William E. Mitchell
Chairman of the Board

March 19, 2008

Dear Shareholder:

You are invited to Arrow’s Annual Meeting of Shareholders, on Friday, May 2, 2008, at the Grand Hyatt New York, 109 East 42^nd Street, New York, New York at 11:00 a.m. The formal notice of the meeting and the proxy statement soliciting your vote at the meeting appear on the following pages.

The three matters being put to a vote at the meeting are the election of directors, a proposal to ratify the appointment of our independent registered public accounting firm, and a proposal to authorize an increase in the number of shares which can be issued under the company’s Omnibus Incentive Plan. These matters are discussed more fully in the proxy statement.

Arrow’s Board of Directors recommends the approval of the proposals as being in the best interests of Arrow, and urges you to read the proxy statement carefully before you vote. Your vote is important, regardless of the number of shares you own.

Under the rules recently adopted by the Securities and Exchange Commission, we are now furnishing proxy materials to our shareholders online, rather than mailing printed copies of those materials to each shareholder. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request one. The Notice includes instructions on how to access and review the materials, and how to access your proxy card and vote, online. If you received the Notice and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice.

Please make sure you vote whether or not you plan to attend the meeting. You can cast your vote at the meeting, by mailing your proxy card in the postage-paid return envelope, by telephone or online by following the instructions on either the proxy card or the Notice of Internet Availability.

ARROW ELECTRONICS, INC.

50 Marcus Drive
Melville, New York 11747

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TIME AND DATE

11:00 a.m. on Friday, May 2, 2008

PLACE

Grand Hyatt New York
109 East 42^nd Street
New York, New York 10017

ITEMS OF BUSINESS

     The annual meeting will be held:

	1.		To elect directors of Arrow for the ensuing year.
	2.		To act upon a proposal to ratify the appointment of Ernst & Young LLP as Arrow’s independent registered public accounting firm for the fiscal year ending December 31, 2008.
	3.		To approve an amendment to the Arrow Electronics, Inc. 2004 Omnibus Incentive Plan to increase the aggregate number of shares of Arrow common stock available for issuance to plan participants.

RECORD DATE

     Only shareholders of record at the close of business on March 12, 2008 are entitled to notice of and to vote at the meeting or any adjournments thereof.

PROXY MATERIALS AND ANNUAL REPORT

     Shareholders who have received a Notice of Internet Availability of Proxy Materials by mail will receive a printed copy of the proxy materials and our annual report only upon request. The Notice of Internet Availability has instructions for access to and review of our proxy materials online, as well as instructions for online voting.

     Arrow’s 2007 Annual Report (which is not a part of the proxy soliciting material), and this proxy statement were made available through www.proxyvote.com on or about March 19, 2008, and are also available at the Investor Relations section of the company’s website at www.arrow.com.

PROXY VOTING

     Shareholders can vote by completing and returning the proxy card, online, by telephone, or by attending the meeting. The Notice of Internet Availability and the proxy card itself have detailed instructions for voting.

     Shareholders may revoke a proxy (change or withdraw the vote) at any time prior to its exercise at the meeting by following the instructions in the proxy statement.

ARROW ELECTRONICS, INC.

ANNUAL MEETING OF SHAREHOLDERS

To be Held May 2, 2008

TABLE OF CONTENTS

Proxy Statement					1
		The Purpose of this Statement			1
		Invitation to the Annual Meeting			1
		Voting Instructions			1
		Shareholders Entitled to Vote			1
		Revocation of Proxies			2
		Cost of Proxy Solicitation			2
Certain Shareholders					2
		Holders of More than 5% of Common Stock			2
		Shareholding of Executive Officers and Directors			3
Proposal 1: Election of Directors					4
The Board and Its Committees					7
		Committees			7
		Independence			9
		Meetings and Attendance			10
		Director Compensation			11
		Availability of More Information			13
Report of the Audit Committee					14
Principal Accounting Firm Fees					15
Proposal 2: Ratification of Appointment of Auditors					16
Proposal 3: Proposal to Amend the Arrow Electronics, Inc. 2004 Omnibus Incentive Plan					16
Summary Description of the Plan					16
		Purpose of the Plan			16
		Duration			17
		Administration			17
		Plan Share Limits			17
		Participant Award Limits			18
		Eligibility and Participation			18
		Stock Options			18
		Stock Appreciation Rights			18
		Restricted Stock and Restricted Stock Units			19
		Performance Unit and Performance Shares			19

		Performance Measures			19
		Covered Employee Annual Incentive Awards			20
		Non-Employee Director Awards			21
		Other Awards			21
		Other Provisions of Awards and Individual Award Agreements			21
		Treatment of Awards Upon a Corporate Event			21
		Amendment of Awards or Plan and Adjustment of Awards			22
		Awards Net of Withholding			22
		Rights of Participants			22
		New Plan Benefits			22
		Federal Tax Effects			23
		Incentive Stock Options			23
		Non-Qualified Stock Options			23
		Section 162(m) of the Internal Revenue Code			23
Report of the Compensation Committee					25
Compensation Discussion and Analysis					25
		Overview			25
		Philosophy			26
		Process			26
		Benchmarking			27
		Base Salary			28
		Variable Compensation			29
		Short-Term Incentive Program			30
		Medium-Term Incentive Program			31
		Long-Term Incentive Program			33
		Retirement Programs and Other Benefits			34
		Deferred Compensation			34
		Qualified Plans			34
		Management Insurance Plan			34
		Employment and Change of Control Agreements			35
		SERP			35
		Tax Considerations			35
Compensation of the Named Executive Officers					36
		Summary Compensation Table			36
		All Other Compensation — Detail			38
		Grants of Plan-Based Awards			39
		Outstanding Equity Awards at Fiscal Year-End			40
		Options Exercised and Stock Vested in Last Fiscal Year			42
		Supplemental Executive Retirement Plan			42
		Deferred Compensation Plans			44

