics varied yielding a 50% overall payout as a percentage of target.
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The performance achievement related to our environmental strategy exceeded the maximum performance targets. The performance achievements related to our human capital strategy were below the relevant targets. The Compensation Committee evaluated the resulting formulaic outcomes and determined that the goals had appropriately aligned leadership team incentives with the actual performance of the Company and concluded that pay and performance were reasonably aligned. Award Payouts. The Absolute EPS and strategic ESG goal achievements resulted in an overall award payout of 68.01%, which, under its negative discretion review and determination authority, the Compensation Committee approved. The table below provides a summarysets forth the 2023 annual cash incentive awards paid to each NEO. | | | | | | | | | | | | | | | Target | | | | Strategic | | | | | | | | Annual Cash | | Absolute | | ESG Goals | | Total | | | | | | Incentive | | EPS Payout | | Payout | | Payout | | Total | Name | | ($) | | (70% Weighting) | | (30% Weighting) | | (as % of Target) | | Payout ($) | Sean J. Kerins | | $ | 2,000,000 | | 66.41% | | 71.75% | | 68.01% | | $ | 1,360,200 | Rajesh K. Agrawal | | $ | 700,000 | | 66.41% | | 71.75% | | 68.01% | | $ | 476,070 | Gretchen K. Zech | | $ | 675,000 | | 66.41% | | 71.75% | | 68.01% | | $ | 459,068 | Kristin D. Russell | | $ | 550,000 | | 66.41% | | 71.75% | | 68.01% | | $ | 374,055 | Carine L. Jean-Claude | | $ | 450,000 | | 66.41% | | 71.75% | | 68.01% | | $ | 306,045 | Michael J. Long (1) | | $ | 1,019,200 | | 66.41% | | 71.75% | | 68.01% | | $ | 693,158 | Kirk D. Schell (2) | | $ | 500,000 | | — | | — | | — | | $ | — |
| (1) | Mr. Long’s annual cash incentive award was prorated for his period of service from January 1, 2023 to July 5, 2023 and determined based on the Company’s achievement of the relevant performance goals. In anticipation of his upcoming retirement, the award was approved by the Compensation Committee on May 17, 2023, as an exception to the Management Incentive Compensation Plan’s requirement to be employed by Arrow on the day the annual cash incentive awards are paid. |
| (2) | In connection with his separation, Mr. Schell received a severance payment determined based on the Company’s achievement of the financial targets for the full fiscal year and the strategic performance goals achieved through the date of his separation. Please see “Kirk D. Schell – Separation Benefits” under the heading “2023 Potential Payouts Upon Termination” for a discussion of the compensation payable to Mr. Schell in connection with his separation. |
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Table of the awards earned by each NEO:Contents | | | | | | | | | | | | | | | | | | | | | | | | | | | | Target | | | | Strategic | | | | | | | | | Annual Cash | | Arrow | | Growth Goal | | | | Approved | | Total | | | Incentive | | EPS Payout | | Payout | | Calculated | | Payout (as % | | Approved | Name | | Award ($) | | (70% Weighting) | | (30% Weighting) | | Achievement % | | of Target) | | Payout ($) | Michael J. Long | | 3,180,000 | | 200% | | 50% | | 155% | | 100% | | 3,180,000 | Christopher D. Stansbury | | 700,000 | | 200% | | 50% | | 155% | | 100% | | 700,000 | Sean J. Kerins | | 650,000 | | 200% | | 50% | | 155% | | 100% | | 650,000 | Andrew D. King | | 650,000 | | 200% | | 50% | | 155% | | 100% | | 650,000 | Gretchen K. Zech | | 500,000 | | 200% | | 50% | | 155% | | 100% | | 500,000 |
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Long-Term Incentive Awards Long-term incentive awards (also referred to as “LTIP”) are designed to promote a balanced focus on driving performance, retaining talent, and aligning the interests of the Company’s NEOs with those of its shareholders. Under the LTIP, awards are expressed in dollars and normallyare customarily granted annually. For 2020,2023, the annual LTIP awards for NEOs, other than Mr. Long, included a mix of PSUs, RSUs,Performance Stock Units (“PSUs”) and stock options.RSUs. For Mr. Long, his LTIP award was delivered entirely in the form of RSUs. | | | |
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2020 LTIP Equity Mix
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Form | Performance Metric | Rationale | Detail |
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50% - PSUs | > 60% three-year Relative EPS Growth > 40% three-year average ROIC minus three-year WACC | > Incents and rewards long-term performance Rewards for three-year EPS growth relative to Arrow’s Peer Group Companies, as adjusted for Arrow’s three-year average ROIC in excess of WACC
| > The number of PSUs earned (from 0% to 185% of target number of PSUs granted) is based on the Company’s performance over a three-year period > Vesting isalso contingent upon the Company achieving a non-GAAPon positive net income greater than zero in the fiscal year of the initial grant > PSUs are paid outsettled in shares of Arrow stock at the end of the three-year vesting term if the performance metrics are achieved | 25%50% - RSUs
| > Stock price performance100% contingent on positive net income in the fiscal year of the initial grant
| | > RSUs generally vest in four equal annual installments beginning on the first anniversary of the grant >
Vesting is contingent upon the Company achieving a non-GAAP net income greater than zero in the fiscal year of the initial grant
> RSUs are paid outsettled in shares of Arrow stock when vested | 25% - Stock Options
| | Rewards price appreciation and directly link shareholder value creation with executive compensation outcomes
| >
Stock options vest in four equal annual installments beginning on the first anniversary of the grant
>
Exercise price is determined by using the closing price on date of grant
>
Options expire ten years from grant date
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2023 Target LTIP Award Opportunities The Company’s annual long-term incentives are designed to incentivize and reward individuals for strong performance by the Company based on pre-established metrics set by the Compensation Committee. 56 |
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| | CHANGED FOR 2021
| In response to shareholder feedback, stock options have been eliminated and the mix of equity awards has been rebalanced effective fiscal 2021, as shown in the charts below
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2020 Target LTIP Award Opportunities
The Compensation Committee evaluates the CEO’s performance consideringand also considers prior grant history, the Compensation Committee’s assessment of his contribution, potential contribution, performance during the prior year, peer compensation benchmarking analysis, and the long-term incentive award practices of the Peer Group to determine his annual long-term incentive award.award (which is then ratified by the Board’s independent directors). The Compensation Committee also makes LTIP award decisions for other executives based on the abovementioned factors discussed above and input from the CEO.CEO, and each NEO is assigned an annual long-term incentive target based on the NEO’s level of responsibility, ability to impact overall results, and relevant benchmarking data. These awards are set forth below. For more detail, including the expense to the Company associated with each grant, see the table labeled “2023 Grants of Plan-Based Awards Table.Awards” below. The Compensation Committee generally makesand senior management monitor the Company’s equity grant practices to evaluate whether such policies comply with governing regulations and are consistent with good corporate practices. When making regular annual equity grants, the Compensation Committee’s practice is to approve them at the first regularly scheduled Board meeting of the calendar year. All stock option grants are made with exercise prices equal to the valueyear as part of the Company stock onannual compensation review and after results for the grant date closing pricepreceding fiscal year become available. In addition, the Board or Compensation Committee may make grants at any time during the year it deems appropriate, including with respect to ensure participants derive value only as shareholders realize corresponding gains over an extended time period. None ofnew hires or transitions. We believe that the options granted by the Company, as discussed throughout this Proxy Statement, have been repriced, replaced, or modified in any way since the time of the original grant. The Company’s three-year average burn rate of 0.99%0.61% of weighted average basic common shares outstanding reflects its prudent management of equity shares used under its LTIP. In consultation with its independent compensation consultant, the Compensation Committee met in December 2022 to conduct its annual review of LTIP awards and to determine the 2023 annual LTIP award for each NEO. As a result of its review, the Compensation Committee approved an increase in Mr. Kerins’ LTIP award to reflect his promotion to President and CEO as well as a decrease in Mr. Long’s LTIP award based on his role as Executive Chair, consistent with market and peer practices. In addition, the Compensation Committee approved an 8% and 21% increase to Mses. Russell and Jean-Claude’s annual long-term incentive awards, respectively, effective February 15, 2023, based on individual performance, time in the role, and relevant benchmarking data. The 2020table below provides a summary of the grant-date values of the annual long-term incentive awards for each participating NEO. | | | | | | | | | Name | | 2022 | | 2023 | | % Change | Sean J. Kerins (1) | | $ | 3,500,000 | | $ | 4,000,000 | | 14% | Rajesh K. Agrawal (2) | | $ | n/a | | $ | 2,200,000 | | 0% | Gretchen K. Zech | | $ | 1,500,000 | | $ | 1,500,000 | | 0% | Kristin D. Russell (3) | | $ | 1,200,000 | | $ | 1,300,000 | | 8% | Carine L. Jean-Claude (4) | | $ | 700,000 | | $ | 850,000 | | 21% | Michael J. Long (5) | | $ | 6,000,000 | | $ | 3,000,000 | | -50% | Kirk D. Schell (6) | | $ | n/a | | $ | 1,500,000 | | 0% |
| (1) | For 2023, Mr. Kerins’ award was increased to reflect his promotion to President and CEO consistent with market and peer practices. For 2022, Mr. Kerins’ award value reflects his annual LTIP award on February 16, 2022 and an additional award granted on June 1, 2022 to align his total LTIP award value closer to market and peer practices for his role as President and CEO. |
| (2) | Mr. Agrawal joined the Company on September 6, 2022, and he did not receive an annual long-term incentive award in 2022. |
| (3) | For 2023, Ms. Russell’s annual long-term incentive award increased effective February 15, 2023, as a result of the Compensation Committee’s annual review, as described above. |
| (4) | For 2023, Ms. Jean-Claude’s annual long-term incentive award increased effective February 15, 2023, as a result of the Compensation Committee’s annual review, as described above. |
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| (5) | For 2023, Mr. Long’s award was reduced based on his role as Executive Chair consistent with market and peer practices. |
| (6) | Mr. Schell joined the Company on May 12, 2022, and he did not receive an annual long-term incentive award in 2022. |
The 2023 LTIP awards were granted as follows: | | | | | | | | | | | | | | | | | | | Name | | PSUs | | RSUs | | Stock Options | | PSUs | | RSUs | Sean J. Kerins | | | 16,083 | | 16,082 | Rajesh K. Agrawal | | | 8,845 | | 8,846 | Gretchen K. Zech | | | 6,031 | | 6,031 | Kristin D. Russell | | | 5,227 | | 5,227 | Carine L. Jean-Claude | | | 3,417 | | 3,418 | Michael J. Long | | 56,804 | | 18,395 | | — | | — | | 24,124 | Christopher D. Stansbury | | 10,098 | | 5,050 | | 19,424 | | Sean J. Kerins | | 9,467 | | 4,734 | | 18,211 | | Andrew D. King | | 9,467 | | 4,734 | | 18,211 | | Gretchen K. Zech | | 8,205 | | 4,102 | | 15,785 | | Kirk D. Schell | | | 6,031 | | 6,031 |
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A Closer Look at PSUs: 20202023 Grants The 20202023 PSU awards are tied to Arrow’s three-year (2020-2022)(2023-2025) EPS growth as compared to the EPS growth of Arrow’s Peer Group (see page 52)the “The Role of Peer Companies” section below in this CD&A) and Arrow’s three-yearthree - year average ROIC in excess of its three-year WACC. The calculation of WACC is defined as the sum of the after-tax cost of each capital component times its weight. The Compensation Committee chose these performance metrics and the range of payouts in order to reward participants for successfully balancing profit maximization and the efficient use of capital, both key drivers in creating shareholder value. See below: 
The Compensation Committee established the PSU performance goals to encourage strong, focused performance. Given the economic and market conditions at the time the targets were set, the target payout levels were designed to be challenging but achievable, while payouts at the maximum levels were designed to be stretch goals. 
The three-year Relative EPS Growth metric is weighted at 60%, and the three-year average ROIC minus three- year WACC metric is weighted at 40%. At the end of the performance period, the Compensation Committee reviews the outcome of ROIC compared to WACCthe payout within the context of the Company’s overall performance during the period, including an evaluation of any adjustments to the underlying metrics, and may implement a downward adjustment to the payout if the Compensation Committee concludes that an adjustment would be appropriate to align pay outcomes with performance. 58 |
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Performance Stock Unit Payout Matrix (January 1, 2023 - December 31, 2025) 
| (1) | There will be no payout if ROIC minus WACC is less than zero, except when determined otherwise in the Compensation Committee’s discretion. |
| (2) | The nine companies comprising the Peer Group are Avnet, Inc., CDW Corporation, Celestica Inc., Flex Ltd., Hewlett Packard Enterprise Company, HP Inc., Jabil Inc., TD SYNNEX Corporation, and Wesco International, Inc. |
Provided the Company achieves a non-GAAP net income of greater than zero during the grant year, participants may earn up to 185% of their targeted PSUs based on performance against the pre-established performance goals, subject to the individual’s continued employment through the applicable vesting date and any rights provided under the applicable award agreement, Severance Policy (as defined below), and Participation Agreements (as defined below). Performance Payout for 20182021 PSU Grants (January 1, 2021 – December 31, 2023) The tables below applyThree-year average ROIC in excess of three-year WACC (40%).Results are measured at the end of the three - year performance period against Arrow’s internal target, which was set to 2018 PSU grants.exceed Arrow’s three-year WACC by 1.5% (as shown in the table below) and is based on an enduring value creation standard.
Three-year Relative EPS Growth (60%). Results are measured by the change in Arrow’s EPS during the performance cycle as compared to the companies in the Peer Group and are paid out based on the schedule below: | | | | | | | Performance Range | Actual | Weighted | | Threshold | Target | Maximum | Result | Result | Performance Achievement | Next-to-Last | Median | First | Fourth | | Payout Percentage | 25% | 100% | 175% | 85% | 51% |
Note: Payouts are linearly interpolated for performance between threshold and maximum. For performance below threshold, there is norelative ranking determines the payout earned.
Three-year average ROIC in excessas a percentage of three-year WACC (40%).Results are measured at the end of the three-year performance cycle against Arrow’s internal target which was set to exceed Arrow’s three-year WACC by 1.5% (asas shown in the table below) and is based upon an enduring value creation standard.below.
| | | | | | | Performance Range | Actual | Weighted | | Threshold | Target | Maximum | Result | Result | Performance Achievement | ≥0% | 1.5% | ≥3% | 2.32% | | Payout Percentage | 50% | 100% | 200% | 155% | 62% |
Note: Payouts are linearly interpolated forThe performance between threshold and maximum. For performance below threshold, there is no payout earned.
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Forperiod for the PSUs granted in 2018, the performance period2021 was completed at the end of calendar year 2020, with theJanuary 1, 2021, to December 31, 2023. The payout level was approved by the Compensation Committee in February 2021. During 2020, two of the companies in the 2020 Peer Group ─ Anixter International, Inc. and Tech Data Corporation ─ were acquired. As a result of the acquisitions, sufficient financial data was no longer available, and these companies were subsequently removed from the Peer Group at the end of the performance period. Based on this Peer Group, the2024. The Company determined that its EPS growth ranked fourthfifth among the reporting companies (weighted(a weighted result of 51%60%). The Company’s average ROIC exceeded its WACC by 2.32%7.93% during the same period (weighted(a weighted result of 62%80%). As a result, in February 2021,2024, the 2018-2020 PSUs granted in 2021 vested at 113%140% of target.the target number of PSUs.
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Performance Stock Unit Payout Matrix (January 1, 2021 - December 31, 2023) 
| (1) | There will be no payout if ROIC minus WACC is less than zero, except when determined otherwise in the Compensation Committee’s discretion. |
| (2) | The nine companies comprising the Peer Group are Avnet, Inc., CDW Corporation, Celestica Inc., Flex Ltd., Hewlett Packard Enterprise Company, HP Inc., Jabil Inc., TD SYNNEX Corporation, and Wesco International, Inc. |
Restricted Stock Units Grants of RSUs represent 25%50% of the LTIP value for the participating NEOs and vest in 25% increments on each of the first four anniversaries of the grant date, of grant contingent upon the Company achieving a non-GAAPpositive net income greater than zero duringin the fiscal year of the initial grant year and subject to the individual’s continued employment through the applicable vesting date.date and any rights provided under the applicable award agreement, Severance Policy (as defined below), and Participation Agreements (as defined below). RSUs are intended to provide the NEOs with the economic equivalent of a direct ownership interest in the Company during the vesting period and provide the Company with significant retention security regardless of post-grant share price volatility.security. Stock Options
| | CHANGED FOR 2021
| In response to shareholder feedback, stock options have been eliminated from the LTIP equity mix effective fiscal 2021
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In 2020, stock option grants represented 25% of the LTIP value and will vest in 25% increments on each of the first four anniversaries of the date of grant, subject to the individual’s continued employment through the applicable vesting date. The Company granted stock options to provide the NEOs with a strong incentive to drive long-term stock appreciation for the benefit of the Company’s shareholders. Each stock option grant allows the holder to acquire shares of the Company at a fixed exercise price (Arrow’s closing share price on grant date) over a ten-year term, providing value only to the extent that the Company’s share price appreciates during that period.
THE COMPANY’S DECISION-MAKING PROCESS The Role of the Compensation Committee The Compensation Committee is comprised of independent, non-employee directors of the Board.directors. The Compensation Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. Details of the Compensation Committee’s authority and responsibilities are specified in its charter, a copy of which is available under “Governance Documents” at the “Leadership &and Governance” sub-link of the InvestorsInvestor Relations drop-down menu on investor.arrow.com.investor.arrow.com. The Compensation Committee is responsible for developing and reviewing Arrow’s executive compensation philosophy. It implements that philosophy through compensation programs and plans designed to further Arrow’s strategy, drive long-term profitable growth, and increase shareholder value. The Compensation Committee reviews and approves the corporate goals and objectives relevant to executive compensation and, subject to review and ratification by the other non-employee directors, of the Board, reviews and approves the compensation and benefits for the CEO and the Company’s other NEOs.CEO. In making its decisions, the Compensation Committee reviews the performance of each of the NEOs and the Company as a whole. It considers the compensation of other Company executives, levels of responsibility, prior experience, breadth of knowledge, and job performance, and benchmarking data in reviewing target total compensation levels. 60 |
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The Compensation Committee considers performance reviews prepared by the CEO for his direct reports and conducts its own performance review of the CEO. The Compensation Committee reviews the Company’s | | | | 52
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performance on the metrics relevant to the execution of its strategy and evaluates the CEO’s performance of the CEO in light of that execution. The Compensation Committee evaluates the compensation of the CEO in an executive session without the CEO present, and then the Compensation Committee recommends the CEO’s compensation to the Board for ratification. For NEOs other than the CEO, the Compensation Committee’s review includes input provided by the CEO. The CEO’s compensation is evaluated in executive session without the CEO present. AllCEO; however, all decisions regarding NEO compensation are ultimately made by the Compensation Committee (subject to ratification by the Board in the case of the CEO’s compensation). The Role of Management Compensation Committee meetings are regularly attended by the Company’s CEO, the Chief Governance, Sustainability, and Human Resources Officer, the Chief Financial Officer, and the Chief Legal Officer. Each of the management attendees provides the Compensation Committee with his or her specific expertise and the business and financial context deemed necessary to understand and properly target financial and performance metrics. None of the members of management are present during the Compensation Committee’s deliberations regarding their own compensation, but the Company’s independent compensation consultant, Pearl Meyer, may participate in those discussions. For NEOs other than the CEO, the Compensation Committee considers, among other things, the input provided by the CEO. The Role of the Independent Compensation Consultant The Compensation Committee has selected and engaged Pearl Meyer as its independent compensation consultant to provide the Compensation Committee with expertise on various compensation matters, including competitive practices, market trends, and specific program design. Additionally, Pearl Meyer provides the Compensation Committee with competitive data regarding market compensation levels at the 25th, 50th, and 75th percentiles for total compensation and for each major element of compensation.compensation element. Pearl Meyer reports to the Compensation Committee and, other than advising the Corporate Governance Committee on non-employee director compensation, does not provide any other services to the Company or its management. The Compensation Committee annually assesses thecompensation advisors' independence and any potential conflicts of interest of compensation advisors in accordance with applicable law and New York Stock ExchangeNYSE listing standards. Based on its assessment, the Compensation Committee determined that Pearl Meyer’s services have not raised any conflicts of interests between the Compensation Committee, the Corporate Governance Committee, the Company, or Company management.interest. The Role of Peer Companies | | CHANGED FOR 2021
| Based on shareholder feedback, conducted an in-depth peer group analysis to determine an expanded group of peer companies, which was approved in December 2020
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TheWhile the Compensation Committee believes targeting TDC around the market median is appropriate, but target TDC levels can range from below to above marketbelow-to above-market based on factors such as experience and performance of the individual and the Company or applicable business unit over time. For the purpose of Arrow’s annual competitive benchmarking study, Pearl Meyer reviews compensation data of the Peer Group, as well as general industry survey data published by third parties. General industry survey data serves as a broader reference point for specific business units where the breadth and relevance of Peer Group data is not as comprehensive as desired, and in cases where the NEO’s position and responsibilities are broader than the typical benchmarks.
The Compensation Committee evaluates the appropriateness of each NEO’s compensation based on factors such as Company and business unit performance, job scope, individual performance, and time in position.position, and alignment with comparable positions at companies in the Peer Group. To the extent the Compensation Committee deems that the compensation level associated with ana NEO’s position versus the market (one measure of which is the Peer Group) is not aligned with the relevant factors, the Compensation Committee may choose to modify one or more of the NEO’s compensation components. | | |
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The Compensation Committee, withWith input from its independent compensation consultant, the Compensation Committee annually reviews and approves the compensation Peer Group to ensureevaluate whether it continues to meet the Company’s objectives. During 2020,objectives, based on shareholder feedback,the process set forth below under “Peer Group Selection Process.” Based on the Compensation Committee, with
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Committee’s review during 2022, no changes were made to the support of Pearl Meyer, conducted an in-depthPeer Group for 2023 as the peer group analysiscontinues to determine a new, expanded group of peer companies, which was approved in December 2020. The expanded be viewed as appropriately aligned with Arrow’s business and the factors set forth below. Peer Group better reflects our labor market for key executive talent and uses a balanced combination of direct and broader industry peers, creating stronger alignment.Selection Process Set an initial list of companies |  
| Screened initial list with established criteria | 
| Performed a robust analytical review that considered: | | | | | | > Other Technology Distributorstechnology distributors > GICS code to determine industry relevance | | > Industry Similaritysimilarity > Peer Similaritysimilarity > Size Similaritysimilarity > Business Model Alignmentmodel alignment | | > Market cap to revenue ratio > Return on invested capital > Total shareholder return |
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20212023 PEER GROUP
(the “Peer Group”) | | | | | | | | | | > WESCO International Inc. | | | | |
| Blue peer indicates new addition
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| | | | | 2023 Peer Group Data (Millions) | Percentile | | Revenue (1) | | Market Cap | 25th | | 23,192 | | 7,154 | Median | | 29,261 | | 11,422 | 75th | | 33,367 | | 20,648 | Arrow | | 33,107 | | 6,578 | Percentile Rank | | 67% | | 22% |
| (1) | Trailing Twelve Months. Source: Company reports and S&P Capital IQ market data. |
*Peer Group used to set pay in late 2019 for 2020 included Anixter International, Inc. and Tech Data Corporation which were both acquired in 2020.
| | | | | | | | | | 2020 Peer Group Data (Millions) | Percentile | | Revenue (1) | | Market Cap | 25th | | 12,326 | | 3,472 | Median | | 17,861 | | 3,928 | 75th | | 23,343 | | 6,386 | Arrow | | 28,673 | | 7,530 | Percentile Rank | | 99% | | 83% | (1) Trailing Twelve Months; Source S&P Capital IQ | | | | |
The Compensation Committee also reviews other benchmarking data of companies outside of the Peer Group when deemed necessary and appropriate. This data can cover a variety of areas, such as equity vesting practices, the prevalence of performance metrics among peer companies, types of equity vehicles used by peer companies, severance practices, equity burn rates, and any other market data the Compensation Committee believes it needs to consider when evaluating the Company’s executive compensation program. | | | | 54 62
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OTHER PRACTICES, POLICIES, AND GUIDELINES Stock Ownership Requirements The Compensation Committee recognizes the importance of equity ownership by delivering a significant portionmajority of the NEOs’ total compensation in the form of equity. To further align the interests of the Company’s executives with those of shareholders, the Company requires its NEOs to hold specified amounts of Arrow equity as summarized below: | | Position | Ownership Requirement | CEO | 5x base salary | Other NEOs | 3x base salary | | |
If the ownership requirement has not been met by the fifth anniversary of the date the NEO became subject to the ownership requirement multiple, then 100% of net shares acquired annually are tofrom employee equity awards must be retained until the requirements are met. AllShares that count towards the ownership requirement include shares owned and vested and unvested RSUs. Non-Qualified Stock Options, whether vested or unvested, and unvested PSUs do not count towards the ownership requirement. As of the Record Date, all NEOs currently meet the stock ownership requirements. The following chart illustrates the investment levels in Company equity held by our CEO and all other NEOs as a group, valued at $74.21 per share (trailing 12-month average as of December 31,2020).
Clawback PolicyPolic | | NEWies
| In response to shareholder feedback, implemented a clawback policy for incentive pay that provides for the recoupment of certain executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws or in the event an executive has been involved in any misconduct
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The Board believes that it is in the best interests of the CompanyCompany’s and its shareholdersshareholders’ best interests to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-performance compensation philosophy. Effective December 8, 2020, the The Board has (i) adopted a formalnew clawback policy whichstructured to comply with the NYSE listing standards (the “Dodd-Frank Compensation Clawback Policy”) and (ii) retained the Company’s existing clawback policy applicable to executive officers (amended to prevent duplication of any recoveries required under the Dodd - Frank Compensation Clawback Policy) and other members of senior management not otherwise subject to the Dodd-Frank Compensation Clawback Policy (the “Incentive Compensation Clawback Policy”). The Company will continue to monitor its clawback policies to evaluate whether they remain consistent with applicable laws and update them as deemed necessary. |
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Dodd-Frank Compensation Clawback Policy The Dodd-Frank Compensation Clawback Policy applies to the Company’s Chief Executive Officer; Chief Financial Officer; Chief Accounting Officer; President, Global Enterprise Computing Solutions; President, Global Components; Chief Governance, Sustainability, and Human Resources Officer; and Chief Legal Officer and Secretary (for purposes of this section, “executive officers”). The Dodd-Frank Compensation Clawback Policy provides for the recoupment of certain executive compensation, including both annual cash incentives and long-term incentive awards,that in the event of an accounting restatement resultingthat either (a) results from material noncompliance with financial reporting requirements under the federal securities laws. | | |
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In the eventamount that would have otherwise been received if the calculation were based on those results in the Restatement. The recoupment period covers the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance withRestatement.
Additionally, the Dodd-Frank Compensation Clawback Policy prohibits the Company from indemnifying or reimbursing the covered employee for any financial reporting requirementloss under the securities laws,Dodd-Frank Compensation Clawback Policy. Incentive Compensation Clawback Policy The Incentive Compensation Clawback Policy is additive, and not duplicative, of the BoardDodd-Frank Compensation Clawback Policy. The Incentive Compensation Clawback Policy permits the Company, acting through its Compensation Committee, to recoup specific executive compensation from its executive officers (without duplication of any recoupment under the Dodd-Frank Compensation Clawback Policy), vice-president managers, and other members of senior management, in the event of (i) a Restatement or (ii) an executive’s involvement in specified misconduct under the Incentive Compensation Clawback Policy (“Misconduct”). In the event of a Restatement, the Compensation Committee may require reimbursementan employee to reimburse the Company or forfeiture ofto forfeit any excess incentive compensation (which could include PSUs and RSUs under the LTIP) received by an executivethe employee during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement. a Restatement. In the event an executive has been involved in any misconduct (or knew or should have known aboutof Misconduct, the misconduct and failed to report it to the Company), the BoardCompensation Committee may require reimbursementan employee to reimburse the Company or forfeiture ofto forfeit any and all incentive compensation if the underlying conductMisconduct occurred during any of the three fiscal years preceding the grant, payment, vesting, or settlement of the incentive compensation. Consistent with the Dodd-Frank Compensation Clawback Policy, the Incentive Compensation Clawback Policy prohibits the Company from indemnifying or reimbursing the covered employee for any loss under the Incentive Compensation Clawback Policy. Insider Trading Policy The Company believes that it is essential to (i) prevent insider trading, (ii) prevent the appearance of insider trading, (iii) prevent the misuse of insider information, and (iv) protect the Company’s reputation for integrity and ethical conduct. The Company’s insider trading policy prohibits directors and all other employees from transacting in the Company securities while aware of material nonpublic information. Specific individuals who are at a greater risk of possessing material nonpublic information, including directors and executive leadership, are restricted to transacting in Company securities only during open trading windows, with certain exceptions for, among other things, scheduled trades under a contract, instruction, or plan intended to satisfy the conditions of Exchange Act Rule 10b5-1(c) (a “10b5-1 plan”), vesting of stock, transactions resulting from domestic-relations orders, and surrender or withholding of shares to satisfy taxes. 64 |
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The Company’s open trading windows commence on the opening of the market on the first day after the filing with the SEC of the Company’s Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as applicable, until the close of the market on the fifteenth calendar day prior to the last day of the then-current quarter. The Chief Legal Officer may also impose special trading blackout periods due to the occurrence of material developments known to the Company but not yet publicly disclosed. Under the insider-trading policy, directors and executive leadership must also preclear their trades (unless done under an existing 10b5-1 plan) or the adoption or modifications of any 10b5-1 plans with the Company’s Chief Legal Officer. In 2023, the Company updated its Insider Trading Policy to implement the mandatory cooling-off periods required by the new SEC rules for first trades made under 10b5-1 plans. The Company implemented the longer cooling-off period required by the SEC for officers and directors to apply to all Arrow employees. The Company also updated the Insider Trading Policy to treat gifts of Arrow securities as covered transactions and prohibit insiders’ use of overlapping 10b5-1 plans (except for the purpose of selling Arrow securities to satisfy tax withholding obligations arising from the vesting of certain equity awards). Anti-Hedging and Anti-Pledging Policy | | NEW
| Strengthened our anti-hedging and anti-pledging policy to eliminate the ability of the Company’s Chief Legal Officer to pre-approve exceptions to the policy
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The Company’s anti-hedging and anti-pledging policy provides that directors, executive officers, and certain other employeescorporate officers and senior executives may not directly or indirectly engage in transactions that would have the effect of reducing the economic risk of holding the Company’s securities. The Company’s policy prohibits covered individuals from engaging in short-term trading, buying,certain derivatives transactions in the Company’s securities, such as options, puts, calls, or selling putsimilar instruments; prepared variable forward contracts; equity swaps or call options, short sales,other equity derivatives; zero cost dollars; exchange funds or entering into hedging“swap funds,” “spread betting” transactions (i.e., transactions speculating on the open market with respect to their ownership of Company securities.share price movement) or other speculative transactions; and participation in certain pooled investment partnerships. The policy also prohibits the pledging of companyCompany securities or the holding of Company securities in margin accounts since securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call, and any such margin sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company securities. The policy is reviewed annually and, if needed, updated by the Compensation Committee. A copy of the policy is available under “Governance Documents” at the “Leadership &and Governance” sub-link of the Investor Relations drop-down menu on investor.arrow.com.investor.arrow.com. Severance Policy and Change in Control Agreements The Company has a policy for severance (“Severance Policy”) and a change in control retention agreement (“Change in Control Retention Agreement”) for its executives. In connection with his departure, Mr. Schell became eligible for separation benefits under the Severance Policy based on his termination without cause. The Severance Policy and Change in Control Retention Agreements, including a quantification of the benefits that Mr. Schell received in connection with his termination, are described in detail in the section entitledheading “Agreements and Potential PaymentsPayouts upon Termination or Change in Control.” Retirement Programs and Other Benefits In keeping with its total compensation philosophy and in light of the need to provide a totalcomprehensive compensation and benefitbenefits package that is competitive within the industry, the Compensation Committee believes that the retirement and other benefit programs discussed below are critical elements of the compensation package made available to the Company’s NEOs.
Qualified Plans The NEOs participate in the Arrow Electronics, Inc. 401(k) Savings Plan, which is available to all of Arrow’s U.S. employees. Company contributions to the Arrow Electronics, Inc. 401(k) Savings Plan on behalf of the NEOs are included under the heading “All Other Compensation” in the table labeled “2023 Summary Compensation Table,” and |
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specified under the headingcolumn “401(k) Plan Company Contribution” onin the Alltable labeled “All Other Compensation — Detail Table.Detail.”
Supplemental Executive Retirement Plan (“SERP”) The Company maintains the SERP, a non-qualified, unfunded retirement plan in which all NEOs employed by the Company as of December 31, 2020, all then-current NEOs2023 participated, the details of which are discussed inunder the heading “Supplemental | | | | 56
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Executive Retirement Plan” section. The Company has placed approximately $109 million in various investments to cover the ongoing costs of SERP payouts for both current and former executives.Plan.”
Management Insurance Program AllExecutives, including the NEOs, participate in Arrow’s Management Insurance Program.Program (“MIP”). The Board determines participant eligibility, and each NEO employed by the Company as of December 31, 2023, participates in the MIP. In the event of the death of ana participating executive, the Company provides aan after - tax death benefit (after tax) to the executive’s named beneficiary equal to four times the executive’s annual target cash compensation.compensation (after giving effect to a tax assistance benefit included in the program). The benefit generally ends upon separation from service butservice. However, the MIP benefit is extended until the first day of the seventh month following separation from service in the event the participating executive’s actual commencement of benefit payments under the SERP areis delayed pursuant to Section 409A of the Internal Revenue Code.Code since no SERP benefit is payable if a participant dies prior to commencement of benefit payments.
Tax and Accounting Considerations
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COMPENSATION COMMITTEE REPORT A varietyThe substantive discussion of tax and accounting considerations influence the Compensation Committee’s development and implementationmaterial elements of all of the Company’s executive compensation programs and the determinations by the Compensation Committee with respect to compensation and benefit plans. Among them is Section 162(m) ofexecutive performance for 2023 are contained in the Internal Revenue Code, which historically limited to $1 million the amount of non-performance-based compensation that Arrow may have deducted on its U.S. income tax returns for its CEO and NEOs other than the CFO.
As part of the Tax Cuts and Jobs Act (“TCJA”) signed into law on December 22, 2017, this exemption from Section 162(m) limitation for performance-based compensation was repealed, effective for taxable years beginning after December 31, 2017, such that any compensation paid to the Company’s CEO, CFO and three other highest-paid NEOs (“covered employees”) in excess of $1 million will now be nondeductible, subject to transition rules. Additionally, under the TCJA’s revised Section 162(m) rules, once the individual becomes a covered employee for any taxable year, that individual will remain a covered employee for all future years, thereby increasing the number of employees subject to the executive compensation limitation rules under Section 162(m) of the Internal Revenue Code.
Even though the TCJA eliminated the exception for performance-based compensation, the Compensation Committee’s policy, in general, is still to maximize the tax deductibility of compensation paid to executive officers under the Internal Revenue Code.CD&A above. The Compensation Committee recognizes, however, that in order to effectively support corporate goals, not all amounts may qualify for deductibility. Therefore,has reviewed and discussed the CD&A with the Company’s management. In reliance on these reviews and discussions, the Compensation Committee will continuerecommended to consider all applicable facts and circumstances in exercising its business judgment with respect to appropriate compensation plan design.
As discussed belowthe Board that the CD&A be included in the section entitled “Agreementsdefinitive Proxy Statement on Schedule 14A for Arrow’s 2024 Annual Meeting for filing with the SEC and Potential Payments upon Termination or Changebe incorporated by reference in Control,” the Company’s relevant agreements and policies contain provisions as appropriate in order to avoid penalties to executives under Section 409A ofAnnual Report on Form 10-K for the Internal Revenue Code. The Company provides no tax gross- ups in connection with Sections 280G and 4999 of the Internal Revenue Code in the event of a change in control of the Company.fiscal year ended December 31, 2023.
Gerry P. Smith, Chair William F. Austen Fabian T. Garcia Andrew C. Kerin | | |
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COMPENSATION OF THE
NAMED EXECUTIVE OFFICERS 2023 SUMMARY COMPENSATION TABLE The following table provides certain summary information concerning the compensation of the NEOs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change in | | | | | | | | | | | | | | | | | | | Pension | | | | | | | | | | | | | | | Stock | | Non-Equity | | Value & | | | | | | | | | | | | | Stock | | Option | | Incentive | | NQDC | | All Other | | | | | | | Salary | | Bonus | | Awards | | Awards | | Compensation | | Earnings | | Compensation | | Total | Name | | Year | | ($) | | ($) | | ($)(1) | | ($)(2) | | ($)(3) | | ($)(4) | | ($)(5) | | ($) | Michael J. Long | | 2020 | | 1,320,000 | | — | | 6,000,044 | | — | | 3,180,000 | | 979,530 | | 33,518 | | 11,513,092 | Chairman, President, and Chief Executive Officer | | 2019 | | 1,320,000 | | — | | 4,499,977 | | 1,500,038 | | 2,464,500 | | 1,872,494 | | 14,833 | | 11,671,842 | | | 2018 | | 1,200,000 | | — | | 10,500,008 | | 1,499,971 | | 2,120,940 | | — | | 19,013 | | 15,339,932 | Christopher D. Stansbury | | 2020 | | 700,000 | | — | | 1,200,025 | | 399,979 | | 700,000 | | 925,551 | | 17,268 | | 3,942,823 | Senior Vice President,
Chief Financial Officer | | 2019 | | 700,000 | | — | | 1,200,026 | | 399,977 | | 542,500 | | 734,378 | | 11,259 | | 3,588,140 | | | 2018 | | 600,000 | | — | | 2,387,473 | | 312,492 | | 706,980 | | 360,480 | | 489,087 | | 4,856,512 | Sean J. Kerins | | 2020 | | 650,000 | | — | | 1,125,003 | | 375,001 | | 650,000 | | 1,048,363 | | 11,459 | | 3,859,826 | President, Global Enterprise Computing Solutions | | 2019 | | 650,000 | | — | | 1,124,974 | | 375,032 | | 503,750 | | 910,267 | | 11,343 | | 3,575,366 | | | 2018 | | 550,000 | | — | | 974,959 | | 325,027 | | 589,150 | | 341,430 | | 17,356 | | 2,797,922 | Andrew D. King | | 2020 | | 650,000 | | — | | 1,125,003 | | 375,001 | | 650,000 | | 915,672 | | 11,459 | | 3,727,135 | President, Global
Components | | 2019 | | 650,000 | | — | | 1,124,974 | | 375,032 | | 253,750 | | 750,618 | | 12,483 | | 3,166,857 | | | 2018 | | 525,000 | | — | | 937,508 | | 312,492 | | 559,693 | | 372,641 | | 15,398 | | 2,722,732 | Gretchen K. Zech | | 2020 | | 500,000 | | — | | 974,961 | | 325,045 | | 500,000 | | 918,209 | | 14,984 | | 3,233,199 | Senior Vice President, Chief Human Resources Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change in | | | | | | | | | | | | | | | | | | | Pension | | | | | | Total | | | | | | | | | | | Non-Equity | | Value & | | | | | | Without | | | | | | | | | Stock | | Incentive | | NQDC | | All Other | | | | Change in | | | | | Salary | | Bonus | | Awards | | Compensation | | Earnings | | Compensation | | Total | | Pension | Name | | Year | | ($) | | ($) | | ($)(1) | | ($)(2) | | ($)(3) | | ($)(4) | | ($) | | Value ($)(5) | Sean J. Kerins | | 2023 | | 1,000,000 | | — | | 4,000,040 | | 1,360,200 | | 2,517,506 | | 14,068 | | 8,891,814 | | 6,374,308 | President and Chief Executive Officer | | 2022 | | 895,833 | | — | | 3,500,063 | | 2,514,584 | | 533,030 | | 34,715 | | 7,478,225 | | 6,945,195 | | | 2021 | | 750,000 | | — | | 2,300,083 | | 1,275,000 | | 1,027,429 | | 16,654 | | 5,369,166 | | 4,341,737 | Rajesh K. Agrawal | | 2023 | | 700,000 | | — | | 2,200,053 | | 476,070 | | 370,369 | | 13,200 | | 3,759,692 | | 3,389,323 | Senior Vice President, Chief Financial Officer | | 2022 | | 226,155 | | — | | 4,000,087 | | 1,190,000 | | — | | — | | 5,416,242 | | 5,416,242 | Gretchen K. Zech | | 2023 | | 675,000 | | — | | 1,500,030 | | 459,068 | | 971,404 | | 16,700 | | 3,622,202 | | 2,650,798 | Senior Vice President, Chief Governance, | | 2022 | | 658,333 | | — | | 1,500,092 | | 1,133,334 | | — | | 14,400 | | 3,306,159 | | 3,306,159 | Sustainability, and Human Resources Officer | | 2021 | | 500,000 | | — | | 1,300,061 | | 850,000 | | 373,549 | | 11,922 | | 3,035,532 | | 2,661,983 | Kristin D. Russell | | 2023 | | 550,000 | | — | | 1,300,060 | | 374,055 | | 368,525 | | 17,954 | | 2,610,594 | | 2,242,069 | President, Enterprise Computing Solutions | | | | | | | | | | | | | | | | | | — | Carine L. Jean-Claude | | 2023 | | 450,000 | | — | | 850,000 | | 306,045 | | — | | 16,700 | | 1,622,745 | | 1,622,745 | Senior Vice President, Chief Legal Officer and Secretary | | | | | | | | | | | | | | | | | | — | Michael J. Long | | 2023 | | 511,539 | | — | | 3,000,061 | | 693,158 | | 1,024,122 | | 155,808 | | 5,384,688 | | 4,360,566 | Former Executive Chair of the Board | | 2022 | | 1,133,333 | | — | | 6,000,112 | | 4,235,834 | | — | | 180,743 | | 11,550,022 | | 11,550,022 | | | 2021 | | 1,320,000 | | — | | 6,000,028 | | 5,406,000 | | — | | 154,810 | | 12,880,838 | | 12,880,838 | Kirk D. Schell | | 2023 | | 333,333 | | — | | 1,500,030 | | — | | — | | 516,688 | | 2,350,051 | | 2,350,051 | Former President, Global Components | | 2022 | | 333,333 | | — | | 2,500,075 | | 566,666 | | — | | 101,683 | | 3,501,757 | | 3,501,757 |
| (1) | Amounts shown under the heading “Stock Awards” reflect the aggregate grant date fair values of such awards computed in accordance with FASB ASC Topic 718, excluding the effectestimates of estimated forfeitures. For stock awards that are subject to performance conditions, such awards are computed based upon the probable outcome of the performance conditions as of the grant date. Assuming the maximum performance is achieved for stock awards that are subject to performance conditions, amounts shown under this heading for Messrs. Long, Stansbury,the NEOs would be as follows: Mr. Kerins, King, and$5,700,109; Mr. Agrawal, $3,135,022; Ms. Zech, would be $9,825,055, $1,879,994, $1,762,483, $1,762,483,$2,137,543; Ms. Russell, $1,852,585; Ms. Jean-Claude, $1,211,198; Mr. Long, $3,000,061, and $1,527,461, respectively, for 2020; for Messrs. Long, Stansbury, Kerins, and King would be $7,049,964, $1,879,995, $1,762,505, and $1,762,505, respectively, for 2019; for Messrs. Long, Stansbury, Kerins, and King, would be $13,050,029, $2,918,751, $1,527,482, and $1,486,786, respectively, for 2018. During 2018, Messrs. Long and Stansbury received one-time special grants. Mr. Long’s RSU award valued at $6,000,000 (73,215 RSUs) will vest equally over five years and forfeits if the executive retires or resigns prior to each vesting date. Mr. Stansbury’s RSU award valued at $1,450,000 (17,767 RSUs) will vest equally over four years and forfeits if the executive retires or resigns prior to each vesting date.Schell, $2,137,543. Additional information on methodologies and assumptions made when calculating the grant date fair value of our stock awards is found in Note 12 to the Company’s Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2020.2023. |
| (2) | Amounts shown under the heading “Stock Option Awards” reflect the grant date fair values for stock option awards calculated using the Black-Scholes option pricing model based on assumptions set forth in Note 12 to the Company’s Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2020. |
(3) | The amounts shown under “Non-Equity Incentive Compensation” are the actual amounts paid for the achievement of both the financial and strategic goals related to the NEO’s MICP awards.annual cash incentive award. |
(4)(3) | The amounts shown under the headingcolumn “Change in Pension Value & NQDC Earnings” reflect the year-to-year change in the present value of each NEO’s accumulated pension plan benefit as discussed under the heading “Supplemental Executive Retirement Plan.” |
(5)(4) | See the All Other Compensation — Detail Tabletable below. |
| (5) | The Total Without Change in Pension Value represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column for the applicable year. The amounts reported in the Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. The change in pension value is subject to many external variables, such as interest rates, assumptions about life expectancy and changes in the discount rate determined at each year end, which are functions of economic factors and actuarial calculations that are not related to the Company’s performance and are outside the control of the Compensation Committee. |
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ALL OTHER COMPENSATION — DETAIL ThisFrom the table labeled “2023 Summary Compensation Table,” this table further sets forth the individual elements comprising each NEO’s 20202023 “All Other Compensation” from the Summary Compensation Table above.Compensation.”