Agreements and Potential Payments Upon Termination or Change of Control					45
		Employment Agreements			45
		Change of Control Agreements			46
		Impact of Internal Revenue Code §409A			47
		Potential Payouts Upon Termination			47
		Narrative Explanation of the Calculation of Amounts			49
		Stock Option, Restricted Stock and Performance Share Award Agreements			49
Related Persons Transactions					50
Section 16(a) Beneficial Ownership Reporting Compliance					50
Submission of Shareholder Proposals					50
Omnibus Incentive Plan, as amended				Annex A

ARROW ELECTRONICS, INC.

50 Marcus Drive
Melville, New York 11747

PROXY STATEMENT

in connection with the
2008 Annual Meeting of Shareholders

The Purpose of this Statement

     The Board of Directors of Arrow Electronics, Inc., a New York corporation (“Arrow” or the “company”), is furnishing this proxy statement to all shareholders of record to solicit proxies to be voted at the 2008 Annual Meeting of Shareholders, and any adjournments of the meeting. By returning the completed proxy card, or voting over the telephone or internet, you are giving instructions on how your shares are to be voted at the Annual Meeting.

Invitation to the Annual Meeting

     You are invited to attend the 2008 Annual Meeting of Shareholders on Friday, May 2, 2008, beginning at 11:00 a.m. The meeting will be held at the Grand Hyatt New York, 109 East 42^nd Street, New York, New York 10017.

Voting Instructions

     Please complete, sign, and date your proxy card and return it promptly in the postage-paid return envelope provided, or vote your shares by telephone or through the internet. Whether or not you plan to attend the meeting, your prompt response will assure a quorum and reduce solicitation expense.

Shareholders Entitled to Vote

     Only shareholders of Arrow’s common stock at the close of business on March 12, 2008 (the “record date”) are entitled to notice of and to vote at the meeting or any adjournments thereof. As of the record date, there were 125,068,705 shares of Arrow common stock outstanding. Each share of common stock is entitled to one vote on each matter properly brought before the meeting.

Revocation of Proxies

     The person giving the proxy may revoke it at any time prior to the time it is voted at the meeting by giving written notice to Arrow’s Secretary. If the proxy was given by telephone or through the internet, it may be revoked in the same manner. You may also revoke your proxy by attending the Annual Meeting and voting in person, though merely attending the Annual Meeting will not automatically revoke your proxy.

Cost of Proxy Solicitation

     Arrow pays the cost of soliciting proxies. Arrow has retained D.F. King & Co., Inc. to assist in soliciting proxies at an anticipated cost of $10,500 plus expenses. Arrow may also request brokers and other nominees holding Arrow common stock to forward soliciting materials to the beneficial owners of that stock and will reimburse them for their expenses in so doing.

CERTAIN SHAREHOLDERS

Holders of More than 5% of Common Stock

     The following table sets forth certain information with respect to the only shareholders known to management to own beneficially more than 5% of the outstanding common stock of Arrow as of March 12, 2008.

Name and Address		Number of Shares
of Beneficial Owner		Beneficially Owned				Percent of Class
FMR LLC (1) 82 Devonshire Street Boston, Massachusetts 02109			15,740,742				12.6	%
Mutuelles AXA (2) 26, rue Drouot 75009 Paris, France			13,159,936				10.5	%
Wellington Management Company, LLP (3) 75 State Street Boston, Massachusetts 02109			12,050,344				9.6	%
JPMorgan Chase & Co. (4) 270 Park Avenue New York, New York 10017			6,633,795				5.3	%

Shareholding of Executive Officers and Directors

     As of March 12, 2008, all of the executive officers and directors of Arrow as a group were the beneficial owners of 3,511,475 shares of the company’s common stock, which is 2.8% of the total shares of common stock outstanding. This amount includes 2,484,484 shares, (2.0% of the company’s outstanding common stock) held by the Arrow Electronics Employee Stock Ownership Plan (the “ESOP”) of which William E. Mitchell, Peter S. Brown and Paul J. Reilly are the trustees. As trustees, they have shared power to vote the shares held by the ESOP, and for that reason are deemed to be beneficial owners of them under SEC regulations. The ESOP total also includes shares allocated to the individual accounts of each of the trustees.

     As of March 12, 2008, the “named executive officers” (the Chief Executive Officer, the Chief Financial Officer and each of the other three most highly compensated executive officers of the company) and directors had beneficial ownership of the company’s common stock as follows:

Shares of Common Stock Beneficially Owned

						Common				Acquirable w/in 60				% of Outstanding
		Currently Owned (1)				Stock Units (2)				Days				Common Stock
William E. Mitchell			2,914,479	(3)			—				—				2.3	%
Paul J. Reilly			2,624,327	(3)			—				—				2.1	%
Michael J. Long			72,167				—				—				*
Peter S. Brown			2,516,902	(3)			—				—				2.0	%
M. Catherine Morris			17,475				—				—				*
Daniel W. Duval			46,200				16,256				—				*
Gail E. Hamilton															*
John N. Hanson			23,500				14,287				—				*
Richard S. Hill			—				5,592				—				*
M.F. (Fran) Keeth			—				8,630				—				*
Roger King			26,000				14,580				—				*
Karen Gordon Mills			26,600				23,080				—				*
Stephen C. Patrick			15,000				12,551				—				*
Barry W. Perry			35,000				13,600				—				*
John C. Waddell			31,576				6,290				—				*
Total Executive Officers’ and Director’s Beneficial Ownership			3,390,859	(3)			114,866				5,750				2.8	%

     Michael J. Long was appointed Arrow’s President and Chief Operating Officer, and a member of the Board of Directors in February 2008. His biography follows under Proposal 1, Election of Directors.