| | | | | | | | | | | | | | | | | | | | | | | Other | | 401(k) Plan Company | | Total | | Other | | 401(k) Plan Company | | Total | Name | | ($) | | Contribution ($) | | ($) | | ($) | | Contribution ($) | | ($) | Sean J. Kerins | | | 868 | | 13,200 | | 14,068 | Rajesh K. Agrawal | | | — | | 13,200 | | 13,200 | Gretchen K. Zech | | | 3,500 | | 13,200 | | 16,700 | Kristin D. Russell | | | 4,754 | | 13,200 | | 17,954 | Carine L. Jean-Claude | | | 3,500 | | 13,200 | | 16,700 | Michael J. Long (1) | | 22,118 | | 11,400 | | 33,518 | | 142,608 | | 13,200 | | 155,808 | Christopher D. Stansbury | | 5,868 | | 11,400 | | 17,268 | | Sean J. Kerins | | 59 | | 11,400 | | 11,459 | | Andrew D. King | | 59 | | 11,400 | | 11,459 | | Gretchen K. Zech | | 3,584 | | 11,400 | | 14,984 | | Kirk D. Schell (2) | | | 503,488 | | 13,200 | | 516,688 |
| (1) | ForThis amount represents (i) Arrow’s contributions to Mr. Long, “Other” includesLong’s account under the Arrow Electronics, Inc. 401(k) Savings Plan in the amount of $13,200 and (ii) personal air travel expenses in the amount of $142,608, which represent the incremental cost to Arrow for Mr. Long’s personal use of Arrow’s fractionally-owned aircraft based on aircrafthourly flight charges and imputed income.other variable costs incurred by Arrow for such use, including, without limitation, variable fuel charges, departure fees, and landing fees. |
| (2) | This amount represents (i) Arrow’s contributions to Mr. Schell’s account under the Arrow Electronics, Inc. 401(k) Savings Plan in the amount of $13,200 (where the Company match is subject to a service requirement); (ii) cash severance in the amount of $166,667, an additional severance payment, determined based on the Company’s achievement of the financial targets for the full fiscal year and the strategic performance goals achieved through the date of his separation in the amount of $304,090, and a severance benefits subsidy in the amount of $30,998; and (iii) a sales recognition event. |
Certain NEOs have been accompanied by family members during business travel on aircraft (of whichFor perquisite disclosure purposes, we determine the Company owns fractional shares) at noaggregate incremental cost to the Company.Company of the NEOs' personal flights on our fractionally-owned aircraft by calculating the average variable aircraft operating costs per hour for the aircraft, which includes the hourly rate, fuel, landing fees, trip-related repairs and maintenance, catering, and other miscellaneous expenses. The fractional program operator's monthly overhead and fixed cost fee are excluded from the calculation. The calculated average variable operating cost per hour is multiplied by the total number of personal flight hours for each NEO. Occasionally, a spouse or other guest may accompany NEOs on corporate aircraft when the aircraft is already scheduled for business purposes and can accommodate additional passengers. In those cases, there is no aggregate incremental cost to the Company, and, as a result, no amount is reflected in the “2023 Summary Compensation Table.” The value of the personal use of a fractionally-owned or chartered corporate aircraft by our NEOs or their guests is included in their personal income in accordance with applicable tax regulations. As noted in the table titled All Other Compensation – Detail above, Mr. Long is the only NEO who used Arrow’s fractionally-owned aircraft in 2023.
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2023 GRANTS OF PLAN-BASED AWARDS The following table provides information regarding the annual cash incentives, PSUs, and RSUs andawarded in 2023. No stock options awardedwere granted in 2020.2023. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Grants of Plan-Based Awards | | | | | | | | | | | | | | | | | All Other | | All Other | | | | Grant | | | | | | | | | | | | | | | | | Stock | | Option | | | | Date | | | | | | | | | | | | | | | | | Awards: | | Awards: | | Exercise | | Fair Value | | | | | Estimated Possible Payouts Under | | Estimated Future Payouts | | Number | | Number of | | or Base | | of Stock | | | | | Non-Equity Incentive Plan | | Under Equity Incentive Plan | | of Shares | | Securities | | Price of | | and | | | | | Awards (1) | | Awards (2) | | of Stock | | Underlying | | Option | | Option | | | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | or Units | | Options | | Awards | | Awards | Name | | Grant Date | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#)(3) | | (#)(4) | | ($/Sh) | | ($)(5) | Michael J. Long | | 2020 | | 1,272,000 | | 3,180,000 | | 5,406,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/19/2020 | | — | | — | | — | | 8,521 | | 56,804 | | 105,087 | | — | | — | | 79.22 | | 4,500,013 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 18,935 | | — | | 79.22 | | 1,500,031 | Christopher D. Stansbury | | 2020 | | 280,000 | | 700,000 | | 1,190,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/19/2020 | | — | | — | | — | | 1,515 | | 10,098 | | 18,681 | | — | | — | | 79.22 | | 799,964 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 5,050 | | — | | 79.22 | | 400,061 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | — | | 19,424 | | 79.22 | | 399,979 | Sean J. Kerins | | 2020 | | 260,000 | | 650,000 | | 1,105,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/19/2020 | | — | | — | | — | | 1,420 | | 9,467 | | 17,514 | | — | | — | | 79.22 | | 749,976 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 4,734 | | — | | 79.22 | | 375,027 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | — | | 18,211 | | 79.22 | | 375,001 | Andrew D. King | | 2020 | | 260,000 | | 650,000 | | 1,105,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/19/2020 | | — | | — | | — | | 1,420 | | 9,467 | | 17,514 | | — | | — | | 79.22 | | 749,976 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 4,734 | | — | | 79.22 | | 375,027 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | — | | 18,211 | | 79.22 | | 375,001 | Gretchen K. Zech | | 2020 | | 200,000 | | 500,000 | | 850,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/19/2020 | | — | | — | | — | | 1,231 | | 8,205 | | 15,179 | | — | | — | | 79.22 | | 650,000 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 4,102 | | — | | 79.22 | | 324,960 | | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | — | | 15,785 | | 79.22 | | 325,045 |
| | | | | | | | | | | | | | | | | | | | | | | | | Grants of Plan-Based Awards | | | | | | | | | | | | | | | | | | | All Other | | All Other | | | | Grant | | | | | | | | | | | | | | | | | | | Stock | | Option | | | | Date | | | | | | | | | | | | | | | | | | | Awards: | | Awards: | | Exercise | | Fair Value | | | | | | | Estimated Possible Payouts Under | | Estimated Future Payouts | | Number | | Number of | | or Base | | of Stock | | | | | | | Non-Equity Incentive Plan | | Under Equity Incentive Plan | | of Shares | | Securities | | Price of | | and | | | | | | | Awards (1) | | Awards (2) | | of Stock | | Underlying | | Option | | Option | | | | | Approval | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | or Units | | Options | | Awards | | Awards | Name | | Grant Date | | Date | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#)(3) | | (#) | | ($/Sh) | | ($)(4) | Sean J. Kerins | | 2023 | | | | 800,000 | | 2,000,000 | | 3,400,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/15/2023 | | | | — | | — | | — | | 3,217 | | 16,083 | | 29,754 | | — | | — | | — | | 2,000,082 | | | 2/15/2023 | | | | — | | — | | — | | — | | — | | — | | 16,082 | | — | | — | | 1,999,958 | Rajesh K. Agrawal | | 2023 | | | | 280,000 | | 700,000 | | 1,190,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/15/2023 | | | | — | | — | | — | | 1,769 | | 8,845 | | 16,363 | | — | | — | | — | | 1,099,964 | | | 2/15/2023 | | | | — | | — | | — | | — | | — | | — | | 8,846 | | — | | — | | 1,100,089 | Gretchen K. Zech | | 2023 | | | | 270,000 | | 675,000 | | 1,147,500 | | — | | — | | — | | — | | — | | — | | — | | | 2/15/2023 | | | | — | | — | | — | | 1,206 | | 6,031 | | 11,157 | | — | | — | | — | | 750,015 | | | 2/15/2023 | | | | — | | — | | — | | — | | — | | — | | 6,031 | | — | | — | | 750,015 | Kristin D. Russell | | 2023 | | | | 220,000 | | 550,000 | | 935,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/15/2023 | | | | — | | — | | — | | 1,045 | | 5,227 | | 9,670 | | — | | — | | — | | 650,030 | | | 2/15/2023 | | | | — | | — | | — | | — | | — | | — | | 5,227 | | — | | — | | 650,030 | Carine L. Jean - Claude | | 2023 | | | | 180,000 | | 450,000 | | 765,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/15/2023 | | | | — | | — | | — | | 683 | | 3,417 | | 6,321 | | — | | — | | — | | 424,938 | | | 2/15/2023 | | | | — | | — | | — | | — | | — | | — | | 3,418 | | — | | — | | 425,062 | Michael J. Long (5) | | 2023 | | | | 800,000 | | 2,000,000 | | 3,400,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/15/2023 | | | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | | 2/15/2023 | | | | — | | — | | — | | — | | — | | — | | 24,124 | | — | | — | | 3,000,061 | Kirk D. Schell | | 2023 | | | | 200,000 | | 500,000 | | 850,000 | | — | | — | | — | | — | | — | | — | | — | | | 2/15/2023 | | | | — | | — | | — | | 1,206 | | 6,031 | | 11,157 | | — | | — | | — | | 750,015 | | | 2/15/2023 | | | | — | | — | | — | | — | | — | | — | | 6,031 | | — | | — | | 750,015 |
| (1) | These columns indicateThe amounts reported above assume that the potential payout for both the financial and strategic goals related to the NEO’s MICP awards. The “Threshold” for incentive paymentperformance standard achieved is 75% achievement ofat threshold, target, for both the financial goal and the strategic goals. The payout at “Threshold” is 25% of target incentiveor maximum for the financial goalperformance metric and 75%each strategic performance metric; see the “Annual Cash Incentives” section in the CD&A for the strategic goals, resulting in an overall payout of 40% at “Threshold.” The “Maximum” for incentive payment is 125% achievement of target for the financial goal and 100% achievement of target for the strategic goals. The payout at “Maximum” is 200% of target incentive for the financial goal and 100% for the strategic goals, resulting in an overall payout of 170% at “Maximum.” For 2020, the maximum amount was capped at 100%. The actual amounts paid to each of the NEOs under this plan for each year are included under the heading “Non-Equity Incentive Compensation” on the Summary Compensation Table.more information. |
| (2) | These columns indicate the potential number of units whichthat will be earned based uponon each of the NEO’s PSU awards granted in 2020.2023. Assuming a payout of greater than zero units, the threshold unit payout begins at 15%20% of the target number of units and up to a maximum payout of 185% of the target number of units. The grant amount is equal to the target amount at achievement of 100%. PSUs vest, if at all, depending on whether vesting conditions are met after the end of the three-year performance period and after the Compensation Committee determines the attainment level. For more information, please see the “Long-Term Incentive Awards” section in the CD&A for more information. |
| (3) | This column reflects the number of RSUs granted in 2020.2023. RSUs vest in 25% annual increments on the first through fourth anniversaries of the grant date. Please see the “Long-Term Incentive Awards” section in the CD&A for more information. |
| (4) | This column and the one that follows reflect, respectively, the number of stock options granted in 2020 and their exercise price. |
(5) | Grant date fair values for RSUs and PSUs reflectare calculated in accordance with FASB ASC Topic 718, reflecting the number of shares awarded (at target for the PSUs) multiplied by the grant date closing market price of Arrow common stock. GrantAdditional information on methodologies and assumptions made when calculating the grant date fair values forvalue of our stock option awards are calculated using the Black-Scholes option pricing model based on assumptions set forthis found in Note 12 to the Company’s Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2020.2023. |
| (5) | Mr. Long’s annual cash incentive target above represents his opportunity at the beginning of 2023. His actual payout was prorated for his period of service from January 1, 2023 to July 5, 2023 and determined based on the Company’s achievement of the relevant performance goals. |
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2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The table below titled “2023 Outstanding Equity TableAwards at Fiscal Year-End” shows: (i) the number of outstanding stock option awards that are vested and unvested as of December 31, 2020;2023; (ii) the exercise price and expiration date of thesethose options; (iii) the aggregate number and value of all unvested RSUs as of December 31, 2020 of all unvested restricted stock or units;2023; and (iv) the aggregate number and value of all PSUs as of December 31, 2020 of all performance shares or units2023, granted under a performance plan whose performance period has not yet been completed. The values ascribed to the awards in the table below may or may not be realized by their recipients, depending on the share prices at the time of vesting or exercise and the achievement of the metrics upon which the performance awardsPSUs depend. Each amount in this table isThe award values are based on the closing market price of the Company’s common stock on December 31, 2020,29, 2023, which was $97.30.$122.25. For each NEO, the fair value of stock awards and stock option awards at the date of grant, based upon the probable outcome of performance conditions, if applicable, is included in the “2023 Summary Compensation TableTable” above. For additional information regarding the impact of a change in control of the Company on equity awards, see under the sectionheading below entitled “Performance Stock Unit, Restricted Stock Unit, and Non-Qualified Stock Option Award Agreements.” | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Outstanding Equity Awards at Fiscal Year-End | |
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2023 Outstanding Equity Awards at Fiscal Year-End | | 2023 Outstanding Equity Awards at Fiscal Year-End |
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| Option Awards | | | | Stock Awards | | Option Awards | | Stock Awards |
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| | | | | | | | | | | | | | | | Equity | | | | Equity Incentive | | | | | | | | | | | | | | | | | | Equity | | Equity Incentive |
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| | | | | | | | | | | | | | | | Incentive | | | | Plan Awards: | | | | | | | | | | | | | | | | | | Incentive | | Plan Awards: |
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| | | | | | | | | | | | | | Market | | Plan Awards; | | | | Market or | | | | | | | | | | | | | | | | Market | | Plan Awards; | | Market or |
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| | | | | | | | | | | | | | Value of | | Number of | | | | Payout Value | | | | | | | | | | | | | | | | Value of | | Number of | | Payout Value |
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| | Number of | | Number of | | | | | | | | Number of | | Shares or | | Unearned | | | | of Unearned | | | | Number of | | Number of | | | | | | | | Number of | | Shares or | | Unearned | | of Unearned |
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| | Securities | | Securities | | | | | | | | Shares or | | Units of | | Shares, Units | | | | Shares, Units | | | | Securities | | Securities | | | | | | | | Shares or | | Units of | | Shares, Units | | Shares, Units |
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| | Underlying | | Underlying | | | | | | | | Units of | | Stock Held | | or Other | | | | or Other | | | | Underlying | | Underlying | | | | | | | | Units of | | Stock Held | | or Other | | or Other |
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| | Unexercised | | Unexercised | | Option | | Option | | Stock | | Stock Held | | That Have | | Rights That | | | | Rights That | | | | Unexercised | | Unexercised | | Option | | Option | | Stock | | Stock Held | | That Have | | Rights That | | Rights That |
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| | Options – | | Options – | | Exercise | | Expiration | | Award | | That Have | | Not Yet | | Have Not | | Vesting | | Have Not Yet | | Option | | Options – | | Options – | | Exercise | | Expiration | | Award | | That Have | | Not Yet | | Have Not | | Have Not Yet |
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| | Exercisable | | Unexercisable | | Price | | Date | | Grant | | Not Vested | | Vested | | Yet Vested | | Dates | | Vested | | Grant | | Exercisable | | Unexercisable | | Price | | Date | | Grant | | Not Vested | | Vested | | Yet Vested | | Vested |
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Name | | (#) | | (#) | | ($)(1) | | (1) | | Date | | (#)(2) | | ($)(2) | | (#)(3) | | (4) | | ($)(3) | | Date(1) | | (#)(1) | | (#)(1) | | ($)(1) | | (1) | | Date | | (#)(2) | | ($)(2) | | (#)(3) | | ($)(3) |
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Michael J. Long | | 68,734 | | — | | 62.13 | | 02/16/2025 | | — | | — | | — | | — | | — | | — | | | | 56,236 | | 18,745 | | 73.86 | | 02/19/2027 | | 02/21/2017 | | 5,077 | | 493,992 | | — | | 02/21/2021 | | — | | | | 32,430 | | 32,428 | | 81.95 | | 02/18/2028 | | 02/20/2018 | | 9,152 | | 890,490 | | — | | (a) | | — | | | | 16,537 | | 49,611 | | 81.05 | | 02/16/2029 | | 02/19/2019 | | 13,880 | | 1,350,524 | | — | | (b) | | — | | | | — | | — | | — | | — | | 02/19/2020 | | 18,935 | | 1,842,376 | | | | (c) | | | | | | — | | — | | — | | — | | 02/20/2018 | | 43,929 | | 4,274,292 | | — | | (d) | | — | | | | — | | — | | — | | — | | 02/20/2018 | | — | | — | | 36,608 | | 02/20/2021 | | 3,561,958 | | | | — | | — | | — | | — | | 02/19/2019 | | — | | — | | 37,014 | | 02/19/2022 | | 3,601,462 | | | | — | | — | | — | | — | | 02/19/2020 | | — | | — | | 56,804 | | 02/19/2023 | | 5,527,029 | | Christopher D. Stansbury | | 75 | | — | | 60.97 | | 09/14/2024 | | — | | — | | — | | — | | — | | — | | | | 1,302 | | — | | 56.43 | | 02/22/2026 | | — | | — | | — | | — | | — | | — | | | | 9,374 | | 3,124 | | 73.86 | | 02/19/2027 | | 02/21/2017 | | 846 | | 82,316 | | — | | 02/21/2021 | | — | | | | 6,756 | | 6,756 | | 81.95 | | 02/18/2028 | | 02/20/2018 | | 1,906 | | 185,454 | | — | | (a) | | — | | | | 4,410 | | 13,228 | | 81.05 | | 02/16/2029 | | 02/19/2019 | | 3,702 | | 360,205 | | — | | (b) | | — | | | | — | | 19,424 | | 79.22 | | 02/19/2030 | | 02/19/2020 | | 5,050 | | 491,365 | | | | (c) | | | | | | — | | — | | — | | — | | 03/12/2018 | | 8,883 | | 864,316 | | — | | (a) | | — | | | | — | | — | | — | | — | | 02/20/2018 | | — | | — | | 7,627 | | 02/20/2021 | | 742,107 | | | | — | | — | | — | | — | | 02/19/2019 | | — | | — | | 9,870 | | 02/19/2022 | | 960,351 | | | | — | | — | | — | | — | | 02/19/2020 | | — | | — | | 10,098 | | 02/19/2023 | | 982,535 | | Sean J. Kerins | | 8,687 | | — | | 41.56 | | 02/17/2023 | | — | | — | | — | | — | | — | | — | | 02/17/2015 | | 11,783 | | — | | 62.13 | | 02/16/2025 | | — | | — | | — | | — | | — | | | 7,043 | | — | | 56.71 | | 02/17/2024 | | — | | — | | — | | — | | — | | — | | 02/23/2016 | | 14,880 | | — | | 56.43 | | 02/22/2026 | | — | | — | | — | | — | | — | | | 11,783 | | — | | 62.13 | | 02/16/2025 | | — | | — | | — | | — | | — | | — | | 02/21/2017 | | 14,370 | | — | | 73.86 | | 02/19/2027 | | — | | — | | — | | — | | — | | | 14,880 | | — | | 56.43 | | 02/22/2026 | | — | | — | | — | | — | | — | | — | | 02/20/2018 | | 14,054 | | — | | 81.95 | | 02/18/2028 | | — | | — | | — | | — | | — | | | 10,778 | | 3,592 | | 73.86 | | 02/19/2027 | | 02/21/2017 | | 973 | | 94,673 | | — | | 02/21/2021 | | — | | 02/19/2019 | | 16,538 | | — | | 81.05 | | 02/16/2029 | | — | | — | | — | | — | | — | | | 7,028 | | 7,026 | | 81.95 | | 02/18/2028 | | 02/20/2018 | | 1,982 | | 192,849 | | — | | (a) | | — | | 02/19/2020 | | 13,659 | | 4,552 | | 79.22 | | 02/19/2030 | | 02/19/2020 | | 1,183 | | 144,622 | | — | | — | | | 4,135 | | 12,403 | | 81.05 | | 02/16/2029 | | 02/19/2019 | | 3,469 | | 337,534 | | — | | (b) | | — | | | | — | | — | | — | | — | | 02/17/2021 | | 5,398 | | 659,906 | | — | | — | | | — | | 18,211 | | 79.22 | | 02/19/2030 | | 02/19/2020 | | 4,734 | | 460,618 | | — | | (c) | | — | | | | — | | — | | — | | — | | 02/16/2022 | | 6,753 | | 825,554 | | — | | — | | | — | | — | | — | | — | | 02/20/2018 | | — | | — | | 