PROPOSAL 1: ELECTION OF DIRECTORS

     Each member of the Board of Directors of Arrow (the “Board”) is to be elected at the meeting to hold office until the next Annual Meeting of Shareholders and until his or her successor has been duly elected and qualified. By resolution of all the current directors, the Board will consist of twelve directors unless and until that number is changed by a resolution of the then current Board. Shareholder proxies solicited under this proxy statement cannot be voted for more than twelve directors.

The Board of Directors recommends a vote for all of the nominees.

     Nominees receiving a plurality of votes cast at the meeting will be elected directors. Consequently, any shares not voted (whether by abstention or broker non-votes) have no effect on the election of directors.

     Management does not contemplate that any of the nominees will be unable or unwilling to serve as a director, but should that happen prior to the voting of the proxies, the persons named in the accompanying proxy reserve the right to substitute another person of their choice when voting at the meeting.

     All of the nominees are currently directors of Arrow and were elected at Arrow’s last annual meeting, except for Ms. Hamilton and Mr. Long, who were appointed to the Board in February 2008.

     Following are the biographies of the twelve nominees:

     Daniel W. Duval, 71, director since 1987

Mr. Duval has been Lead Director of Arrow since May 2006. He was Chairman of the Board from June 2002 to May 2006. He also served as Arrow’s interim Chief Executive Officer from September 2002 to February 2003. He served as interim President and Chief Executive Officer of Robbins & Myers, Inc., a manufacturer of fluids management systems, from December 2003 through July 2004. Mr. Duval is a director of Robbins & Myers, Inc., The Manitowoc Company, Inc., Miller-Valentine Group and Gosiger, Inc.

Gail E. Hamilton, 57, director since 2008

Ms. Hamilton was Executive Vice President of Symantec, an infrastructure software and services provider, for five years prior to January 2005. Previously, she served as the General Manager of the Communications Division of Compaq Computers and as the General Manager of the Telecom Platform Division for Hewlett-Packard Company. She is a director of OpenText Corp., Ixia, and Surgient, Inc.

John N. Hanson, 66, director since 1997

Mr. Hanson has been Non-Executive Chairman of the Board of Joy Global, Inc., a manufacturer of mining equipment for both underground and surface applications, since February 2007. He was Chairman, Chief Executive Officer and President of Joy Global Inc. for more than five years prior thereto. He is a director of the Milwaukee Symphony Orchestra and Chairman of the American Coal Foundation.

Richard S. Hill, 56, director since 2006

Mr. Hill has been Chief Executive Officer and Chairman of the Board of Novellus Systems, Inc., a maker of devices used in the manufacture of advanced integrated circuits, for more than five years. He is a director of LSI Corporation and the University of Illinois Foundation.

M.F. (Fran) Keeth, 61, director since 2004

Mrs. Keeth is retired. She was Executive Vice President of Royal Dutch Shell, plc, and CEO and President of Shell Chemicals Limited, a services company responsible for Royal Dutch Shell’s global petrochemical businesses, from January 2005 to December 2006. She served as Executive Vice President of Customer Fulfillment and Product Business Units for

Shell Chemicals Limited from July 2001 to January 2005 and was President and Chief Executive Officer of Shell Chemical LP, a U.S. petrochemical member of the Royal Dutch/ShellGroup, from July 2001 to July 2006. Mrs. Keeth also serves as a director of Verizon Communications Inc.

Roger King, 67, director since 1995

Mr. King is retired from business. He served as Chief Executive Officer of Sa Sa International Holdings Limited, a retailer of cosmetics, from 1999 until 2002. He is currently an Adjunct Professor in Finance at Hong Kong University of Science and Technology. He also serves as a director of Orient Overseas (International) Limited, Sincere Watch (Hong Kong) Limited and TNT N.V, companies listed on the Hong Kong Stock Exchange and the Euronext Amsterdam, respectively.

Michael J. Long, 49, director since 2008

Mr. Long was appointed President and Chief Operating Officer of Arrow in February 2008. He served as Senior Vice President of the company from January 2006 to February 2008, and, prior thereto, he served as Vice President of the company for more than five years. He was appointed President, Arrow Global Components in September 2006. Prior thereto, he served as President, North America and Asia/Pacific Components from January 2006 until September 2006; President, North America from May 2005 to December 2005; and President and Chief Operating Officer of Arrow Enterprise Computing Solutions from July 1999 to April 2005. He also serves as a director of AmerisourceBergen Corporation.

Karen Gordon Mills, 54, director since 1994

Ms. Mills has served as President of MMP Group, a private equity investor and advisor since 1993. From 1999 to 2007 she was a founding partner and a managing director of Solera Capital, a New York based venture capital firm. She is currently the Lead Director of Scotts Miracle-Gro, a public company. Ms. Mills is the Chair of the Governor’s Council on Competitiveness and the Economy of the state of Maine and serves on the Board of the Maine Technology Institute. She is also a director of the Maine Chapter of the Nature Conservancy.

William E. Mitchell, 64, director since 2003

Mr. Mitchell has been Chief Executive Officer of Arrow since February 2003, and was also President of the company from February 2003 to February 2008. He has been Chairman of the Board of Arrow since May 2006. Mr. Mitchell also serves as a director of Brown-Forman Corporation.