7,932 | | 02/20/2021 | | 771,784 | | | | — | | — | | — | | — | | 06/01/2022 | | 3,754 | | 458,927 | | — | | — | | | — | | — | | — | | — | | 02/19/2019 | | — | | — | | 9,254 | | 02/19/2022 | | 900,414 | | | | — | | — | | — | | — | | 02/15/2023 | | 16,082 | | 1,966,025 | | — | | — | | | — | | — | | — | | — | | 02/19/2020 | | — | | — | | 9,467 | | 02/19/2023 | | 921,139 | | | | — | | — | | — | | — | | 02/17/2021 | | — | | — | | 10,798 | (4) | 1,320,056 | Andrew D. King | | 14,880 | | — | | 56.43 | | 02/22/2026 | | 02/23/2016 | | — | | — | | — | | — | | — | | | | | | | — | | — | | — | | — | | 02/16/2022 | | — | | — | | 9,006 | (5) | 1,100,984 | | | | | | — | | — | | — | | — | | 06/01/2022 | | — | | — | | 5,007 | (6) | 612,106 | | | | | | — | | — | | — | | — | | 02/15/2023 | | — | | — | | 16,083 | (7) | 1,966,147 | Rajesh K. Agrawal | | | | | — | | — | | — | | — | | 09/14/2022 | | 30,267 | | 3,700,141 | | — | | — | | | | | | — | | — | | — | | — | | 02/15/2023 | | 8,846 | | 1,081,424 | | — | | — | | | | | | — | | — | | — | | — | | 02/15/2023 | | — | | — | | 8,845 | (7) | 1,081,301 | Gretchen K. Zech | | | 02/21/2017 | | 2,936 | | — | | 73.86 | | 02/19/2027 | | — | | — | | — | | — | | — | | | 10,310 | | 3,436 | | 73.86 | | 02/19/2027 | | 02/21/2017 | | 930 | | 90,489 | | — | | 02/20/2021 | | — | | 02/20/2018 | | 10,810 | | — | | 81.95 | | 02/18/2028 | | — | | — | | — | | — | | — | | | 6,756 | | 6,756 | | 81.95 | | 02/18/2028 | | 02/20/2018 | | 1,906 | | 185,454 | | — | | (a) | | — | | 02/19/2019 | | 14,331 | | — | | 81.05 | | 02/16/2029 | | — | | — | | — | | — | | — | | | 4,135 | | 12,403 | | 81.05 | | 02/16/2029 | | 02/19/2019 | | 3,469 | | 337,534 | | — | | (b) | | — | | 02/19/2020 | | 11,839 | | 3,946 | | 79.22 | | 02/19/2030 | | 02/19/2020 | | 1,025 | | 125,306 | | — | | — | | | — | | 18,211 | | 79.22 | | 02/19/2030 | | 02/19/2020 | | 4,734 | | 460,618 | | — | | (c) | | — | | | | — | | — | | — | | — | | 02/17/2021 | | 3,051 | | 372,985 | | — | | — | | | — | | — | | — | | — | | 02/20/2018 | | — | | — | | 7,627 | | 02/20/2021 | | 742,107 | | | | — | | — | | — | | — | | 02/16/2022 | | 4,405 | | 538,511 | | — | | — | | | — | | — | | — | | — | | 02/19/2019 | | — | | — | | 9,254 | | 02/19/2022 | | 900,414 | | | | — | | — | | — | | — | | 02/15/2023 | | 6,031 | | 737,290 | | | | | | | — | | — | | — | | — | | 02/19/2020 | | — | | — | | 9,467 | | 02/19/2023 | | 921,139 | | | | — | | — | | — | | — | | 02/17/2021 | | — | | — | | 6,103 | (4) | 746,092 | | | | | | — | | — | | — | | — | | 02/16/2022 | | — | | — | | 5,873 | (5) | 717,974 | | | | | | — | | — | | — | | — | | 02/15/2023 | | — | | — | | 6,031 | (7) | 737,290 | Kristin D. Russell | | | 02/19/2020 | | — | | 1,821 | | 79.22 | | 02/19/2030 | | 02/19/2020 | | 473 | | 57,824 | | — | | — | | | | | | — | | — | | — | | — | | 02/17/2021 | | 2,347 | | 286,921 | | — | | — | | | | | | — | | — | | — | | — | | 02/16/2022 | | 3,524 | | 430,809 | | — | | — | | | | | | — | | — | | — | | — | | 02/15/2023 | | 5,227 | | 639,001 | | — | | — | | | | | | — | | — | | — | | — | | 02/17/2021 | | — | | — | | 4,694 | (4) | 573,842 | | | | | | — | | — | | — | | — | | 02/16/2022 | | — | | — | | 4,699 | (5) | 574,453 | | | | | | — | | — | | — | | — | | 02/15/2023 | | — | | — | | 5,227 | (7) | 639,001 |
| | |
|
| 6171
|
| | | | | | | | | | | | | | | | | | | | |
|---|
| | | | | | | | | | | | | | | | | | | | |
|---|
Outstanding Equity Awards at Fiscal Year-End |
|---|
| Option Awards | | | | Stock Awards |
|---|
| | | | | | | | | | | | | | | | Equity | | | | Equity Incentive |
|---|
| | | | | | | | | | | | | | | | Incentive | | | | Plan Awards: |
|---|
| | | | | | | | | | | | | | Market | | Plan Awards; | | | | Market or |
|---|
| | | | | | | | | | | | | | Value of | | Number of | | | | Payout Value |
|---|
| | Number of | | Number of | | | | | | | | Number of | | Shares or | | Unearned | | | | of Unearned |
|---|
| | Securities | | Securities | | | | | | | | Shares or | | Units of | | Shares, Units | | | | Shares, Units |
|---|
| | Underlying | | Underlying | | | | | | | | Units of | | Stock Held | | or Other | | | | or Other |
|---|
| | Unexercised | | Unexercised | | Option | | Option | | Stock | | Stock Held | | That Have | | Rights That | | | | Rights That |
|---|
| | Options – | | Options – | | Exercise | | Expiration | | Award | | That Have | | Not Yet | | Have Not | | Vesting | | Have Not Yet |
|---|
| | Exercisable | | Unexercisable | | Price | | Date | | Grant | | Not Vested | | Vested | | Yet Vested | | Dates | | Vested |
|---|
Name | | (#) | | (#) | | ($)(1) | | (1) | | Date | | (#)(2) | | ($)(2) | | (#)(3) | | (4) | | ($)(3) |
|---|
Gretchen K. Zech | | 7,897 | | — | | 41.56 | | 02/17/2023 | | — | | — | | — | | — | | — | | — | | | 7,349 | | — | | 56.71 | | 02/17/2024 | | — | | — | | — | | — | | — | | — | | | 8,510 | | — | | 62.13 | | 02/16/2025 | | — | | — | | — | | — | | — | | — | | | 10,267 | | — | | 56.43 | | 02/22/2026 | | — | | — | | — | | — | | — | | — | | | 8,811 | | 2,936 | | 73.86 | | 02/19/2027 | | 02/21/2017 | | 795 | | 77,354 | | — | | 02/21/2021 | | — | | | 5,406 | | 5,404 | | 81.95 | | 02/18/2028 | | 02/20/2018 | | 1,525 | | 148,383 | | — | | (a) | | — | | | 3,583 | | 10,748 | | 81.05 | | 02/16/2029 | | 02/19/2019 | | 3,007 | | 292,581 | | — | | (b) | | — | | | — | | 15,785 | | 79.22 | | 02/19/2030 | | 02/19/2020 | | 4,102 | | 399,125 | | — | | (c) | | — | | | — | | — | | — | | — | | 02/20/2018 | | — | | — | | 6,101 | | 02/20/2021 | | 593,627 | | | — | | — | | — | | — | | 02/19/2019 | | — | | — | | 8,020 | | 02/19/2022 | | 780,346 | | | — | | — | | — | | — | | 02/19/2020 | | — | | — | | 8,205 | | 02/19/2023 | | 798,347 |
| | | | | | | | | | | | | | | | | | | | |
|---|
2023 Outstanding Equity Awards at Fiscal Year-End |
|---|
| | Option Awards | | Stock Awards |
|---|
| | | | | | | | | | | | | | | | | | Equity | | Equity Incentive |
|---|
| | | | | | | | | | | | | | | | | | Incentive | | Plan Awards: |
|---|
| | | | | | | | | | | | | | | | Market | | Plan Awards; | | Market or |
|---|
| | | | | | | | | | | | | | | | Value of | | Number of | | Payout Value |
|---|
| | | | Number of | | Number of | | | | | | | | Number of | | Shares or | | Unearned | | of Unearned |
|---|
| | | | Securities | | Securities | | | | | | | | Shares or | | Units of | | Shares, Units | | Shares, Units |
|---|
| | | | Underlying | | Underlying | | | | | | | | Units of | | Stock Held | | or Other | | or Other |
|---|
| | | | Unexercised | | Unexercised | | Option | | Option | | Stock | | Stock Held | | That Have | | Rights That | | Rights That |
|---|
| | Option | | Options – | | Options – | | Exercise | | Expiration | | Award | | That Have | | Not Yet | | Have Not | | Have Not Yet |
|---|
| | Grant | | Exercisable | | Unexercisable | | Price | | Date | | Grant | | Not Vested | | Vested | | Yet Vested | | Vested |
|---|
Name | | Date(1) | | (#)(1) | | (#)(1) | | ($)(1) | | (1) | | Date | | (#)(2) | | ($)(2) | | (#)(3) | | ($)(3) |
|---|
Carine L. Jean - Claude | | 02/21/2017 | | 2,187 | | — | | 73.86 | | 02/19/2027 | | — | | — | | — | | — | | — | | | 02/20/2018 | | 1,891 | | — | | 81.95 | | 02/18/2028 | | — | | — | | — | | — | | — | | | 02/19/2019 | | 2,204 | | — | | 81.05 | | 02/16/2029 | | — | | — | | — | | — | | — | | | 02/19/2020 | | 1,367 | | 455 | | 79.22 | | 02/19/2030 | | 02/19/2020 | | 118 | | 14,426 | | — | | — | | | | | — | | — | | — | | — | | 02/17/2021 | | 328 | | 40,098 | | — | | — | | | | | — | | — | | — | | — | | 02/16/2022 | | 2,055 | | 251,224 | | — | | — | | | | | — | | — | | — | | — | | 02/15/2023 | | 3,418 | | 417,851 | | | | | | | | | — | | — | | — | | — | | 02/17/2021 | | — | | — | | 657 | (4) | 80,318 | | | | | — | | — | | — | | — | | 02/16/2022 | | — | | — | | 2,741 | (5) | 335,087 | | | | | — | | — | | — | | — | | 02/15/2023 | | — | | — | | 3,417 | (7) | 417,728 | Michael J. Long (8) | | | | — | | — | | — | | — | | 02/19/2020 | | 4,733 | | 578,609 | | — | | — | | | | | — | | — | | — | | — | | 02/17/2021 | | 14,082 | | 1,721,525 | | — | | — | | | | | — | | — | | — | | — | | 02/16/2022 | | 17,619 | | 2,153,923 | | — | | — | | | | | — | | — | | — | | — | | 02/15/2023 | | 24,124 | | 2,949,159 | | — | | — | | | | | — | | — | | — | | — | | 02/17/2021 | | — | | — | | 28,167 | (4) | 3,443,416 | | | | | — | | — | | — | | — | | 02/16/2022 | | — | | — | | 23,493 | (5) | 2,872,019 | Kirk D. Schell (9) | | | | — | | — | | — | | — | | 05/11/2022 | | 13,518 | (10) | 1,652,576 | | — | | — | | | | | — | | — | | — | | — | | 02/15/2023 | | 6,031 | | 737,290 | | — | | — | | | | | — | | — | | — | | — | | 02/15/2023 | | — | | — | | 6,031 | (7) | 737,290 |
| (1) | These columns reflect the grant date, number of options exercisable and unexercisable, exercise price, and expiration date respectively, for all of the stock options under each award. Each option expires ten years after its grant date. All of the awards were issued under the Company's LTIP. AllAccordingly, all stock options: (a) have an exercise price equal to the closing market price of the awardsCompany’s common stock on the grant date; (b) vest in four equal amounts on the first, second, third, and fourth anniversaries of the grant datedate; and have an exercise price equal to the closing market price of the Company's common stock on(c) expire ten years after the grant date. |
| (2) | These columns reflect the number of unvested restricted shares or stock unitsRSUs held by each NEO under each award of restricted shares or stock units and the associated value. The dollar value of those units is calculated using the closing market price of the Company’s common stock on December 31, 2020.29, 2023. Except as otherwise noted, the RSUs reported in this column vest in four equal amounts on the grant date's first, second, third, and fourth anniversaries. |
| (3) | These columns show the number of shares or units of Arrow common stock each NEO would receive under each grant of performance shares or units,PSUs, assuming that the performance criteria achievement is 100%, and the. The dollar value of those shares orstock units is calculated using the closing market price of the Company’s common stock on December 31, 2020.29, 2023. PSUs vest, if at all, depending on whether vesting conditions are met after the end of the three-year performance period and after the Compensation Committee determines the attainment level. |
| (4) | With regardThese PSUs were awarded on February 17, 2021, and vest upon the Compensation Committee’s certification of our Company’s cumulative achievement of specific three-year EPS growth goals compared to the stockEPS growth of Arrow’s Peer Group and Arrow’s three-year average ROIC in excess of its three-year WACC over the 2021 to 2023 performance period. Due to the cumulative goals, the amounts reported in this column are based on target achievement of the applicable performance goals. |
| (5) | These PSUs were awarded on February 16, 2022, and vest upon the Compensation Committee’s certification of our Company’s cumulative achievement of specific three-year EPS growth goals compared to the EPS growth of Arrow’s Peer Group and Arrow’s three-year average ROIC in excess of its three-year WACC over the 2022 to 2024 performance period. Due to the cumulative goals, the amounts reported in this column are based on target achievement of the applicable performance goals. |
| (6) | These PSUs were awarded on June 1, 2022, and vest upon the Compensation Committee’s certification of our Company’s cumulative achievement of specific three-year EPS growth goals compared to the EPS growth of Arrow’s Peer Group and Arrow’s three-year average ROIC in excess of its three-year WACC over the 2022 to 2024 performance period. Due to the cumulative goals, the amounts reported in this column are based on target achievement of the applicable performance goals. |
| (7) | These PSUs were awarded on February 15, 2023, and vest upon the Compensation Committee’s certification of our Company’s cumulative achievement of specific three-year EPS growth goals compared to the EPS growth of Arrow’s Peer Group and Arrow’s three-year average ROIC in excess of its three-year WACC over the 2023 to 2025 performance period. Due to the cumulative goals, the amounts reported in this column are based on target achievement of the applicable performance goals. |
| (8) | In connection with Mr. Long’s retirement, equity award vesting continues in accordance with their respective vesting schedules, subject to forfeiture in the event of a non-compete violation. |
| (9) | In exchange for Mr. Schell signing a general release of claims in favor of the Company, Mr. Schell’s unvested equity awards the following describes the vesting dates: (i) those awards designated by “(a)”will continue to vest in two equal installmentsaccordance with their respective vesting schedules until his eighteen-month severance period ends on the thirdFebruary 28, 2025. |
| (10) | These RSUs were awarded on May 11, 2022, and fourth anniversaries of the grant date; (ii) those awards designated by “(b)” vest in three equal installmentsamounts on the second, third, and fourth anniversaries of the grant date; (iii) those awards designated by “(c)” vest in four equal installments on thedate’s first, second, and third and fourth anniversaries of the grant date; (iv) those awards designated by “(d)” vest in three equal installments on the third, fourth, and fifth anniversaries of the grant date.anniversaries. |
| | | | 62 72
|
| |
The following table sets forth the maximum potential number of PSUs which may be awarded to each of the NEOs for PSU awards granted in 2023, 2022, and 2021. For more information, please see the “Long-Term Incentive Awards” section in the CD&A. | | | | | | | | | Maximum Performance Stock Units | Name | | 2021 | | 2022 | | 2023 | Sean J. Kerins | | 19,976 | | 25,924 | | 29,754 | Rajesh K. Agrawal | | — | | — | | 16,363 | Gretchen K. Zech | | 11,291 | | 10,865 | | 11,157 | Kristin D. Russell | | 8,684 | | 8,693 | | 9,670 | Carine L. Jean-Claude | | 1,215 | | 5,071 | | 6,321 | Michael J. Long | | 52,109 | | 43,462 | | — | Kirk D. Schell | | — | | — | | 11,157 |
STOCK VESTED AND OPTIONS EXERCISED IN 202023 The following table provides information concerning the value realized by each NEO upon the vesting of restrictedRSUs and performance unitsPSUs and the exercise of stock options during 2020.2023. The value realized on the vesting of restrictedRSUs and performance unitsPSUs is based on the number of shares vesting and the closing market price of the Company’s common stock on the vesting date. The value realized on the exercise of stock options shown below is based on the difference between the exercise price per share paid by the executive and the closing market price of the Company’s common stock on the exercise date. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Vested and Options Exercised | | Options Exercised and Stock Vested | | Options Exercised and Stock Vested | | | | | Stock Awards | | Option Awards | | | Option Awards | | Stock Awards | | | | | Number of | | | | Number of | | | | Number of | | | | Number of | | | | | | | Shares Acquired | | Value Realized | | Shares Acquired | | Value Realized | | Shares Acquired | | Value Realized | | Shares Acquired | | Value Realized | | | | | on Vesting | | on Vesting | | on Exercise | | on Exercise | | on Exercise | | on Exercise | | on Vesting | | on Vesting | Name | | Award Type | | (#) | | ($) | | (#) | | ($) | | (#) | | ($) | | (#) | | ($) | Sean J. Kerins | | | 7,043 | | 465,930 | | 20,944 | | 2,591,101 | Rajesh K. Agrawal | | | — | | — | | 10,089 | | 1,290,988 | Gretchen K. Zech | | | — | | — | | 15,771 | | 1,948,892 | Kristin D. Russell | | | 3,475 | | 130,785 | | 8,245 | | 1,018,775 | Carine L. Jean-Claude | | | — | | — | | 2,364 | | 292,166 | Michael J. Long | | 2017 PSUs — 3 Yr | | 42,242 | | 3,379,360 | | — | | — | | 49,288 | | 2,815,641 | | 111,332 | | 13,755,518 | | | RSUs | | 35,014 | | 2,775,063 | | — | | — | | | | Stock Options | | — | | — | | 81,840 | | 2,394,925 | | Christopher D. Stansbury | | 2017 PSUs — 3 Yr | | 7,041 | | 563,280 | | — | | — | | | | RSUs | | 16,096 | | 1,034,093 | | — | | — | | | | Stock Options | | — | | — | | — | | — | | Sean J. Kerins | | 2017 PSUs — 3 Yr | | 8,096 | | 647,680 | | — | | — | | | | RSUs | | 4,228 | | 333,157 | | — | | — | | | | Stock Options | | — | | — | | 13,801 | | 390,125 | | Andrew D. King | | 2017 PSUs — 3 Yr | | 7,745 | | 619,600 | | — | | — | | | | RSUs | | 13,008 | | 1,017,833 | | — | | — | | | | Stock Options | | — | | — | | — | | — | | Gretchen K. Zech | | 2017 PSUs — 3 Yr | | 6,618 | | 529,440 | | — | | — | | | | RSUs | | 12,185 | | 953,075 | | — | | — | | | | Stock Options | | — | | — | | — | | — | | Kirk D. Schell | | | — | | — | | 6,760 | | 802,412 |
| | |
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| 6373
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2023 NONQUALIFIED DEFERRED COMPENSATION The Executive Deferred Compensation Plan (“EDCP”) was frozen to new contributions as of December 31, 2019. Carine L. Jean-Claude, who was an NEO during the year, had an outstanding balance under the EDCP. Ms. Jean-Claude is the only NEO that participated in the EDCP. The EDCP allows participants to direct their plan assets among the same investment choices as available under the Arrow Electronics, Inc. 401(k) Savings Plan. Distribution options include in-service withdrawals or lump sum payments made at the time of separation from service. | | | | | | | | | | | | | | | | | | | | | | | | | | | Aggregate | | Aggregate | | | Executive | | Registrant | | Aggregate | | Withdrawals/ | | Balance at | | | Contributions | | Contributions | | Earnings | | Distributions | | December 31, | Name | | in 2023 | | in 2023 | | in 2023 | | in 2023 | | 2023 | Sean J. Kerins | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | Rajesh K. Agrawal | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | Gretchen K. Zech | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | Kristin D. Russell | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | Carine L. Jean-Claude | | $ | — | | $ | — | | $ | 38,446 | | $ | — | | $ | 215,196 | Michael J. Long | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | Kirk D. Schell | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — |
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Arrow maintains a non-qualified Supplemental Executive Retirement Plan under which the Company will pay pension benefits to certain employees upon retirement or as a result of certain other termination events. AsTwelve current executives participate in the SERP as of December 31, 2020, there were ten current executives participating in the SERP.2023. The Board determines participant eligibility, and each NEO employed by the eligibilityCompany as of the NEOs who participate. Each of the NEOsDecember 31, 2023, participates in the SERP. The typical gross SERP benefit is calculated by multiplying 2.5% of final average compensation (salary plus targeted incentive compensation) by the participant’s years of credited service (SERP participation) up to a maximum of 18eighteen years. Final average compensation is ordinarily the highest average of any three years during the participant’s final five years of service. Both final average compensation and service are frozen as of normal retirement date (age 60)(generally age 60, unless otherwise specified in written notice to a participant from the Board). The gross benefit is reduced by the value of hypothetical defined contribution plan contributions and 50% of Social Security.Security benefits. The benefit described above is payable at normal retirement age 60 for participants who remain in service until that time. In addition, participants are eligible for early retirement at age 55 or when combined years of age and service equals at least 72, if later. Benefits are reduced by 7% perfor each year that retirement precedes age 60.normal retirement age. Except as provided below, no benefits are payable for termination prior to retirement eligibility.eligibility, and no benefits are payable if a retired participant dies before payments commence. The normal form of benefits provided is a single life annuity with 60sixty monthly payments guaranteed. Other monthly annuity payment forms are also available. The years of credited service for each of the NEOs and the present value of their respective accumulated benefits as of December 31, 20202023, are set out onin the following table. None of the NEOs received any payments under the SERP in or with respect to 2020.2023. As of December 31, 2020,2023, Mr. LongKerins was the only NEO eligible for normal retirement. The present value calculation assumes each recipient remains employed until normal 74 |