Stephen C. Patrick, 58, director since 2003

Mr. Patrick has served as the Chief Financial Officer of the Colgate-Palmolive Company, a global consumer products company, for more than five years. In his more than 20 years at Colgate-Palmolive he has also held positions as Vice President, Corporate Controller and Vice President of Finance for Colgate Latin America.

     Barry W. Perry, 61, director since 1999

Mr. Perry was Chief Executive Officer and Chairman of the Board of Engelhard Corporation, a surface and materials science company, for more than five years prior to his retirement in June 2006. Mr. Perry is also a director of the Cookson Group plc and Ashland Inc.

     John C. Waddell, 70, director since 1969

Mr. Waddell retired as the Chairman of the Board of Arrow in May 1994 and since that time has served as the Vice Chairman.

THE BOARD AND ITS COMMITTEES

     The Board meets in general sessions with Chairman Mitchell presiding, in meetings limited to non-management directors, which are led by Lead Director Duval, and in its various committees. Committee meetings are open to all members of the Board. Committee memberships and chair assignments are reviewed annually by the Corporate Governance Committee.

     The table below reflects the various positions held by Board members during calendar year 2007. The table and the discussion that follows generally exclude Ms. Hamilton and Mr. Long, who were appointed to the Board in February 2008.

Audit

Compensation

Corporate Governance

Jan 2007 — May 2007

May 2007 — Dec 2007

Jan 2007 — May 2007

May 2007 — Dec 2007

Jan 2007 — May 2007

May 2007 — Dec 2007

Daniel W. Duval

•

•

•

•

John N. Hanson

•

5

•

Richard S. Hill

•

•

•

•

M.F. (Fran) Keeth

•

•

•

•

Roger King

•

•

•

•

Karen Gordon Mills

•

•

5

•

William E. Mitchell

Stephen C. Patrick

5

5

•

Barry W. Perry

•

5

•

John C. Waddell

•

•

•

5

     5 Chair • Member

Committees

     The audit committee reviews and evaluates Arrow’s financial reporting process and other matters including its accounting policies, reporting practices, and internal accounting controls. The committee also monitors the scope and reviews the results of the audit conducted by Arrow’s independent registered public accounting firm. The committee reviews with the internal audit department the status and results of the annual internal audit plan, assessments of the adequacy and effectiveness of internal controls, and the sufficiency of the department’s resources. The Board has determined that Mr. Patrick is an “audit committee financial expert” as defined by the SEC. In light of the possibility that Mr. Patrick might at some time be unable to attend a meeting of the committee, the Board has also determined that Mrs. Keeth qualifies as an “audit committee financial expert.”

     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 strategy, drive long-term profitable growth and increase shareholder value. The committee reviews and approves the corporate goals and objectives relevant to executive compensation, and, subject to review and ratification by the other independent members of the Board, reviews and approves the base salary, annual incentives, performance and stock-based awards and retirement and other benefits for the Chief Executive Officer and the company’s other principal executives.

     Compensation committee meetings are regularly attended by the company’s Chief Executive Officer, the General Counsel (who also serves as secretary), the Senior Vice President of Human Resources, and, as required, the Chief Financial Officer. Each of the management attendees provides the committee with his or her specific expertise and the business and financial context necessary to understand and properly target financial and performance metrics. None of the members of management has, or is delegated, any decision-making authority as to the compensation of the company’s executive officers, and none of the management invitees are present during the committee’s deliberations regarding their compensation.

     The committee meets regularly to review and manage compensation, review executive-level hiring, retention, and termination arrangements, and a number of related issues. In 2007, these included:

	•		Approving the prior year (2006) bonuses, performance share awards and equity grants;
	•		setting the Employee Share Ownership Plan (the “ESOP”) share pool;
	•		reviewing and approving all compensation plan metrics, goals and targets, and Chief Executive Officer non-financial incentive goals for 2007;
	•		reviewing the annual report on the performance of the company’s Pension Investment and Oversight Committee;
	•		reviewing the committee’s charter;
	•		reviewing the Compensation Discussion and Analysis regarding 2006 and confirming the committee’s Report to Shareholders;
	•		receiving advice concerning legislative developments regarding compensation;
	•		reviewing the performance of the compensation consultant; and
	•		conducting the annual committee self-assessment.

     The committee’s consideration of the performance and compensation of the Chief Executive Officer is conducted in executive session. The committee reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation and evaluates the Chief Executive Officer’s performance and the performance of the company itself in light of those goals and objectives.

     Under its charter, the committee may delegate its authority to a subcommittee consisting of one or more members.

     In 2007, the committee directly engaged Pearl Meyer & Partners as a consultant to examine and report exclusively to the committee on best practices in the alignment of compensation programs for the Chief Executive Officer and other members of senior management with corporate goals by providing competitive and benchmarking data, analyses, and recommendations with regard to plan design and target compensation. Pearl Meyer & Partners does not provide any other services to the company.

     Prior to the retention of Pearl Meyer & Partners, the committee had directly engaged Hewitt Associates as its executive compensation consultant to report exclusively to the committee on such matters. It acted in that capacity with respect to 2007 compensation until the engagement of Pearl Meyer & Partners. Hewitt Associates also provided, and continues to provide, services to management, and not the committee, unrelated to executive compensation, including health care benefits consulting and administrative and actuarial support for certain company benefit plans.

     The committee operates under the Compensation Committee Charter, a copy of which is available at the investor relations section of the company’s website, www.arrow.com.

     The corporate governance committee has primary responsibility for developing the corporate governance guidelines for Arrow and for making recommendations with respect to committee assignments and other governance issues. The committee regularly reviews and makes recommendations to the Board regarding the compensation of non-employee directors.

     The committee will consider shareholder recommendations of nominees for membership on the Board as well as those recommended by current directors, company officers, employees, shareholders, and others. Such recommendations may be submitted to Arrow’s Secretary, Peter S. Brown, at Arrow Electronics, Inc., 50 Marcus Drive, Melville, New York, 11747, who will forward them to the committee. The committee’s expectations as to the specific qualities and skills required for directors are set forth in Section 4 of Arrow’s corporate governance guidelines (available at the investor relations section of the company’s website, www.arrow.com.)

     The committee’s initial review of the potential candidate is typically based on any written materials provided to the committee. In connection with the evaluation of potential nominees, the committee determines whether to interview the nominee, and if warranted, the committee, the Chairman of the Board and Chief Executive Officer, the Lead Director and others as appropriate, interview the potential nominees. The committee has retained the services of a third-party executive recruitment firm to assist committee members in the identification and evaluation of potential nominees for the Board.

Independence

     The company’s corporate governance guidelines provide that the Board should consist primarily of independent, 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 relationship with the company and that he or she is not involved in any activity or interest that might appear to conflict with his or her fiduciary duties to the company.

     To be deemed independent, a director must also meet the independence standards in the New York Stock Exchange listing rules, which require that neither such a director nor any member of his or her immediate family:

	i)		is, or has been within the last three years, an officer or employee of the company;
	ii)		received more than $100,000 from the company (except for director or committee fees) during any twelve-month period in the last three years;

	iii)		is employed by or a partner in the company’s independent registered public accounting firm (or, if a former employee or partner, has worked on the audit of the company within the past three years);
	iv)		is or has been at any time in the last three years, an executive officer of another company where any of Arrow’s executive officers serves as a member of such other company’s board of directors and compensation committee; and
	v)		is an employee (or, in the case of a family member, an executive officer) of a company which has made payments to or received payment from Arrow in excess of the larger of $1 million or 2% of such other company’s consolidated gross revenues in any of the last three fiscal years.

     In addition to applying these guidelines, the Board will consider all relevant facts and circumstances in making an independence determination. In making this determination regarding Mr. Hill, the Board considered that Mr. Hill is an independent director of LSI Corporation, a semiconductor manufacturer for which the company is an authorized distributor. In 2007, the company purchased approximately $100,000,000 of LSI products worldwide, an amount equal to approximately 3.8% of LSI’s total sales. In addition to the immateriality of the amount of company sales involved, the Board determined that this relationship did not impair Mr. Hill’s independence because he is an independent director of LSI, and receives compensation from LSI only in connection with his services as such. In addition, Novellus Systems, Inc., of which Mr. Hill is Chairman and Chief Executive Officer, purchased less than $50,000 of product from Arrow in 2007.

     The Board has determined that all of its directors and nominees, other than Mr. Mitchell and Mr. Long, satisfy both the New York Stock Exchange’s independence requirements and the company’s guidelines.

     As required by the company’s corporate governance guidelines and the New York Stock Exchange’s listing rules, all members of the audit, compensation and corporate governance committees are independent, non-management directors.

     No member of the compensation committee is a present or former employee of the company, except for Mr. Duval, who served as interim Chief Executive Officer from September 2002 to February 2003, and Mr. Waddell, who served as Chief Executive Officer of the company until December 1986 and Executive Chairman of the company until May 1994. Under the rules of the New York Stock Exchange, neither Mr. Duval’s interim service nor Mr. Waddell’s prior service alter their respective status as independent, non-management directors. No member of the compensation committee is an employee or director of any company where any employee or director of Arrow serves on the compensation committee.

     All members of the audit committee also satisfy an additional SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from Arrow or any of its subsidiaries other than their directors’ compensation.

Meetings and Attendance

     In general, it is the practice of the Board for all of its non-management directors to meet in “executive session” at each Board meeting, with the Lead Director presiding. Consistent with Arrow’s corporate governance guidelines, in 2007 these non-management director meetings included one under the guidance of the Chair of the compensation committee to evaluate the performance of the Chief Executive Officer and one under the guidance of the Chair of the corporate governance committee to discuss senior management development and succession.

     During 2007 there were 9 meetings of the Board, 9 meetings of the audit committee, 10 meetings of the compensation committee, and 3 meetings of the corporate governance committee. All directors attended 75% or more of all of the meetings of the Board and the committees on which they served. It is the policy of the Board that all of its members attend the Annual Meeting of Shareholders absent exceptional cause, and all the members of the Board did so in 2007 but for one member who was absent as a result of a family medical matter.

Director Compensation

     The following table shows the total dollar value of compensation received by all non-employee directors in or in respect of 2007 and the expense recorded by the company in connection with the vesting during 2007 of stock-based compensation.

Non-Employee Director Compensation

										Change in
		Fees Earned or				Stock				Pension Value and
		Paid in Cash				Awards				NQDC Earnings				Total
Name		($)				($)(1)				($)(2)				($)
Daniel W. Duval			98,000				165,313				—				263,313
Gail E. Hamilton			—				—				—				—
John N. Hanson			89,000				60,000				—				149,000
Richard S. Hill			94,000				66,667				—				160,667
M.F. (Fran) Keeth			94,000				60,000				970				154,970
Roger King			90,000				60,000				—				150,000
Karen Gordon Mills			103,000				60,000				—				163,000
Stephen C. Patrick			98,000				60,000				—				158,000
Barry W. Perry			91,000				60,000				6,187				157,187
John C. Waddell			99,000				60,000				—				159,000

     The following table reflects the number of unvested restricted stock units and unexercised options held by each independent director as of year-end 2007. The company no longer uses stock options as a part of the compensation of independent directors. The prior grants reflected in the table below had ten-year terms. Each vested in two equal installments beginning on the

first anniversary of the grant date and had exercises prices set at the market price of Arrow common stock at the close on the date of grant.