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retirement age (generally at age 60) or December 31, 20202023, for those beyond normal retirement age. The remainder of the assumptions underlying the calculation of the present value of the benefits are discussed in Note 1413 to the Company’s Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2020.2023. | | | | | | | Pension Benefits | | | Number of Years of | | Present Value of | | Payments During | | | Credited Service | | Accumulated Benefit | | Last Fiscal Year | Name | | (#) | | ($) | | ($) | Sean J. Kerins | | 9.58 | | 7,324,332 | | — | Rajesh K. Agrawal | | 1.25 | | 370,369 | | — | Gretchen K. Zech | | 12.08 | | 3,979,867 | | — | Kristin D. Russell | | 2.83 | | 555,802 | | — | Carine L. Jean-Claude | | 2.50 | | — | | — | Michael J. Long | | 18.00 | | 16,446,707 | | — | Kirk D. Schell (1) | | — | | — | | — |
| | | | | | | | | | | | | | Pension Benefits | | | Number of Years of | | Present Value of | | Payments During | | | Credited Service | | Accumulated Benefit | | Last Fiscal Year | Name | | (#) | | ($) | | ($) | Michael J. Long | | 18.00 | | 21,623,080 | | — | Christopher D. Stansbury | | 4.58 | | 2,296,056 | | — | Sean J. Kerins | | 6.58 | | 3,246,367 | | — | Andrew D. King | | 5.00 | | 2,414,202 | | — | Gretchen K. Zech | | 9.08 | | 3,223,491 | | — |
| (1) | As Mr. Schell was not eligible for retirement at the time of his departure, Mr. Schell forfeited his SERP benefits. |
The SERP provides that if a participant’s employment is terminated involuntarily without “cause” or voluntarily for “good reason,” in either case within two years after a “change in control” of the Company, the participant will receive an annual benefit under the SERP upon reaching age 60. The payment amount of the payment is based on the amount accrued up to the time of the termination. No payments will be made if the participant is not yet age 50 at the time of the “change in control” related termination. Should a participant become disabled before retiring, his or hertheir accrued SERP benefits will generally commence at age 60, subject to reduction for Company-paid disability benefits received for the same payment period and for termination prior to age 60. | | | | 64
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Benefits under the SERP may terminate, with no further obligation to the recipient, if the participant becomes involved in any way with an entity whichthat competes with Arrow (except for limited ownership of stock in a publicly traded company). The present values of the SERP benefitsbenefit accrued through year-end by the NEOs in the event of termination, death, disability, or a change in control of the Company are set forth onin the table labeled “2023 Potential Payouts Upon Termination Table.Termination” below. DEFERRED COMPENSATION PLANS
The Executive Deferred Compensation Plan (“EDCP”) was frozen as of December 31, 2019.
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| 6575
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AGREEMENTS AND POTENTIAL PAYOUTS
UPON TERMINATION OR CHANGE IN CONTROL The Company does not enter into employment agreements with senior management. The Company does, however, have a common Severance Policy and an “ExecutiveExecutive Change in Control Retention Agreement”Agreement for its executives. SEVERANCE POLICY Under the current Severance Policy, upon an involuntary termination of employment of any of the NEOs without “cause,” the Company willwould pay such NEO a pro ratapro-rata portion of his or her MICPtheir annual cash incentive with respect to the year of termination plus his or hertheir base salary and MICP awardsannual cash incentive (prorated as applicable) for a period of 18eighteen months (24(twenty-four months for the CEO) (in each case, “Severance Period”). Salary continuation payments would be made in accordance with the Company’s customary payroll practices. MICP amounts,Annual cash incentive awards, if any, would be paid on the date they are normally paid to the Company’s then-current executives. Each NEO also would receive continuation of health care benefit coverage at the same level of coverage through the Severance Period or equivalent benefits, as determined in the sole reasonable discretion of the Compensation Committee. The Company will also reimburse the NEO for the cost of outplacement services up to a maximum of $50,000 ($75,000 for the CEO). The Severance Policy imposes an affirmative duty on each NEO to seek substitute employment that is reasonably comparable to such NEO’s employment with the Company in order to mitigate the severance payments and benefits provided under the Severance Policy. The Company can offset certain of those sums earned elsewhere. The Severance Policy is subject to change at the discretion of the Compensation Committee. As a condition to receiving these benefits, the Severance Policy requires the NEO to execute a general release of claims and a restrictive covenants agreement in favor of the Company. UnderGenerally, under the restrictive covenants agreement, the NEO must agree to covenants providing for (i) the confidentiality of the Company’s information, (ii) non-competition in specified businesses and industries, and (iii) non-solicitation of the Company’s employees and customers for a period equal to the relevant Severance Period. In the case of termination of the NEO’s employment without “cause,” his or hertheir outstanding equity-based awards would continue to vest through the duration ofthroughout the Severance Period. Equity-based awards that do not vest prior tobefore the end of the Severance Period would be forfeited. Vested stock options would remain exercisable until the earlier of the expiration of the Severance Period or the expiration date as provided in the applicable award agreement. Unvested equity-based awards held by NEOs would vest in the event of death or disability. Vested stock options would remain exercisable until the expiration date of such stock option,the Severance Period, or if earlier, the expiration date, as provided in the applicable award agreement. Also, any shares to which an NEO is entitled by reason of a vested PSU would be delivered within thirty days following the date of his or hertheir death or disability. | | | | 66 76
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PARTICIPATION AGREEMENTS Each NEO who consented to the early termination of his or hertheir employment and change in control agreements in 2013 was eligible to enter into a Participation Agreement with the Company (“Participation Agreement”). Under the Participation Agreement, the Company: (i) is prohibited from modifying or amending certain terms of the Severance Policy as they relate to that NEO and (ii) will provide severance benefits upon termination for “good reason” at a benefit level equal to that provided under the Severance Policy and upon an involuntary termination of employment without “cause” of such NEO. “Good reason” terminations include the executive terminating as a result of the Company reducing the executive’s base salary or incentive target; any adverse change in the executive’s position; and any material diminution in the executive’s duties, responsibilities, or authority. Mr. Long and Ms. Zech werewas the only current NEOsNEO eligible to enter into a Participation Agreement, and they both did so.which she did. The Company does not expect to enter into any such Participation Agreements in the future. CHANGE IN CONTROL RETENTION AGREEMENTS Each of the continuing NEOs is a party to a Change in Control Retention Agreement. The purpose of the Change in Control Retention Agreements is to provide the NEOs with certain compensation and benefits in the event of an involuntary termination of employment without “cause” or resignation for “good reason,” in either case within 24twenty-four (24) months following a “change in control.” Examples of terminationTermination for “cause” is defined in each Change in Control Retention Agreement to include terminations for a felony conviction; willful failure to perform duties; willful misconduct; and willful failure to abide by any lawful policy adopted by the Company. “Good reason” terminationsis defined in each Change in Control Retention Agreement to include the executive terminating as a result of the Company reducing the executive’s base salary or incentive target;target or the Company failing to pay any compensation to the executive when due; any adverse change in the executive’s position; and any material diminution in the executive’s duties, responsibilities, or authority. If an NEO receives benefits under his or her Change in Control Retention Agreement, the NEO will not receive severance payments under the Severance Policy or Participation Agreement (if applicable). Under the Change in Control Retention Agreements, the NEOs are eligible for compensation and benefits if, within two yearstwenty-four (24) months following a “changechange in control, date,” the NEO’s employment is terminated without “cause” by the Company or for “good reason” by the executive, each as defined in the Change in Control Retention Agreement. In such event, the terminated NEO is entitled to receive a lump sum cash payment in the aggregate of the following amounts: (i) all unpaid base salary, earned vacation, and earned but unpaid benefits and awards through the date of termination; (ii) three times (forfor the CEO)CEO or two times (forfor all other NEOs)NEOs the sum of (a) the greater of such NEO’s annual base salary in effect immediately prior to the change in control date or the date of termination and (b) the greater of such NEO’s target MICP awardannual cash incentive in effect immediately prior to the change in control date or the date of termination; (iii) a pro rata MICP paymentpro-rata annual cash incentive award for the calendar year of termination (determined based on the basis of actual performance); and (iv) continuation of coverage under the Company’s health care plan for a period not to exceed 24twenty-four months (36(thirty-six months for the CEO). The estimated payments that the NEOs would receive under their respective Change in Control Retention Agreements are set forth in the table labeled “2023 Potential Payouts Upon Termination Table.Termination” below. However, the severance payments to the NEOs pursuant to Change in Control Retention Agreements may be limited in certain circumstances. Specifically, the Change in Control Retention Agreements provide that if an amount payable to an NEO would be treated as an “excess parachute payment,”payment” and would therefore reduce the tax deductibility by the Company and result in an excise tax being imposed on the NEO, then the severance payment will be reduced to a level sufficient to avoid these adverse consequences. However, if the severance payment amounts payable to the NEO, taking into account the effect of all of the applicable taxes, including the excise tax imposed, would be greater than the amount payable if the amount were reduced as described above, the NEO willwould receive this greater amount, without consideration for the impact this payment may have on the Company’s tax deductibilitytax-deductibility of such payment. The Change in Control Retention Agreement does not affect the rights and benefits to which NEOs are entitled under any of the Company’s equity compensation plans, which such rights and benefits are governed by the terms and conditions of the relevant plans and award agreements. | | |
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| 6777
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IMPACT OF SECTION 409A OF THE INTERNAL REVENUE CODE Each of the Change in Control Retention Agreements between the Company and the NEOs has provisions that ensure complianceare intended to comply with Section 409A of the Internal Revenue Code by deferring any payment due upon termination of employment for up to six months to the extent required by Section 409A of the Internal Revenue Code and addingCode. The Change in Control Retention Agreements also include an interest component to the amount due for the period of deferral (at the then-current six- month Treasury rate). 78 |
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2023 POTENTIAL PAYOUTS UPON TERMINATION The following table sets forth the estimated payments and value of benefits that each of the NEOs would be entitled to receive under his or hertheir Change in Control Retention Agreement and the Severance Policy, including theMs. Zech’s Participation Agreements, as applicable,Agreement, in the event of the termination of employment under various scenarios, assuming that the termination occurred on December 31, 2020.2023. The amounts represent the entire value of the estimated liability, even if some or all of that value has been disclosed elsewhere in this Proxy Statement. Actual amounts that the Company may pay out and the assumptions used in arriving at such amounts can only be determined at the time of each such executive’sNEO’s termination or the change in control and could differ materially from the amounts set forth below. The NEOs are not entitled to receive any payment at, following, or in connection with the termination of his or hertheir employment for cause. In both the table below and the Share-Based Award Agreement Terms Related to Post-Employment Scenarios Tabletable which follows it: | > | Death refers to the death of the executive; |
> | Disability refers to the executive becoming permanently and totally disabled during the term of employment; |
| > | Termination Without Cause or Resignation for Good Reason means that the executive is asked to leave the Company for some reason other than “cause” (as defined in the Severance Policy) or the executive voluntarily leaves the Company for “good reason” (as defined in theMs. Zech’s Participation Agreement, if applicable, which generally includes the Company failing to allow the executive to continue in a then-currentthen-current or an improved position, or where the executive’s reporting relationship is changed so that he or shethe executive no longer reports to the CEO, and as further defined in each applicableMs. Zech’s Participation Agreement); |
| > | Change in Control Termination means the occurrence of both a change in control of the Company and the termination of the executive’s employment without “cause” or resignation for “good reason” within two years following the change in control; and |
| > | Retirement means the executive’s voluntary departure at or after retirement age as defined by the Company’s SERP (typically, age 60). As of December 31, 2023, Mr. Kerins was the only NEO eligible for normal retirement, while Ms. Jean-Claude was eligible for early retirement. Each executive is eligible for early retirement in the event that such executive reaches the age of 55 and the combined years of age and service equals at least 72. Mr. Long was eligible for retirement as of December 31, 2020.seventy-two. |
Michael J. Long – Retirement Benefits As noted in the CD&A of this Proxy Statement, effective May 17, 2023, Mr. Long ceased to be an executive officer of the Company and formally retired as an employee of the Company effective July 5, 2023. In connection with Mr. Long’s retirement, equity award vesting continues in accordance with their respective vesting schedules, subject to forfeiture in the event of a non-compete violation. The following equity awards are expected to vest (the estimated values are based on the Company’s closing stock price as of December 29, 2023 and assuming target performance in the case of the PSUs): 51,660 PSUs valued at $6,315,435 and 60,558 RSUs valued at $7,403,216. In addition, the Compensation Committee approved an exception to the Management Incentive Compensation Plan’s requirement to be employed by Arrow on the day the annual cash incentive awards are paid and, as a result of this approval, Mr. Long received a pro-rated annual cash incentive award for the period January 1, 2023, through July 5, 2023, based on the Company’s achievement of the relevant performance goals in the amount of $693,158. Mr. Long will also receive benefits under the SERP with a value of $16,446,707 as of December 31, 2023, as described further above under “Supplemental Executive Retirement Plan.” Kirk D. Schell – Separation Benefits As noted in the CD&A of this Proxy Statement, effective August 16, 2023, Mr. Schell ceased to be an executive officer of the Company and left the Company effective August 31, 2023. Due to his termination without cause and in exchange for Mr. Schell signing a general release of claims in favor of the Company, he became eligible for certain benefits pursuant to the Severance Policy during his eighteen-month severance period, which is expected to end on February 28, 2025. Pursuant to the Severance Policy, Mr. Schell is eligible to receive monthly salary continuation payments, adjusted severance period bonuses based on annual cash incentive targets, and continued vesting of his unvested equity awards in accordance with their respective vesting schedules during the severance period. During 2023, Mr. Schell received salary continuation payments in the amount of $166,667 and is eligible to receive up to $583,334 of additional salary continuation payments through February 2025. Mr. Schell received a severance payment in the amount of $304,090 based on his 2023 annual cash incentive target. The first portion of the payment was prorated for the period he was actively employed and based on the Company’s achievement of the financial goals and the strategic performance goals. The second portion of the payment was prorated for the first four months of his severance period through December 31, 2023, and based only on the Company’s achievement of the financial goals. Mr. Schell may receive additional severance period bonuses based only on the Company’s achievement of financial goals and prorated for the remainder of the severance period. Assuming 100% achievement of the financial goals, Mr. Schell would be eligible to receive $406,560 of additional severance period bonus payments in the future. The following equity awards are expected to vest during the severance period (the estimated values are based on the Company’s closing stock price as of December 29, 2023): 9,775 RSUs valued at $1,194,994, with the remainder of his unvested equity awards being forfeited. Mr. Schell received a severance benefit subsidy in the amount of $30,998 and is eligible to receive reimbursement for outplacement services up to $50,000. Further, as Mr. Schell was not eligible for retirement at the time of his departure, he will not receive any SERP benefit payments. 80 |
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Potential Payouts Upon Termination |
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| | | | | | | | Without Cause | | | | |
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| | | | | | | | Resignation for | | Control | | |
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| | | | Death | | Disability | | Good Reason | | Termination | | Retirement |
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Name | | Benefit | | ($) (1) | | ($) (2) | | ($) (3) (4) | | ($) (5) | | ($) (6) (7) |