Outstanding Equity Awards at Fiscal Year-End

		Option Awards								Stock Awards
		Number of Securities																Market Value of
		Underlying				Option								Number of Shares or				Shares or Units of
		Unexercised Options—				Exercise								Units of Stock Held				Stock Held that Have
		Exercisable				Price				Option Expiration Date				That Have Not Vested				Not Yet Vested
Name		(#)(1)				($)(2)				(2)				(#)(3)				($)(3)
Daniel W. Duval			—				—				—				2,216.75				87,074
			4,000				27.50				5/14/2008				—				—
			4,000				18.13				5/14/2009				—				—
			4,000				33.69				5/23/2010				—				—
			4,000				26.52				5/11/2011				—				—
			4,000				26.23				5/23/2012				—				—
			4,000				16.51				5/23/2013				—				—
John N. Hanson			—				—				—				1,477.83				58,049
			4,000				18.13				5/14/2009				—				—
			4,000				33.69				5/23/2010				—				—
			4,000				26.52				5/11/2011				—				—
			4,000				26.23				5/23/2012				—				—
			4,000				16.51				5/23/2013				—				—
Richard S. Hill			—				—				—				1,477.83				58,049
M.F. (Fran) Keeth			—				—				—				1,477.83				58,049
Roger King			—				—				—				1,477.83				58,049
			4,000				27.50				5/14/2008				—				—
			4,000				18.13				5/14/2009				—				—
			4,000				33.69				5/23/2010				—				—
			4,000				26.52				5/11/2011				—				—
			4,000				26.23				5/23/2012				—				—
			4,000				16.51				5/23/2013				—				—
Karen Gordon Mills			—				—				—				1,477.83				58,049
			4,000				27.50				5/14/2008				—				—
			4,000				18.13				5/14/2009				—				—
			4,000				33.69				5/23/2010				—				—
			4,000				26.52				5/11/2011				—				—
			4,000				26.23				5/23/2012				—				—
			4,000				16.51				5/23/2013				—				—
Stephen C. Patrick			—				—				—				1,477.83				58,049
			15,000				17.27				7/16/2013				—				—
Barry W. Perry			—				—				—				1,477.83				58,049
			15,000				17.44				1/25/2009				—				—
			4,000				18.13				5/14/2009				—				—
			4,000				33.69				5/23/2010				—				—
			4,000				26.52				5/11/2011				—				—
			4,000				26.23				5/23/2012				—				—
			4,000				16.51				5/23/2013				—				—
John C. Waddell			—				—				—				1,477.83				58,049
			4,000				27.50				5/14/2008				—				—
			4,000				18.13				5/14/2009				—				—
			4,000				33.69				5/23/2010				—				—
			4,000				26.52				5/11/2011				—				—
			4,000				26.23				5/23/2012				—				—
			4,000				16.51				5/23/2013				—				—

     The independent members of the Board (that is, all members except Messrs. Mitchell and Long) receive the following fees:

Annual Fee		$	50,000
Annual fee for each Board or committee meeting attended		$	2,000
Annual fee for service as committee chair		$	10,000
Additional annual fee for service as compensation or audit committee chair from and after the 2008 Annual Meeting		$	5,000

     Under the terms of the Non-Employee Director Deferral Plan, non-employee directors may defer the payment of all or any portion of their annual retainers and meeting fees until the end of their service on the Board. Unless a different amount is chosen by the director, 50% of the director’s annual retainer fee is deferred and converted to units of Arrow common stock. When the director leaves the Board, each whole stock unit credited to his or her account will be settled with the issuance of one share of common stock. Other amounts that are deferred may be invested for the benefit of the director, or should a director so choose, be converted into the stock units. The units held by each director are included under the heading “Common Stock Units” in the Shares of Common Stock Beneficially Owned table above. The amounts deferred by each director for 2007 are included under the heading “Fees Earned or Paid in Cash” on the Directors Compensation table above.

     Each non-employee director receives an annual grant of restricted stock units valued at $60,000, ($90,000 from and after the 2008 Annual Meeting) based on the fair market value of Arrow common stock on the date of grant. Based on the closing market price of $40.60 on May 8, 2007, the 2007 grant resulted in 1,477.83 restricted stock units being awarded to each director. The units vest on the first anniversary of the grant date, but are not transferable into Arrow common stock, salable or available to be used as collateral until one year after the director leaves the Arrow Board, when each vested unit is settled with the issuance of one share of Arrow common stock.

     For his service as Lead Director, Mr. Duval received an additional grant of restricted stock units valued at $30,000 (738.92 units in 2007, based on the grant-date closing market price of $40.60.)

     Neither Mr. Mitchell nor Mr. Long receive regular compensation for Board service.

Availability of More Information

     Arrow’s corporate governance guidelines, the corporate governance committee charter, the audit committee charter, the compensation committee charter, the company’s Worldwide Code of Business Conduct and Ethics and the Finance Code of Ethics can be found at the investor relations section of the company’s website, www.arrow.com, and are available in print to any shareholder who requests them.

     Shareholders and other interested parties who wish to communicate with the Chairman of the Board or any of the non-management members of the Board may do so by submitting such communication to Arrow’s Secretary, Peter S. Brown, at Arrow Electronics, Inc., 50 Marcus Drive, Melville, New York 11747, who will present any such communication to the directors.