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Sean J. Kerins | | Severance Payment | | — | | — | | 2,000,000 | | 9,000,000 | | — | | | Prorated Annual Cash Incentive | | 2,000,000 | | 2,000,000 | | 2,000,000 | | 2,000,000 | | — | | | Annual Cash Incentive (Severance) | | — | | — | | 2,800,000 | | — | | — | | | TOTAL Annual Cash Incentives | | 2,000,000 | | 2,000,000 | | 4,800,000 | | 2,000,000 | | — | | | Performance Stock Unit Awards (8) | | 4,999,292 | | 4,999,292 | | 4,999,292 | | 4,999,292 | | 4,999,292 | | | Non-Qualified Stock Option Awards (8) | | 195,873 | | 195,873 | | 195,873 | | 195,873 | | 195,873 | | | Restricted Stock Unit Awards (8) | | 4,055,033 | | 4,055,033 | | 4,055,033 | | 4,055,033 | | 4,055,033 | | | TOTAL Long-Term Incentive Awards | | 9,250,198 | | 9,250,198 | | 9,250,198 | | 9,250,198 | | 9,250,198 | | | Management Insurance Benefit | | 12,000,000 | | — | | — | | — | | — | | | Welfare Benefits Continuation | | — | | 3,532 | | 14,324 | | 21,487 | | — | | | Outplacement Services | | — | | — | | 75,000 | | — | | — | | | Supplemental Executive Retirement Plan | | — | | 7,250,682 | | 7,324,332 | | 7,250,682 | | 7,324,332 | | | TOTAL | | 23,250,198 | | 18,504,412 | | 23,463,854 | | 27,522,367 | | 16,574,530 | Rajesh K. Agrawal | | Severance Payment | | — | | — | | 1,050,000 | | 2,800,000 | | — | | | Prorated Annual Cash Incentive | | 700,000 | | 700,000 | | 700,000 | | 700,000 | | — | | | Annual Cash Incentive (Severance) | | — | | — | | 735,000 | | — | | — | | | TOTAL Annual Cash Incentives | | 700,000 | | 700,000 | | 1,435,000 | | 700,000 | | — | | | Performance Stock Unit Awards (8) | | 1,081,301 | | 1,081,301 | | — | | 1,081,301 | | — | | | Non-Qualified Stock Option Awards (8) | | — | | — | | — | | — | | — | | | Restricted Stock Unit Awards (8) | | 4,781,564 | | 4,781,564 | | 1,774,214 | | 4,781,564 | | — | | | TOTAL Long-Term Incentive Awards | | 5,862,865 | | 5,862,865 | | 1,774,214 | | 5,862,865 | | — | | | Management Insurance Benefit | | 5,600,000 | | — | | — | | — | | — | | | Welfare Benefits Continuation | | — | | 10,191 | | 30,998 | | 41,331 | | — | | | Outplacement Services | | — | | — | | 50,000 | | — | | — | | | Supplemental Executive Retirement Plan | | — | | 303,775 | | — | | 366,127 | | — | | | TOTAL | | 12,162,865 | | 6,876,831 | | 4,340,212 | | 9,770,323 | | — | Gretchen K. Zech | | Severance Payment | | — | | — | | 1,012,500 | | 2,700,000 | | — | | | Prorated Annual Cash Incentive | | 675,000 | | 675,000 | | 675,000 | | 675,000 | | — | | | Annual Cash Incentive (Severance) | | — | | — | | 708,750 | | — | | — | | | TOTAL Annual Cash Incentives | | 675,000 | | 675,000 | | 1,383,750 | | 675,000 | | — | | | Performance Stock Unit Awards (8) | | 2,201,356 | | 2,201,356 | | 1,464,066 | | 2,201,356 | | — | | | Non-Qualified Stock Option Awards (8) | | 169,796 | | 169,796 | | 169,796 | | 169,796 | | — | | | Restricted Stock Unit Awards (8) | | 1,774,092 | | 1,774,092 | | 1,226,045 | | 1,774,092 | | — | | | TOTAL Long-Term Incentive Awards | | 4,145,244 | | 4,145,244 | | 2,859,907 | | 4,145,244 | | — | | | Management Insurance Benefit | | 5,400,000 | | — | | — | | — | | | | | Welfare Benefits Continuation | | — | | 6,694 | | 20,362 | | 27,149 | | — | | | Outplacement Services | | — | | — | | 50,000 | | — | | — | | | Supplemental Executive Retirement Plan | | — | | 2,584,898 | | — | | 3,933,098 | | — | | | TOTAL | | 10,220,244 | | 7,411,836 | | 5,326,519 | | 11,480,491 | | — |
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Potential Payouts Upon Termination |
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| | | | | | | | Termination | | | | |
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| | | | | | | | Without "Cause" or | | Change in | | |
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| | | | Death | | Disability | | for "Good Reason" | | Termination | | Retirement |
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Name | | Benefit | | ($) | | ($) | | ($) (1) | | ($) | | ($) |
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Michael J. Long | | Severance Payment (2) | | — | | — | | 2,640,000 | | 13,500,000 | | — | | | Settlement of MICP Bonus Award | | — | | — | | 4,452,000 | | — | | — | | | Settlement of Pro Rata MICP Bonus Award | | — | | — | | 3,180,000 | | 3,180,000 | | — | | | Settlement of Performance Awards (3) | | 12,690,450 | | 12,690,450 | | 7,163,421 | | 12,690,450 | | — | | | Settlement of Stock Options | | 1,743,331 | | 1,743,331 | | 1,474,605 | | 1,743,331 | | — | | | Settlement of Restricted Awards (3) | | 8,851,673 | | 8,851,673 | | 6,055,660 | | 8,851,673 | | — | | | Management Insurance Benefit | | 18,000,000 | | — | | — | | — | | — | | | Welfare Benefits Continuation | | — | | 5,557 | | 22,538 | | 28,173 | | — | | | SERP | | — | | 21,228,581 | | — | | 21,228,581 | | 21,623,080 | | | Other | | — | | — | | 75,000 | | — | | — | | | Total | | 41,285,454 | | 44,519,592 | | 25,063,224 | | 61,222,208 | | 21,623,080 | Christopher D. Stansbury | | Severance Payment (2) | | — | | — | | 1,050,000 | | 2,034,660 | | — | | | Settlement of MICP Bonus Award | | — | | — | | 735,000 | | — | | — | | | Settlement of Pro Rata MICP Bonus Award | | — | | — | | 700,000 | | 700,000 | | — | | | Settlement of Performance Awards (3) | | 2,684,994 | | 2,684,994 | | 1,702,458 | | 2,684,994 | | — | | | Settlement of Stock Options | | 743,072 | | 743,072 | | 495,833 | | 743,072 | | — | | | Settlement of Restricted Awards (3) | | 1,983,655 | | 1,983,655 | | 1,618,002 | | 1,983,655 | | — | | | Management Insurance Benefit | | 5,600,000 | | — | | — | | — | | — | | | Welfare Benefits Continuation | | — | | 8,133 | | 24,738 | | 32,983 | | — | | | SERP | | — | | 1,509,219 | | — | | 2,249,793 | | — | | | Other | | — | | — | | 50,000 | | — | | — | | | Total | | 11,011,721 | | 6,929,073 | | 6,376,031 | | 10,429,157 | | — | Sean J. Kerins | | Severance Payment (2) | | — | | — | | 975,000 | | 2,600,000 | | — | | | Settlement of MICP Bonus Award | | — | | — | | 682,500 | | — | | — | | | Settlement of Pro Rata MICP Bonus Award | | — | | — | | 650,000 | | 650,000 | | — | | | Settlement of Performance Awards (3) | | 2,593,337 | | 2,593,337 | | 1,672,198 | | 2,593,337 | | — | | | Settlement of Stock Options | | 722,849 | | 722,849 | | 491,053 | | 722,849 | | — | | | Settlement of Restricted Awards (3) | | 1,085,673 | | 1,085,673 | | 742,983 | | 1,085,673 | | — | | | Management Insurance Benefit | | 5,200,000 | | — | | — | | — | | — | | | Welfare Benefits Continuation | | — | | 2,846 | | 8,656 | | 11,542 | | — | | | SERP | | — | | 2,893,010 | | — | | 3,188,210 | | — | | | Other | | — | | — | | 50,000 | | — | | — | | | Total | | 9,601,859 | | 7,297,715 | | 5,272,390 | | 10,851,611 | | — |
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| 6981
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Potential Payouts Upon Termination |
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| | | | Death | | Disability | | for "Good Reason" | | Termination | | Retirement |
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Name | | Benefit | | ($) | | ($) | | ($) (1) | | ($) | | ($) |
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Andrew D. King | | Severance Payment (2) | | — | | — | | 975,000 | | 1,861,477 | | — | | | Settlement of MICP Bonus Award | | — | | — | | 682,500 | | — | | — | | | Settlement of Pro Rata MICP Bonus Award | | — | | — | | 650,000 | | 650,000 | | — | | | Settlement of Performance Awards (3) | | 2,563,660 | | 2,563,660 | | 1,642,521 | | 2,563,660 | | — | | | Settlement of Stock Options | | 715,048 | | 715,048 | | 483,252 | | 715,048 | | — | | | Settlement of Restricted Awards (3) | | 1,074,095 | | 1,074,095 | | 731,404 | | 1,074,095 | | — | | | Management Insurance Benefit | | 5,200,000 | | — | | — | | — | | — | | | Welfare Benefits Continuation | | — | | 5,557 | | 16,904 | | 22,538 | | — | | | SERP | | — | | 1,921,705 | | — | | 2,365,684 | | — | | | Other | | — | | — | | 50,000 | | — | | — | | | Total | | 9,552,803 | | 6,280,065 | | 5,231,581 | | 9,252,502 | | — | Gretchen K. Zech | | Severance Payment (2) | | — | | — | | 750,000 | | 2,000,000 | | — | | | Settlement of MICP Bonus Award | | — | | — | | 525,000 | | — | | — | | | Settlement of Pro Rata MICP Bonus Award | | — | | — | | 500,000 | | 500,000 | | — | | | Settlement of Performance Awards (3) | | 2,172,320 | | 2,172,320 | | 1,373,973 | | 2,172,320 | | — | | | Settlement of Stock Options | | 611,819 | | 611,819 | | 410,924 | | 611,819 | | — | | | Settlement of Restricted Awards (3) | | 917,442 | | 917,442 | | 620,482 | | 917,442 | | — | | | Management Insurance Benefit | | 4,000,000 | | — | | — | | — | | — | | | Welfare Benefits Continuation | | — | | 5,391 | | 16,397 | | 21,862 | | — | | | SERP | | — | | 1,609,606 | | — | | 3,157,574 | | — | | | Other | | — | | — | | 50,000 | | — | | — | | | Total | | 7,701,581 | | 5,316,578 | | 4,246,776 | | 9,381,017 | | — |
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Potential Payouts Upon Termination |
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| | | | | | | | Termination | | | | |
|---|
| | | | | | | | Without Cause | | | | |
|---|
| | | | | | | | or | | Change in | | |
|---|
| | | | | | | | Resignation for | | Control | | |
|---|
| | | | Death | | Disability | | Good Reason | | Termination | | Retirement |
|---|
Name | | Benefit | | ($) (1) | | ($) (2) | | ($) (3) (4) | | ($) (5) | | ($) (6) (7) |
|---|
Kristin D. Russell | | Severance Payment | | — | | — | | 825,000 | | 1,759,518 | | — | | | Prorated Annual Cash Incentive | | 550,000 | | 550,000 | | 550,000 | | 550,000 | | — | | | Annual Cash Incentive (Severance) | | — | | — | | 577,500 | | — | | — | | | TOTAL Annual Cash Incentives | | 550,000 | | 550,000 | | 1,127,500 | | 550,000 | | — | | | Performance Stock Unit Awards (8) | | 1,787,295 | | 1,787,295 | | 1,148,294 | | 1,787,295 | | — | | | Non-Qualified Stock Option Awards (8) | | 78,358 | | 78,358 | | 78,358 | | 78,358 | | — | | | Restricted Stock Unit Awards (8) | | 1,414,555 | | 1,414,555 | | 951,594 | | 1,414,555 | | — | | | TOTAL Long-Term Incentive Awards | | 3,280,208 | | 3,280,208 | | 2,178,246 | | 3,280,208 | | — | | | Management Insurance Benefit | | 4,400,000 | | — | | — | | — | | | | | Welfare Benefits Continuation | | — | | 10,191 | | 30,998 | | 41,331 | | — | | | Outplacement Services | | — | | — | | 50,000 | | — | | — | | | Supplemental Executive Retirement Plan | | — | | 286,177 | | — | | 550,098 | | — | | | TOTAL | | 8,230,208 | | 4,126,576 | | 4,211,744 | | 6,181,155 | | — | Carine L. Jean-Claude | | Severance Payment | | — | | — | | 675,000 | | 1,382,704 | | — | | | Prorated Annual Cash Incentive | | 450,000 | | 450,000 | | 450,000 | | 450,000 | | — | | | Annual Cash Incentive (Severance) | | — | | — | | 472,500 | | — | | — | | | TOTAL Annual Cash Incentives | | 450,000 | | 450,000 | | 922,500 | | 450,000 | | — | | | Performance Stock Unit Awards (8) | | 833,134 | | 833,134 | | 415,406 | | 833,134 | | — | | | Non-Qualified Stock Option Awards (8) | | 19,579 | | 19,579 | | 19,579 | | 19,579 | | — | | | Restricted Stock Unit Awards (8) | | 723,598 | | 723,598 | | 431,054 | | 723,598 | | — | | | TOTAL Long-Term Incentive Awards | | 1,576,311 | | 1,576,311 | | 866,039 | | 1,576,311 | | — | | | Management Insurance Benefit | | 3,600,000 | | — | | — | | — | | — | | | Welfare Benefits Continuation | | — | | 6,694 | | 20,362 | | 27,149 | | — | | | Outplacement Services | | — | | — | | 50,000 | | — | | — | | | Supplemental Executive Retirement Plan | | — | | — | | — | | — | | — | | | TOTAL | | 5,626,311 | | 2,033,005 | | 2,533,901 | | 3,436,164 | | — |
The benefits listed below are provided in accordance with the Executive Change in Control Retention Agreement, the Severance Policy, applicable equity award agreements, the Management Insurance Program, and the Supplemental Executive Retirement Plan. | (1) | As of December 31, 2020, of the NEOs, only Mr. Long and Ms. Zech were eligible to receive payments if he/she resigned for “good reason.” The numbers reflected for Messrs. Stansbury, Kerins, and King only apply in cases of termination without “cause.”Death |
(a) A prorated annual cash incentive award for the calendar year of termination, based upon actual performance, amount displayed is at target (b) Immediate vesting of all unvested equity awards (c) A lump-sum cash payment equal to four times the executive’s target total cash compensation, net of tax and payable under the Management Insurance Program | (2) | The Severance Payment amounts under the “Change in Control Termination” column reflect the anticipated payment that the NEOs would receive under their respective Change in Control Retention Agreements.Disability |
(a) A prorated annual cash incentive award for the calendar year of termination, based upon actual performance; amount displayed is at target (b) Immediate vesting of all unvested equity awards (c) Continued medical coverage under Arrow’s health plan for one-hundred eighty days (d) SERP benefit payments begin at normal retirement date but are reduced by the Early Payment Discount to reflect the date of disability | (3) | The categories “Settlement of Performance Awards” and “Settlement of Restricted Awards” include restricted award grants made to the NEOs that were subject to performance criteria that required the Company achieve a non-GAAP net income greater than zero or they would be canceled.Termination Without Cause |
(a) A prorated annual cash incentive award for the calendar year of termination, based upon actual performance, amount displayed is at target
(b) During the eighteen-month severance period (twenty-four-month severance period for the CEO) i. Salary continuation | | | | 70 82
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NARRATIVE EXPLANATION OF THE CALCULATION OF AMOUNTSii. Annual cash incentive award, based upon actual performance, but adjusted for 0% achievement for MBO performance
Hadiii. Equity award vesting continues
iv. Continued medical coverage under Arrow’s health plan or equivalent cash value (c) SERP benefit payments begin if the death, disability, or a changetermination date is after the earliest retirement date (d) Reimbursement for outplacement expenses – up to $50,000 ($75,000 for the CEO) (e) If eligible for normal retirement, equity award vesting continues in control termination of any of the NEOs occurred, all restricted awards, options, and performance awards would have fully vested. Theaccordance with their respective vesting schedules; stock options would remain exercisable for the remainder of their original term.term | (4) | As of December 31, 2023, of the NEOs, only Ms. Zech was eligible to receive payments upon a resignation for “good reason.” The numbers reflected for Messrs. Kerins, Agrawal, and Schell and Mses. Russell and Jean-Claude only apply in cases of termination without “cause.” |
| (5) | Change in Control Termination |
(a) A lump-sum cash payment equal to two times the executive’s target total cash compensation (three times for the CEO) None(b) A prorated annual cash incentive award for the calendar year of termination, based on actual performance, amount displayed is at target
(c) Immediate vesting of all unvested equity awards (d) Continued medical coverage under Arrow’s health plan for the earlier of (i) twenty-four months (thirty-six months for the CEO) after the termination date and (ii) attaining age 65 (e) SERP benefit payments begin at age 60 based upon Years of SERP Participation as of the NEOs would have received severance payments or MICP bonus awards in the event of disability or retirement. In the event of death, none of the NEOs would have received severance paymentstermination date, but would have received an MICP bonuswith no Early Payment Discount (a) If eligible for normal retirement, equity award (prorated as applicable). For Mr. Long and Ms. Zech, had a termination by the Company without “cause” or the resignation of Mr. Long or Ms. Zech for “good reason” occurred, he or she would have received his or her base salary and MICP bonus awards (prorated as applicable) for a period of twenty-four (24) months for Mr. Long and eighteen (18) months for Ms. Zech. Performance, restricted, and option awards would continue to vestvesting continues in accordance with their respective vesting schedules without regardschedules; stock options would remain exercisable for the remainder of their original term
(b) SERP benefit payments begin if the termination date is after the earliest retirement date | (7) | Mr. Kerins was eligible for normal retirement as of April 1, 2022 |
| (8) | Long-Term Incentive Awards |
(a) The categories “Performance Stock Unit Awards” and “Restricted Stock Unit Awards” include restricted award grants made to his continued employment. For Messrs. Stansbury, Kerins, and King, had a termination bythe NEOs that were subject to performance criteria that required the Company without “cause” occurred, the executiveto achieve non-GAAP net income greater than zero or they would have received his or her base salarybe canceled
(b) PSUs and MICP bonus award for a period of eighteen (18) months. During this period, performance, restricted, and option awards would continue to vest in accordance with their respective vesting schedules without regard to his continued employment. Performance awards and restricted awardsRSUs are valued atas of the closing market price of the Company’s common stock on December 31, 2020.29, 2023
(c) In-the-money stock options are valued based on the difference between the exercise price of the in-the-money options and the closing market price of the Company’s common stock on December 31, 2020.29, 2023 Had the retirement of any of the NEOs occurred, restricted awards would have fully vested and be distributed in accordance with their respective vesting schedules. Options, and performance awards would continue to vest in accordance with their respective vesting schedules without regard to continued employment. The options would remain exercisable for the remainder of their original term.
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| 7183
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PERFORMANCE STOCK UNIT, RESTRICTED STOCK UNIT, AND NON-QUALIFIEDNON-QUALIFIED STOCK OPTION AWARD AGREEMENTS The various share and share-based awards made to the NEOs are evidenced by written agreements, each of which contains provisions addressing alternative termination scenarios. The provisions applicable to NEOs are summarized in the following table for grants in 2020.2023. | | | | | | | | | | | | | | | | | | | Share-basedShare-Based Award Agreement Terms Related to Post-Employment Scenarios
| | Award Type |
|
| Voluntary
Resignation
| | | Death or Disability | | | Termination Without
Cause or Resignation for
Good Reason (1) | | | Involuntary
Termination
for Cause |
|
| Involuntary
Termination
Without Cause
or
for Good Reason
Within
Two Years
Following a
Change in
Control | | | Retirement at
Normal Retirement
Age |
|
| Involuntary
Termination
for Cause |
|
| Voluntary
Resignation | | Performance
Awards
| | | Unvested awards are forfeited.
| | | | | | | | | | | | | | | | | Performance Stock Units | | | If the performance cycleperiod has ended, any remaining unvested awards vest immediately based on performance criteria achievement. If the performance cycleperiod has not ended, the target number of awards vest immediatelyimmediately. | | | Awards with vesting dates falling within the Severance Period (as described in the Severance Policy) will vest, contingent upon satisfaction of performance criteria, if applicable, but subject to forfeiture in the event of a non-compete violation. | | | Unvested awards are forfeited.
|
|
| If the performance cycleperiod has ended, any remaining unvested awards vest immediately. If the performance cycleperiod has not ended, the target number of awards vest immediately.immediately | | | Vesting continues on schedule (based on performance during the performance cycle)period), subject to forfeiture in the event of a non-compete violation. | |
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| Restricted
Awards
|
|
| Unvested awards are forfeited. | | | Unvested awards are forfeited. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units | | | Unvested awards vest immediately. | | | Awards with vesting dates falling within the Severance Period (as described in the Severance Policy) will vest, contingent upon satisfaction of performance criteria, if applicable, but subject to forfeiture in the event of a non-compete violation. | | | Unvested awards are forfeited.
|
|
| Unvested awards vest immediately. | | | Vesting continues on schedule, subject to forfeiture in the event of a non-compete violation. | | | Unvested awards are forfeited. | | | Unvested awards are forfeited. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options | | | Unvested options are forfeited. Vested options remain exercisable for 90 days following termination.
|
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| All options vest immediately and remain exercisable until the original expiration date (ten years from the grant date). | | | Options with vesting dates falling within the Severance Period (as described in the Severance Policy) will vest, contingent upon satisfaction of performance criteria, if applicable, but subject to forfeiture in the event of a non-compete violation. All vested options remain exercisable until the earlier of the expiration of the Severance Period or the applicable stock option award. | | | Vested and unvested options are forfeited.