REPORT OF THE AUDIT COMMITTEE

     The audit committee represents and assists the Board by overseeing the company’s financial statements and internal controls; the independent registered public accounting firm’s qualifications and independence; and the performance of the company’s internal audit function and of its independent registered public accounting firm. The committee operates under the Audit Committee Charter, a copy of which is available at the investor relations section of the company’s website, www.arrow.com.

     The audit committee currently consists of six directors, all of whom are independent in accordance with New York Stock Exchange listing standards and other applicable regulations. The Board has determined that Mr. Patrick is an “audit committee financial expert” as defined by the SEC. In light of the possibility that Mr. Patrick might at some time be unable to attend a meeting of the committee, the Board has also determined that Mrs. Keeth qualifies as an “audit committee financial expert.”

     Company management has the primary responsibility for financial statements and for the reporting process, including the establishment and maintenance of Arrow’s systems 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, 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 2007 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 are required to be reviewed with them under the standards promulgated by the Public Company Accounting Oversight Board. Also discussed with both management and the company’s independent registered public accounting firm were the design and efficacy of the company’s internal controls 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 required by Independence Standards Board Standard No. 1 (“Independence Discussions with Audit Committees”) and considered the compatibility of non-audit services rendered to Arrow with the auditors’ independence. The committee also discussed with the independent registered public accounting firm those matters required to be considered by Statement on Auditing Standards No. 114 (“The Auditor’s Communication with Those Charged with Governance.”)

     The audit committee also discussed with the independent registered public accounting firm and Arrow’s internal audit group the overall scope and plans for their respective audits. The committee periodically met with the independent registered public accounting firm and the internal audit group, with and without management present, to discuss the results of their

examinations, 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, 2007 for filing with the SEC.

Stephen C. Patrick, Chair
Daniel W. Duval
Richard S. Hill
M.F. (Fran) Keeth
Roger King
Barry W. Perry

PRINCIPAL ACCOUNTING FIRM FEES

     The aggregate fees billed by Arrow’s principal accounting firm, Ernst & Young LLP, for auditing the annual financial statements and the company’s internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act and related regulations included in the Form 10-K, the reviews of the quarterly financial statements included in the Forms 10-Q, statutory audits, assistance with and review of documents filed with the SEC and consultations on various 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 business acquisitions, employee benefit plan audits, and other accounting consultations. Tax fees relate to assistance in tax return preparation and tax audits, and tax interpretation and compliance, in various tax jurisdictions around the world. Ernst & Young did not provide any services related to financial information systems design or implementation or personal tax work or other services for any of the company’s executive officers or members of the Board of Directors.

		2007				2006
Audit Fees		$	7,359,840			$	6,378,810
Audit-Related Fees			126,775				219,110
Tax Return and Compliance Fees			445,706				505,098
Other Tax Related Fees			288,372				358,005
Total		$	8,220,693			$	7,461,023

     The amounts in the table above do not include fees charged by Ernst & Young to Marubun/Arrow, a joint venture between the company and the Marubun Corporation, which totaled $232,946 (audit-related fees) and $1,766 (tax fees) in 2007, and $194,441 (audit-related fees) and $12,662 (tax fees) in 2006.

     Consistent with the audit committee charter, all audit, audit-related, tax return and compliance and other tax related services were pre-approved by the audit committee, or by a designated member thereof. The committee has determined that the provision of the non-audit services described above is compatible with maintaining Ernst & Young’s independence.

PROPOSAL 2: RATIFICATION OF APPOINTMENT OF AUDITORS

     Shareholders will be asked to ratify the appointment of Ernst & Young as Arrow’s independent registered public accounting firm for 2008. Arrow expects that representatives of Ernst & Young will be present at the 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 meeting.

The Board recommends that the shareholders vote for the ratification of the appointment of Ernst & Young LLP.

PROPOSAL 3: PROPOSAL TO AMEND THE ARROW ELECTRONICS, INC.
2004 OMNIBUS INCENTIVE PLAN

     The Board believes that the future growth and profitability of Arrow depends, in large measure, on its ability to retain and motivate outstanding employees, advisors, consultants and others providing services to the company. To further this goal, in 2004 the Board adopted an Omnibus Incentive Plan (the “Plan”), which was approved by Arrow’s shareholders in May 2004.

     The Plan provides the compensation committee of the Board the ability to provide a wide variety of compensation and incentive vehicles. Key among these are the equity-based programs: incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock and restricted stock units, performance units and performance shares. Equity-based compensation is critical to the company’s effort to insure that the interests of its managers are aligned with the interests of its shareholders and to focus its managers’ efforts on the creation of long-term value.

     The number of shares which remain available for issuance under the Plan after giving effect to all grants through February 29, 2008, is 1,829,078, and that number may only be increased by vote of Arrow shareholders. At current and projected rates of utilization, without an increase there will be insufficient shares available to meet the company’s needs with respect to grants and awards expected to be made early in 2009, prior to the company’s annual meeting of shareholders for that year.

     In light of the continued growth of the company and the importance of the share-based incentive vehicles facilitated by the Plan, and in order for Arrow to have a sufficient amount of shares available for future grants, on February 27, 2008, the Board approved an amendment to the Plan, subject to shareholder approval, which increased the aggregate number of shares of Arrow common stock (“Shares”) available for issuance to plan participants by 5,000,000 shares.

     The principal provisions of the Plan are summarized below, and the complete text of the Plan is attached as Annex A. Both the summary and the complete text reflect the amendment for which approval is sought; the summary under the heading “Plan Share Limits” and the full text at section 4.1.