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| All options vest immediately, and the entire award is exercisable until the original expiration date (ten years from the grant date). | | | Unvested options continue to vest on schedule. Options remain exercisable for the lesser of 7 years from the grant date or the remaining term of the option. All options are subject to forfeiture in the event of a non-compete violation. | | | Vested and unvested options are forfeited. | | | Unvested options are forfeited. Vested options remain exercisable for 90 days following termination. | | | | | | | | | | | | | | | | | | | | | |
| (1) | Of the current2023 NEOs, as of December 31, 2023, only Mr. Long and Ms. Zech areis eligible for the rights described if he or she resignsupon a resignation for “good reason.” The rights described in this column apply to Messrs. Stansbury, Kerins and KingAgrawal, and Mses. Russell and Jean-Claude only if terminated without “cause.” |
| | | | 72 84
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CEO PAY RATIO In compliance with the pay ratio disclosure requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company is providing the following information about the relationshipratio of the annual total compensation paid to the individual identified as its median paid employee and the annual total compensation of the CEO, Mr. Long. Kerins. The 20202023 annual total compensation of the individual identified as the median paidmedian-paid employee, other than the Company’s CEO, was $57,569.$56,886. Mr. Long’s 2020Kerins’ 2023 annual total compensation was $11,513,092. The$8,891,814, as reported in the “2023 Summary Compensation Table.” As a result, we estimate that for 2023, the ratio of these amounts was 1-to-200.1-to-156. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with applicable SEC rules and based on payroll and employment records and the methodology described above. The estimates and assumptions that we use may differ from those used by other companies, including those in our Peer Group described in the CD&A. The following summarizes the methodology, material assumptions, adjustments, and estimates the Company used for calculating the CEO pay ratio: | > | Employee Measurement Date: The Company utilized the entire global population of approximately 19,60022,100 eligible employees on December 31, 2020.2023. |
| > | Exclusions: The number of US and non-US employees prior to exemption were approximately 5,2004,900 and 14,400,17,200, respectively. Employees from the following non-US jurisdictions that collectively constitute 5% or less of the total global workforce were excluded: Argentina (7)Poland (879), Malaysia (220)(155), Thailand (33), Philippines (26), and Poland (753)New Zealand (11). The total number of employees excluded was approximately 980.1,100. Therefore, the total number of US and non-US employees used in the final analysis was 5,2004,900 and 13,420,16,100, respectively. |
| > | Compensation Time PeriodPeriod::The Company measured compensation for the above employees using the 12-month period ending December 31, 2020. 2023. |
> | Consistently Applied Compensation Measure: Target total cash (base + target bonus) was selected as the consistently applied compensation measure used to identify the median paid employee. Base pay for hourly employees was calculated based on a reasonable estimate of hours worked in 2020, and on salary levels for all remaining employees. |
| > | Determining the Median Paid Employee: Using this methodology, While total annual compensation for each of the company identifiedmedian employee and the CEO is used to calculate the pay ratio, the SEC allows companies to use a different compensation measure for identifying the median employee. We used target total cash (base + target bonus) as its 2020the consistently applied compensation measure to identify the median paid employee the same employee identified in 2019. This employee is a full-time, hourly employee, with wages and overtime pay for the 12-month period ending December 31, 2020 in the amount of $55,250. employee. |
Base pay for hourly employees was calculated based on a reasonable estimate of hours worked in 2023 and on salary levels for all remaining employees. Using this methodology, the Company identified its 2023 median paid employee, a full-time, hourly employee, located in the United States. | > | Determining Median Paid Employee’s Pay for CEO Ratio: The individual identified as the median paid employee had an annual compensation in the amount of $57,569$56,886 for fiscal 2020,2023, calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. |
| > | Determining the CEO’s Pay for CEO Ratio:With respect to the annual total compensation of the CEO, the Company used the amount reported in the “Total” column of our 20202023 Summary Compensation Table included in this Proxy Statement. |
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on payroll and employment records and the methodology described above. Because the SEC rules for identifying the median paid employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
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| 7385
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Alternative Pay Ratio As an alternative approach in determining Mr. Kerins’ compensation for purposes of calculating the CEO Pay Ratio, we adjusted the compensation reported in the 2023 Summary Compensation Table to exclude the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column. The amounts reported in the Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. The change in pension value is subject to many external variables, such as interest rates, assumptions about life expectancy and changes in the discount rate determined at each year end, which are functions of economic factors and actuarial calculations that are not related to the Company’s performance and are outside the control of the Compensation Committee. This adjustment resulted in total annual compensation of $6,374,308, and an adjusted pay ratio of approximately 1-to-112. We believe excluding the Change in Pension Value from the CEO’s total annual compensation for purposes of calculating the pay ratio results in a more meaningful comparison of ongoing CEO compensation to the median of the annual total compensation of all employees, particularly when viewed over a period of time. 86 |
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PAY VERSUS PERFORMANCE In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Rules”), the following table sets forth information regarding the relationship between “compensation actually paid” as calculated per the Rules, and certain financial performance of Arrow for the years ended December 31, 2023, 2022, 2021, and 2020 for each individual who served as our Principal Executive Officer (“PEO”) and our other NEOs during each year. Refer to the “Executive Compensation” section in the CD&A for further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with Company performance, and how the Compensation Committee makes its decisions. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Value of Initial Fixed | | | | | | | | | | | | | | | | | | | $100 Investment Based | | | | | | | | | | | | | | | Average | | Average | | On: | | | | | | | Summary | | Summary | | | | | | Summary | | Compensation | | | | Peer | | | | | | | Compensation | | Compensation | | Compensation | | Compensation | | Compensation | | Actually | | Arrow's | | Group | | | | | | | Table Total for | | Table Total for | | Actually Paid | | Actually Paid | | Table Total | | Paid to | | Total | | Total | | Net | | | | | First | | Second | | to First | | to Second | | for Non-PEO | | Non-PEO | | Shareholder | | Shareholder | | Income | | Absolute | Year1 (a) | | PEO2 (b) | | PEO2 (c) | | PEO3 (d) | | PEO3 (e) | | NEOs2 (f) | | NEOs3 (g) | | Return4 (h) | | Return5 (i) | | (in millions)6 (j) | | EPS7 (k) | 2023 | | $8,891,814 | | n/a | | $11,494,294 | | n/a | | $3,224,995 | | $3,983,576 | | $144 | | $181 | | $ 904 | | $17.06 | 2022 | | $7,478,225 | | $11,550,022 | | $8,049,694 | | $6,516,685 | | $2,734,955 | | $2,070,990 | | $123 | | $140 | | $1,427 | | $23.13 | 2021 | | n/a | | $12,880,838 | | n/a | | $24,843,768 | | $3,902,722 | | $6,736,978 | | $158 | | $157 | | $1,108 | | $15.60 | 2020 | | n/a | | $11,703,943 | | n/a | | $14,433,945 | | $3,705,149 | | $4,146,853 | | $115 | | $106 | | $584 | | $7.92 |
(1) | NEOs included in these columns reflect the following: |
| | | | | Year |
| PEOs |
| Non-PEO NEOs | 2023 | | Sean J. Kerins (PEO 1)
| | Rajesh K. Agrawal, Gretchen K. Zech, Kristin D. Russell, Carine L. Jean-Claude, Michael J. Long, Kirk D. Schell | 2022 | | Sean J. Kerins (PEO 1)
Michael J. Long (PEO 2) | | Rajesh K. Agrawal, Kirk D. Schell, Gretchen K. Zech, Vincent P. Melvin, Richard A. Seidlitz, Christopher D. Stansbury | 2021 | | Michael J. Long (PEO 2) | | Sean J. Kerins, Christopher D. Stansbury, Gretchen K. Zech, Vincent P. Melvin | 2020 | | Michael J. Long (PEO 2) | | Sean J. Kerins, Christopher D. Stansbury, Gretchen K. Zech, Andrew D. King |
(2) | Amounts reflect the table labeled “2023 Summary Compensation Table” for our NEOs for each corresponding year. |
(3) | The following table shows the adjustment to the total compensation reported in the “2023 Summary Compensation Table” for our PEOs, as well as the average for our other NEOs, to determine “compensation actually paid,” as computed in accordance with the Rules. Because “compensation actually paid,” as calculated per the Rules, requires the inclusion of equity awards as compensation prior to vesting of the awards, the amounts reported below do not reflect the actual compensation earned by or paid to our NEOs during the applicable year, with a significant portion of the “compensation actually paid” subject to forfeiture if the underlying vesting conditions are not achieved. The “compensation actually paid” for 2020 – 2022 has been updated from the amounts reported in the Company’s 2023 Proxy Statement to reflect application of SEC guidance relating to retirement vesting treatment and valuing performance awards as well as to correct the inadvertent exclusion of the new hire grants received by Mr. Agrawal and Mr. Schell in 2022. |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | 2023 | | 2022 | | 2021 | | 2020 | | | | | Non-PEO | | | | | | | | Non-PEO | | | | | Non-PEO | | | | | Non-PEO | | PEO 1 | | NEO Average | | PEO 1 | | PEO 2 | | NEO Average | | PEO 2 | | NEO Average | | PEO 2 | | NEO Average | Total Compensation from the Summary Compensation Table | $ | 8,891,814 | | $ | 3,224,995 | | $ | 7,478,225 | | $ | 11,550,022 | | $ | 2,734,955 | | $ | 12,880,838 | | $ | 3,902,722 | | $ | 11,703,943 | | $ | 3,705,149 | Adjustments for Pension | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment Summary Compensation Table Pension (a) | $ | (2,517,506) | | $ | (455,737) | | $ | (533,030) | | $ | — | | $ | — | | $ | — | | $ | (594,473) | | $ | (979,530) | | $ | (951,949) | Amount added for Current Year Service Cost (b) | $ | 762,082 | | $ | 269,720 | | $ | — | | $ | (14,085) | | $ | 273,214 | | $ | (13,682) | | $ | 544,659 | | $ | (12,599) | | $ | 528,740 | Amount added for Prior Year Service Cost Impacting Current Year (b) | $ | 2,692,795 | | $ | — | | $ | 3,029,395 | | $ | — | | $ | — | | | — | | $ | — | | $ | — | | $ | — | Total Adjustments for Pension | $ | 937,371 | | $ | (186,017) | | $ | 2,496,365 | | $ | (14,085) | | $ | 273,214 | | $ | (13,682) | | $ | (49,814) | | $ | (992,129) | | $ | (423,209) | Adjustments for Equity Grants | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment for grant date values in the Summary Compensation Table(c) | $ | (4,000,040) | | $ | (1,725,039) | | $ | (3,500,063) | | $ | (6,000,112) | | $ | (1,615,082) | | $ | (6,000,028) | | $ | (1,625,076) | | $ | (6,000,044) | | $ | (1,475,005) | Year-end fair value of unvested awards granted in the current year(d) | $ | 3,932,171 | | $ | 1,511,458 | | $ | 2,930,470 | | $ | 4,913,326 | | $ | 1,492,162 | | | 7,563,832 | | $ | 2,048,625 | | $ | 7,369,405 | | $ | 1,957,883 | Year-over-year difference of year-end fair values for unvested awards granted in prior years(d) | $ | 1,305,688 | | $ | 824,037 | | $ | (895,968) | | $ | (2,095,192) | | $ | (255,980) | | $ | 10,018,282 | | $ | 2,368,526 | | $ | 4,051,168 | | $ | 776,509 | Fair values at vest date for awards granted and vested in the current year (d) | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | — | | $ | — | | $ | — | | $ | — | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years(d) | $ | 427,290 | | $ | 451,940 | | $ | (459,335) | | $ | (1,837,274) | | $ | (225,767) | | $ | 394,526 | | $ | 91,995 | | $ | (1,698,398) | | $ | (394,474) | Forfeitures during the current year equal to the prior year-end fair value(d) | $ | — | | $ | (117,798) | | $ | — | | $ | — | | $ | (332,512) | | | — | | $ | — | | $ | — | | $ | — | Dividends or dividend equivalents not otherwise included in total compensation | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | Total Adjustments for Equity Awards | $ | 1,665,109 | | $ | 944,598 | | $ | (1,924,896) | | $ | (5,019,252) | | $ | (937,179) | | $ | 11,976,612 | | $ | 2,884,070 | | $ | 3,722,131 | | $ | 864,913 | Compensation Actually Paid | $ | 11,494,294 | | $ | 3,983,576 | | $ | 8,049,694 | | $ | 6,516,685 | | $ | 2,070,990 | | $ | 24,843,768 | | $ | 6,736,978 | | $ | 14,433,945 | | $ | 4,146,853 |
(a) | The amounts reflect the change in the actuarial present value of the accumulated benefit under all defined benefit and actuarial pension plans reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column in the “2023 Summary Compensation Table” for the applicable year. |
(b) | The amounts represent the sum of the actuarial present value of the benefits under all defined benefit and actuarial pension plans attributable to services rendered during the indicated fiscal year and any plan modifications during the applicable year, calculated using the same methodology as used in the Company’s financial statements under generally accepted accounting principles. |
(c) | The amounts reflect the aggregate grant-date fair value reported in the “Stock Awards” and “Option Awards” columns in the “2023 Summary Compensation Table” for the applicable year. |
(d) | In accordance with the Rules, the fair values of unvested and outstanding equity awards to our NEOs were remeasured starting on December 31, 2019, and subsequently as of each vesting date and as of the end of each fiscal year while the award remains unvested, during the years displayed in the table above. Fair values as of each measurement date were determined using valuation assumptions and methodologies (including volatility, dividend yield, risk-free interest rates and probability of achievement of the underlying performance goals) that are generally consistent with those used to estimate fair value on the grant date under US GAAP. |
For options, a Black-Scholes model was used to estimate the fair value as of the various measurement dates. We explain assumptions made in valuing equity awards on the grant date in the “Stock-Based Compensation Plans” section of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the corresponding fiscal year. (4) | The amounts in this column show changes over our past four fiscal years in the value of $100 (assuming reinvestment of dividends) invested in Arrow’s common shares traded on the NYSE. |
(5) | The amounts in this column show changes over the past four fiscal years in the value of $100 (assuming reinvestment of dividends), invested in Arrow’s peer group, consisting of Avnet, Inc., Celestica Inc., Flex Ltd., Jabil Inc., WESCO International, Inc., CDW Corp., HP Inc., HP Enterprise Co., and TD SYNNEX Corp. In 2020, our peer group consisted of Anixter International Inc., Avnet, Inc., Celestica Inc., Flex Ltd., Jabil Inc., Tech Data Corporation, and WESCO International, Inc. (the “2020 Peer Group”). |
(6) | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements in its Annual Report on Form 10-K for the applicable year. |
(7) | While we use numerous financial and non-financial performance measures to evaluate performance under our compensation programs, Absolute EPS is the financial performance measure that, in our assessment, represents the most important performance measure used to link “compensation actually paid” to NEOs to Company performance in 2023. Absolute EPS determines the payout with respect to 70% of our 2023 annual cash incentive. See Appendix to this Proxy Statement for a reconciliation of Absolute EPS to the most directly comparable GAAP measure. |
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Required Relationship Disclosure In accordance with the Rules, Arrow is providing the following representation of the relationships between the information presented in the Pay versus Performance table. Compensation Actually Paid and Cumulative TSR 
Compensation Actually Paid vs. Net Income 
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Compensation Actually Paid vs. Absolute EPS (Company Selected Measure) 
Required Tabular Measures As required by the Rules, the following is a list of the most important performance measures used to link “compensation actually paid” to Company performance. The role of each of these performance measures in our executive compensation programs is more thoroughly discussed in the “Executive Compensation” section in the CD&A along with a description of how executive compensation relates to Company performance and how the Compensation Committee makes its decisions. | Tabular List | Absolute EPS | Relative EPS Growth | ROIC | WACC |
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RELATED PERSON TRANSACTIONS The Company has a variety of policies and procedures for the identification and review of related person transactions. Arrow’s Worldwide Code of Business Conduct and Ethics (“Code”) prohibits employees, officers, and directors from entering into transactions that present a conflict of interest absent a specific waiver.interest. A conflict of interest arises when an employee’s private interests either conflict or appear to conflict with Arrow’s interests. The Code also requires that any such transaction, which may become known to any employee, officer, or director, be properly reported to the Company. Any conflict of interest disclosed under the Codeinvolving an executive officer requires a waiver from senior management. If the conflict of interest involves senior management, a waiver from the Board is required.Board. Any such waiver, or any amendment to the Code, would be disclosed on the Company’s website. A “related person transaction,” as defined under SEC rules, generally includes any transaction, arrangement, or relationship involving more than $120,000 in which the Company or any of its subsidiaries was, is, or will be a participant and in which a “related person” has a material direct or indirect interest. “Related persons” mean directors and executive officers, and their immediate family members, director nominees, and shareholders owning more than five percent of the Company’s outstanding stock.stock, and their immediate family members. “Immediate family member” means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, or any person (other than a tenant or employee) sharing a household with any such director, director nominee, executive officer, or five percent shareholder. As part of the process related to the financial close of each quarter, the Company distributes a disclosure checklist to the management of each operating unit and financial function globally, which seeks to ensure complete and accurate financial disclosure. One part of the checklist seeks to identify any related person transactions. AnyPursuant to the Company’s written Disclosure Controls and Procedures, any previously undisclosed transaction is initially reviewed by: (i) the Company’s Corporate Controller Department, in consultation with the Company’s disclosure committee, to determine whether the transaction should be disclosed in the Company’s SEC filings;filings and (ii) senior management of the Company, including the ChiefCompany’s Legal Officer and the Chief Financial Officer,Department for consideration of the appropriateness of the transaction. If such transaction involves members of senior management,and to determine if it is elevated to the Board for review. Transactions involving members of senior management or a director require therequires review and approval ofby the Board. Further, the
The Audit Committee reviewsconducts a reasonable prior review and approvesoversight of all related person transactions required to be disclosed pursuant to SEC Regulation S-K.S-K or NYSE listing standards. In the course of its review of related person transactions, the senior management of the Company or the independent directors of the BoardAudit Committee will consider all of the relevant facts and circumstances that are available to them, including but not limited to: (i) the benefits to the Company; (ii) in a transaction involving a director, the impact on the director’s independence; (iii) the availability of comparable products or services; (iv) the terms of the transaction; and (v) whether the transaction is proposed to be on terms more favorable to the Company than terms that could have been reached with an unrelated third party. The manager or director involved in the transaction will not participate in the review or approval of such transaction. The Company’s LawCorporate Controller Department, together with the Corporate Controller’sLaw Department, is responsible for monitoring compliance with these policies and procedures. There were no related party transactions requiring disclosure under SEC Regulation S-K since January 1, 2023.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Arrow’s directors, executive officers, and persons who own more than ten percent of a registered class of Arrow’s equity securities to file reports of ownership and changes in ownership with the SEC. To facilitate compliance with Section 16(a) by Arrow’s directors and executive officers, the Company’s employees generally prepare these reports on the basis of information obtained from each director and executive officer. To the Company’s knowledge, based solely on a review of the reports Arrow filed on behalf of its directors and executive officers, written representations from these persons that no other reports were required, and all Section 16(a) reports provided to the Company, the Company believes that during the fiscal year ended December 31, 2020, all Section 16(a) filings were timely filed with the exception of four Form 4 reports (relating to RSUs vesting on the same date for each of Ms. Hamilton, Mr. Hill, Mr. Kerin and Ms. Krzeminski, which were filed three days late).
AVAILABILITY OF MORE INFORMATION Arrow’s corporate governance guidelines,Corporate Governance Guidelines, the Corporate Governance Committee charter, the Audit Committee charter, the Compensation Committee charter, the Worldwide Code of Business Conduct and Ethics, the Director Resignation Policy and the Anti-Hedging and Anti-Pledging Policy, and the Finance Code of Ethics can be found under “Governance Documents” at the “Leadership &and Governance” sub-link of the Investor Relations drop-down menu on investor.arrow.com. The contents of this website are not incorporated by reference in this Proxy Statement or any other report or document the Company files with the SEC. Hard copies are available in print to any shareholder who requests them. The Company’s transfer agent and registrar is Equiniti Trust Company, 1110 Centre Pointe Curve, Suite 101, Mendota Heights, Minnesota 55120. Shareholders and other interested parties who wish to communicate with the Board or any of its members of the Board(including non-management directors as a group) may do so by submitting such communication to Arrow’s Corporate Secretary, Carine L. Jean-Claude, at Arrow Electronics, Inc., 92019151 East Dry Creek Road,Panorama Circle, Centennial, Colorado 80112. Arrow’s Corporate Secretary will present any such communication to the directors.Board or applicable directors or group of directors, except those of a harassing nature or solicitations.
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MULTIPLE SHAREHOLDERS
WITH THE SAME ADDRESS The Company will promptly deliver promptly upon request a separate copy of the Notice and/or thethis Proxy Statement and Annual Report to any shareholder at a shared address to which a single copy of these materials was delivered. To receive a separate copy of these materials, you may contact the Company’s Investor Relations Department either by mail at 92019151 East Dry Creek Road,Panorama Circle, Centennial, Colorado 80112, by telephone at 303-824-4544,303 - 824 - 4544, or by email at investor@arrow.com. The Company has adopted a procedure called “householding,” which has been approved by the SEC. Under this procedure, the Company is delivering only one copy of the Notice and/or thethis Proxy Statement and Annual Report to multiple shareholders who share the same address and have the same last name, unless the Company received instructions to the contrary from an affected shareholder. This procedure reduces printing costs, mailing costs, and fees. If you are a holder of the Company’s common stock as of the Record Date and would like to revoke your householding consent and receive a separate copy of the Notice and/or thethis Proxy Statement and the Annual Report in the future, please contact Broadridge Financial Solutions, Inc. (“Broadridge”), either by calling toll free at (800) 542-1061 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. You will be removed from the householding program within 30 days of receipt of the revocation of your consent. Any shareholders of record sharing the same address and currently receiving multiple copies of the Notice, the Annual Report, and thethis Proxy Statement, who wish to receive only one copy of these materials per household in the future, may contact the Company’s Investor Relations Department at the address, telephone number, or e-mail listed above to participate in the householding program. Several brokerage firms have instituted householding. If you hold your shares in “street name,” please contact your bank, broker, or other holder of record to request information about householding.
SUBMISSION OF SHAREHOLDER PROPOSALS If a shareholder intends to present a proposal at Arrow’s Annual Meetingannual meeting of shareholders to be held in 20222025 and seeks to have the proposal included in Arrow’s Proxy Statementproxy statement relating to that Annual Meeting,annual meeting, pursuant to Rule 14a-8 of the Securities Exchange Act, of 1934, as amended, the proposal must be received by Arrow no later than the close of business on December 2, 2021.November 26, 2024 for a regularly scheduled annual meeting.
Arrow’s bylawsBy-laws govern the submission of nominations for director and other business proposals that a shareholder wishes to have considered at Arrow’s Annual Meetingannual meeting of shareholders to be held in 2022 which2025 that are not included in the Company’s Proxy Statementproxy statement for that Annual Meeting.annual meeting. Under the bylaws,By-laws, subject to certain exceptions, nominations for director or other business proposals to be addressed at the Company’s next Annual Meeting2025 annual meeting may be made by a shareholder entitled to vote who has delivered a notice to theArrow’s Corporate Secretary of Arrow no earlier than January 7, 2025 and not later than March 13, 2022 and not earlier than February 11, 2022.6, 2025. The notice must contain the information required by the bylaws.By-laws. These advance notice provisions are in addition to, and separate from, the requirements that a shareholder must meet in order to have a proposal included in the Proxy Statementproxy statement under the rules of the SEC. Arrow’s bylawsBy-laws provide that a shareholder, or a group of up to 20 shareholders, owning at least 3% of Arrow’s outstanding common stock continuously for at least three years, may include in our Proxy Statementproxy statement director nominees constituting up to the greater of two directors or 20% of the number of directors on the Board, provided that the shareholder and the nominees satisfy the eligibility requirements in our bylaws.By-laws. If you wish to nominate any person for election to our Board at the 2022 Annual Meeting2025 annual meeting of shareholders under the proxy access provision of our bylaws,By-laws, your nomination notice must be submitted to theArrow’s Corporate Secretary between October 27, 2024 and November 2, 2021 and December 2, 2021,26, 2024, unless the date of the mailing of the notice for the 20222025 annual meeting is moved by more than 30 days before or after the anniversary of the mailing date of this Proxy Statement, in which case the nomination must be received no earlier thanby the 150th10th day and no later thanfollowing the laterday on which public announcement of the 120th day prior to thedate of mailing of the notice for suchthe 2025 annual meeting is first made. In addition to satisfying the requirements under our By-laws, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act, which notice must be postmarked or transmitted electronically to the Company at its principal executive offices no later than March 8, 2025. If the date of the 2025 annual meeting of shareholders is changed by more than 30 calendar days from the first anniversary of the Annual Meeting, then notice must be provided by the later of 60 calendar days prior to the date of the 2025 annual meeting of shareholders or the tenth10th calendar day following the date we announce publicly the mailingday on which public announcement of the notice.date of the 2025 annual meeting of shareholders is first made. | | | By Order of the Board of Directors, | |  
| | Carine L. Jean-Claude Corporate Secretary |
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APPENDIX RECONCILIATION OF NON-GAAP EXECUTIVE COMPENSATION MEASURES
The tables below present calculations of performance measures used for long termshort-term and long-term incentive compensation purposes. For a full discussion of these measures, refer to the section titledinformation in the “Annual Cash Incentives” and “Long-Term Incentive Awards” above. sections in the CD&A. The annual cash incentive is based on the “Absolute EPS” measure below. The LTIP is based on: (1) the “Three-Year Relative EPS Growth” which is defined as “Three-Year EPS Growth” as calculated below compared to the EPS growth of Arrow’s Peer Group, and (2) the “Three-Year Average ROIC in Excess of Three-Year WACC” measure below. The tables below include reconciliationreconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure.measures. For a description of the items adjusting the GAAP results in the tables below, refer to the respective fiscal year's Annual Report on Form 10-K filed with the Securities and Exchange Commission.SEC. Any analysis of results presented on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented on a GAAP basis. Absolute EPS used in the annual cash incentive calculation excludes the impact of intangible asset amortization expense resulting from acquisitions. We believe excluding this expense provides an appropriate measure of short-term performance because acquisitions generally contribute to long-term value creation. For this same reason, we include this amortization expense in the Three-Year EPS Growth used in the LTIP calculation to hold management accountable for investments in acquisitions.
Three-year averageAbsolute EPS used in the annual cash incentive calculation is adjusted to exclude the short-term impact of changes in foreign currencies in order to align the achieved result with the exchange rates used in setting the target. Additionally, Absolute EPS is adjusted to exclude pension settlement gains and losses, and gains and losses on investments, net. The Three-Year Relative EPS Growth LTIP calculation does not include these adjustments because the impacts are not readily available for the entire peer group.
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Annual Cash Incentive Measure Absolute EPS ($ per diluted share) | | | | | | | | | | | | | | | December 31, | | December 31, | | December 31, | | December 31, | | | 2023 | | 2022 | | 2021 | | 2020 | Net income per diluted share, as reported | | $ | 15.84 | | $ | 21.80 | | $ | 15.10 | | $ | 7.43 | Intangible amortization expense | | | 0.40 | | | 0.39 | | | 0.37 | | | 0.36 | Restructuring, integration, and other charges(1) | | | 1.12 | | | 0.17 | | | 0.17 | | | 0.21 | Impact of wind down | | | — | | | — | | | — | | | (0.15) | (Gain) loss on investments | | | (0.26) | | | 0.03 | | | (0.13) | | | (0.05) | Other(2) | | | — | | | — | | | — | | | 0.23 | Non-recurring tax items(3) | | | 0.02 | | | — | | | — | | | (0.02) | FX impact(4) | | | (0.06) | | | 0.74 | | | 0.10 | | | (0.08) | Non-GAAP net income per diluted share(5) | | $ | 17.06 | | $ | 23.13 | | $ | 15.60 | | $ | 7.92 |
(1) | Restructuring, integration, and other charges for 2023 includes charges to increase the environmental remediation reserves, early lease termination charges, and operating expense reduction initiatives for the year ended December 31, 2023. |
(2) | Other for 2020, includes the impact of tariffs and write-down of certain assets. |
(3) | Includes income tax expense (benefit) related to legislation changes and other non-recurring tax adjustments. |
(4) | Includes the impact of differences between foreign exchange rates assumed in plan targets and actual foreign exchange rates during the years presented. |
(5) | The sum of the components for non-GAAP net income per diluted share may not agree to totals, as presented, due to rounding. |
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Long-Term Incentive Program (LTIP) Measures Three-Year EPS Growth ($ per diluted share) | | | | | | | | | Year Ended | | | December 31, 2023 | | December 31, 2020 | Net income per diluted share, as reported | | $ | 15.84 | | $ | 7.43 | Restructuring, integration, and other charges (1) | | | 1.12 | | | 0.21 | Impact of wind down | | | — | | | (0.15) | Other(2) | | | 0.02 | | | (0.02) | Non-GAAP net income per diluted share | | $ | 16.98 | | $ | 7.47 | | | | | | | | Three-year EPS % growth | | | 113.2 | % | | | Non-GAAP three-year EPS % growth | | | 127.3 | % | | |
(1) | Includes charges to increase the environmental remediation reserves, early lease termination charges, and operating expense reduction initiatives for the year ended December 31, 2023 |
(2) | Includes non-recurring tax adjustments for the year ended December 31, 2023 and write-down of notes receivables for the year ended December 31, 2020. |
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Three-Year Average ROIC in excessExcess of three-yearThree-Year WACC ($ in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended | | | | | 3 Year | | December 31, 2023 | | December 31, 2022 | | December 31, 2021 | | | | | | Year Ended | | | Average | | (unaudited) | | (unaudited) | | (unaudited) | | | | 3 year
average | | December 31,
2020 | | December 31,
2019 | | December 31,
2018 | | | | | | | | | | | | | | Numerator: | | | | (unaudited) | | (unaudited) | | (unaudited) | | | | | | | | | | | | | | Consolidated operating income, as reported | | | | $ | 894,511 | | $ | 107,696 | | $ | 1,147,512 | | | | | $ | 1,471,164 | | $ | 2,068,494 | | $ | 1,556,822 | | Equity in earnings of affiliated companies (1) | | | | | | 6,407 | | | 7,664 | | | 3,508 | | Less: Noncontrolling interests (1) | | | | | | 5,858 | | | 8,274 | | | 2,271 | | Consolidated operating income, as adjusted | | | | | | 1,471,713 | | | 2,067,884 | | | 1,558,059 | | Less: Tax effect | | | | | | 323,586 | | | 494,690 | | | 354,044 | | After-tax consolidated operating income, as adjusted | | | | | | 1,148,127 | | | 1,573,194 | | | 1,204,015 | | | | | | | | | | | | | | | | Consolidated operating income, as reported | | | | | $ | 1,471,164 | | $ | 2,068,494 | | $ | 1,556,822 | | Restructuring & Integration charges | | | | | 13,288 | | | 78,429 | | | 60,361 | | | | | | 83,916 | | | 13,741 | | | 15,393 | | AFS reserves & recoveries | | | | | (1,796) | | | 18,037 | | | — | | | Digital write downs & recoveries | | | | | — | | | 22,332 | | | — | | | Impairments | | | | | 7,223 | | | 623,796 | | | — | | | Impact of wind down(1) | | | | | (14,728) | | | 162,244 | | | — | | | Loss on disposition of businesses, net | | | | | — | | | 1,868 | | | 3,604 | | | Pension expense(2) | | | | | (2,859) | | | (24,849) | | | (6,870) | | | | | | (3,777) | | | (3,503) | | | (5,180) | | Gain (loss) on investments, net(2) | | | | | 5,348 | | | 11,831 | | | (14,166) | | | | | | 19,284 | | | (2,857) | | | 12,951 | | Equity in losses of affiliated companies(2) | | | | | (531) | | | (2,765) | | | (2,332) | | | Equity in earnings of affiliated companies(2) | | | | | | 6,407 | | | 7,664 | | | 3,508 | | Less: Noncontrolling interests(2) | | | | | 2,026 | | | 3,919 | | | 5,379 | | | | | | 5,858 | | | 8,274 | | | 2,271 | | Non-GAAP consolidated operating income | | | | | 898,430 | | | 994,700 | | | 1,182,730 | | | Non-GAAP consolidated operating income, as adjusted | | | | | | 1,571,136 | | | 2,075,265 | | | 1,581,223 | | Less: Tax Effect | | | | | 205,650 | | | 237,300 | | | 285,800 | | | | | | 346,150 | | | 492,500 | | | 359,100 | | After-tax non-GAAP consolidated operating income | | | | $ | 692,780 | | $ | 757,400 | | $ | 896,930 | | | After-tax non-GAAP consolidated operating income, as adjusted | | | | | | 1,224,986 | | | 1,582,765 | | | 1,222,123 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Denominator: | | | | | | | | | | | | | | | | | | | | | | | | | Average short-term borrowings, including current portion of long-term debt(3) | | | | $ | 255,538 | | $ | 270,475 | | $ | 182,869 | | | | | | 892,986 | | | 504,094 | | | 322,696 | | Average long-term debt(3) | | | | | 2,231,394 | | | 3,110,940 | | | 3,349,533 | | | | | | 3,068,681 | | | 2,852,348 | | | 2,034,077 | | Average total equity(3) | | | | | 4,850,535 | | | 5,033,187 | | | 5,167,962 | | | | | | 5,659,361 | | | 5,416,410 | | | 5,233,267 | | Less: Average cash and cash equivalents(3) | | | | | 261,513 | | | 338,714 | | | 518,553 | | | Average cash and cash equivalents(3) | | | | | | 234,840 | | | 240,296 | | | 256,702 | | Invested capital | | | | $ | 7,075,954 | | $ | 8,075,888 | | $ | 8,181,811 | | | | | $ | 9,386,188 | | $ | 8,532,556 | | $ | 7,333,338 | | | | | | | | | | | | | | | | | | | | | | | | | | | Return on invested capital (“ROIC”) | | 10.04 | % | | 9.79 | % | | 9.38 | % | | 10.96 | % | | 15.70 | % | | 12.23 | % | | 18.44 | % | | 16.42 | % | Less: Weighted average cost of capital (“WACC”) | | 7.72 | % | | 7.55 | % | | 7.69 | % | | 7.91 | % | | 8.16 | % | | 8.66 | % | | 8.12 | % | | 7.70 | % | ROIC in excess of WACC | | 2.32 | % | | 2.24 | % | | 1.69 | % | | 3.05 | % | | 7.54 | % | | 3.57 | % | | 10.32 | % | | 8.72 | % | | | | | | | | | | | | | | | | | | | | | | | | | | Non-GAAP ROIC | | | 16.09 | % | | 13.05 | % | | 18.55 | % | | 16.67 | % | Less: WACC | | | 8.16 | % | | 8.66 | % | | 8.12 | % | | 7.70 | % | Non-GAAP ROIC in excess of WACC | | | 7.93 | % | | 4.39 | % | | 10.43 | % | | 8.97 | % |
(1) | During 2019,Operating income is adjusted for noncontrolling interests and equity in earnings of affiliated companies to include the company announced the closurepro-rata ownership of its personal computer and mobility asset disposition business (referred to as “wind down”). As such, the impact of wind down is excluded from operating results for 2019 and 2020.non-wholly owned subsidiaries. |
(2) | Non-GAAP operating income is adjusted to include pension expense and gain (loss) on investments and is adjusted for noncontrolling interests and equity in lossesearnings of affiliated companies to include the pro-rata ownership of non-wholly owned subsidiaries. |
(3) | The year ended average is based on the addition of the account balance at the end of the five most recently ended quarters and dividing by five. |
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Table of Contents
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| Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY STATEMENT | |
Three-Year Relative EPS Growth
($ per diluted share)
| | | | | | | | | | Year Ended | | | | December 31, 2020 | | December 31, 2017 | | Net income per diluted share, as reported | | $ | 7.43 | | $ | 4.48 | | Restructuring, integration, and other charges | | | 0.15 | | | 0.70 | | Impairments | | | 0.06 | | | — | | Impact of wind down | | | (0.15) | | | — | | AFS reserves & recoveries | | | (0.02) | | | — | | Impact of tax reform | | | — | | | 1.39 | | Loss on extinguishment of debt | | | — | | | 0.40 | | Loss on investments | | | — | | | 0.10 | | Non-GAAP net income per diluted share | | $ | 7.47 | | $ | 7.07 | | | | | | | | | | % Change for 3 years | | | 5.7 | % | | | | | | | | | | | |
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| Internet or telephone voting for those who hold shares under Arrow's 401(k) plan is available through 11:59 p.m. Eastern time on Sunday, May 9, 2021.CARD IS VALID ONLY WHEN SIGNED AND DATED. V29471-P04829 ! ! ! For all other shareholders, internet or telephone voting is available through 11:59 p.m. Eastern time on Tuesday, May 11, 2021. Your telephone or internet vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card. If you vote by internet or telephone, you do NOT need to mail your proxy card. You can also view Arrow's annual report and proxy statement on the internet at: www.arrow.com/annualreport2020 and at www.proxyvote.com. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The proxy statement and annual report are available at www.proxyvote.com. D36631-P49938All Withhold All For All Except For Against Abstain ! ! ! ! ! ! ARROW ELECTRONICS, INC. PROXYTo withhold authority to vote for Annual Meeting of Shareholders, May 12, 2021 This proxy is solicited byany individual nominee(s), mark "For All Except" and write the board of directors. The undersigned hereby appoints Michael J. Long, Carine Jean-Claude and Christopher Stansbury, and any one or more of them, with full power of substitution, as proxy or proxiesnumber(s) of the undersigned to vote all shares of stock ofnominee(s) on the line below. ARROW ELECTRONICS, INC. which9151 EAST PANORAMA CIRCLE CENTENNIAL, COLORADO 80112 1. Election of Directors Nominees: The Board of Directors recommends you vote FOR ALL the undersigned would be entitled tofollowing: If acting as attorney, executor, trustee or in other representative capacity, please sign name and title. 2. To ratify the appointment of Ernst & Young LLP as Arrow's independent registered public accounting firm for the fiscal year ending December 31, 2024. 3. To approve, by non-binding vote, if personally present atnamed executive officer compensation. NOTE: Such other business as may properly come before the Annual Meeting of Shareholders to be held on Wednesday, May 12, 2021, at 8:00 a.m. Mountain time, at The Hilton Denver Inverness, 200 Inverness Drive West, Englewood, Colorado 80112,meeting or any adjournments thereof, as set forth onadjournment thereof. The Board of Directors recommends you vote FOR the reverse hereof. This proxy is being solicited by the board of directors and will be voted as specified. If not otherwise specified, it will be voted for the directors and the proposals, and otherwise in accordance with management's discretion. Please Return this Proxy Promptly in the Enclosed Envelope
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| following proposals: 06) Andrew C. Kerin 07) Sean J. Kerins 08) Carol P. Lowe 09) Mary T. McDowell 10) Gerry P. Smith 01) William F. Austen 02) Fabian T. Garcia 03) Steven H. Gunby 04) Gail E. Hamilton 05) Michael D. Hayford VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern timeTime on May 11, 2021. For those who hold shares under Arrow's 401(k) plan, voting ends at 11:59 p.m. Eastern time on May 9, 2021.6, 2024. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern timeTime on May 11, 2021. For those who hold shares under Arrow's 401(k) plan, voting ends at 11:59 p.m. Eastern time on May 9, 2021.6, 2024. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. VOTE IN PERSON You can cast your vote in person at the annual meeting. At the meeting, you will need to request a ballot to vote these shares. We are planningSCAN TO VIEW MATERIALS & VOTEw |
| V29472-P04829 Important Notice Regarding the Availability of Proxy Materials for the possibility thatAnnual Meeting: The proxy statement and annual report are available at www.proxyvote.com. Internet or telephone voting is available through 11:59 p.m. Eastern Time on Monday, May 6, 2024. Your telephone or Internet vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card. If you vote by Internet or telephone, you do NOT need to mail your proxy card. You can also view Arrow's Annual Report and Proxy Statement on the Internet at: investor.arrow.com/financials/financial-results and at www.proxyvote.com. ARROW ELECTRONICS, INC. PROXY for Annual Meeting of Shareholders, May 7, 2024 This proxy is solicited by the Board of Directors. The undersigned hereby appoints Carine L. Jean-Claude and Matthew S. Senko, and any one or both of them, with full power of substitution, as proxy or proxies of the undersigned to vote all shares of stock of ARROW ELECTRONICS, INC. which the undersigned would be entitled to vote if personally present at the Annual Meeting may allow participationof Shareholders to be held on Tuesday, May 7, 2024, at 8:00 a.m. Mountain Time, at The Inverness Denver, a Hilton Golf and Spa Resort, 200 Inverness Drive West, Englewood, Colorado 80112, or any adjournments thereof, as set forth on the reverse hereof. This proxy is being solicited by meansthe Board of remote communication.Directors and will be voted as specified. If we take this step, wenot otherwise specified, it will publicly announce our determination in a press release available at investor.arrow.com/news as soon as practicable beforebe voted “FOR” the meeting. ARROW ELECTRONICS, INC. 9201 EAST DRY CREEK ROAD CENTENNIAL, COLORADO 80112 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D36630-P49938 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. ARROW ELECTRONICS, INC. The boardelection of directors recommends you vote FOR the following: For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s)each of the nominee(s) ondirector nominees named in Proposal 1 and “FOR” each of Proposals 2 and 3. Please Return this Proxy Promptly in the line below. ! !! 1. Election of Directors Nominees: 01) Barry W. Perry 02) William F. Austen 03) Steven H. Gunby 04) Gail E. Hamilton 05) Richard S. Hill 06) M.F. (Fran) Keeth 07) Andrew C. Kerin 08) Laurel J. Krzeminski 09) Michael J. Long 10) Stephen C. Patrick 11) Gerry P. Smith For Against Abstain The board of directors recommends you vote FOR the following proposals: ! ! ! ! ! ! 2. To ratify the appointment of Ernst & Young LLP as Arrow's independent registered public accounting firm for the fiscal year ending December 31, 2021. 3. To approve, by non-binding vote, named executive officer compensation. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. If acting as attorney, executor, trustee or in other representative capacity, please sign name and title. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateEnclosed Envelope |
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