SUMMARY DESCRIPTION OF THE PLAN

Purpose of the Plan

     The Plan is intended to strengthen the company’s ability to attract, motivate and retain the employees, directors, and third-party service providers upon whose judgment, initiative and efforts the financial success and growth of the company largely depends, and to provide additional incentive for such individuals through stock ownership and other rights that promote

and recognize the successful efforts of these individuals and thereby enhance shareholder value.

Duration

     The Plan became effective on May 22, 2004, when Arrow’s shareholders approved the Plan, and will terminate on May 22, 2014 unless sooner terminated by the committee. Any award granted prior to Plan termination will remain outstanding post-termination in accordance with the applicable terms and conditions of the Plan and the award.

Administration

     The committee is responsible for administering the Plan and has the discretionary power to interpret it and any Plan-related documentation, to determine eligibility for awards and the terms and conditions of awards, and to adopt rules, regulations, forms, instruments, and guidelines. Determinations of the committee made under the Plan are final and binding. The committee may delegate administrative duties and powers to one or more of its members or to one or more officers, agents, or advisors. The committee may also delegate to one or more company officers the power to designate employees (other than executive officers of the company) and third-party service providers to be recipients of awards and the amount of such awards. Only the full Board may determine the type and amount of compensation granted under the Plan to the company’s non-employee directors.

Plan Share Limits

     The maximum number of shares of common stock originally authorized to be issued under the Plan was 8,300,000, subject to adjustment upon the occurrence of various corporate events as described in the Plan. The total number included 4,096,869 shares authorized under the Plan upon its adoption in 2004 and 4,203,131 shares that were then available under the company’s various prior plans. Of the total originally authorized, only 1,829,078 shares remain available for grant as of February 29, 2008.

     The proposed amendment to the Plan adds an additional 5,000,000 shares with respect to which grants may be made. Also available will be any of the shares currently subject to awards granted under the Plan and the prior plans which cease to be subject to such awards for any reason other than exercise for, or settlement in, shares.

     Generally, shares are counted against the authorization only to the extent they are actually issued. Restricted stock and performance shares, as described below, count against the authorization at a rate of 1.69:1; each share issued under all other awards count against the authorization at a rate of 1:1. Shares which are the subject of awards that terminate by expiration, forfeiture, cancellation, or otherwise, or are settled in cash in lieu of shares, or exchanged for awards not involving shares, shall again be available for grant, including those awards granted under prior plans. Also, if the option price or tax withholding requirements of any award are satisfied by tendering shares to the company, or if a Stock Appreciation Right (“SAR”) is exercised, only the number of shares issued, net of the shares tendered, will be deemed issued under the Plan. The maximum number of shares shall not be reduced to reflect dividends or dividend equivalents that are reinvested into additional shares or credited as additional restricted stock, restricted stock units, performance shares, or other stock-based awards, but may be adjusted by the committee to reflect certain corporate events or transactions.

Participant Award Limits

     Under the Plan, participants may receive a) stock options, b) SARs, c) restricted stock or restricted stock units, d) performance units or performance shares, e) other stock-based awards, f) cash-based awards and g) covered employee annual incentive awards. The Plan imposes annual per-participant award limits on such awards. For each of the stock-based awards (“a” to “e” above), the maximum award to any participant (other than a non-employee director) in any calendar year is 500,000 shares (or the cash value of 500,000 shares at the time of vesting or payout, if applicable) plus any unused annual limit from prior years. For each of the cash-based awards (“f” and “g” above), the maximum amount awarded or credited to any participant in any year may not exceed $5,000,000 (determined as of the date of vesting or payout) plus the amount of any unused annual limit from prior years.

     The maximum number of shares of common stock of the company that may be issued to each non-employee director is 400,000 shares, and no non-employee director may receive an award for more than 20,000 shares in any calendar year, or 40,000 shares for a non-employee director serving as chairman. However, in the year in which a new non-employee director joins the Board, he or she may receive an award covering no more than an additional 40,000 shares. The number and kind of shares that may be issued, the number and kind of shares subject to outstanding awards, the option price or grant price applicable to outstanding awards, the annual per-participant award limits, and other value determinations and terms of awards are subject to adjustment by the committee to reflect stock dividends, stock splits, reverse stock splits, and other corporate events or transactions, including without limitation distributions of stock or property other than normal cash dividends. The committee shall also, as it deems necessary or appropriate, make adjustments to reflect unusual or non-recurring events.

Eligibility and Participation

     The committee may select from and grant awards to employees and third party service providers of the company, its subsidiaries and its affiliates. Awards to non-employee directors will be made by the Board. In addition to the ten non-employee directors, there are approximately 12,600 employees of the company eligible to receive grants under the Plan. While the number of eligible third party service providers is not determinable, none have received any awards under the Plan.

Stock Options

     The committee may grant both incentive stock options (“ISOs”) and non-qualified stock options (“NQSOs”) under the Plan. ISOs may be granted only to employees of the company, its subsidiaries and its affiliates. The exercise price for options cannot be less than the fair market value of Arrow’s common stock on the date of grant. The options may have terms of up to ten years from grant. The exercise price may be paid with cash, with previously acquired shares of common stock, or by other means approved by the committee. The committee may substitute SARs for outstanding stock options. The maximum number of shares pursuant to stock options that can be issued under the Plan is 13,300,000, plus forfeitures, subject to adjustment upon the occurrence of various corporate events.

Stock Appreciation Rights

     The committee may grant SARs under the Plan either alone or in tandem with stock options on such terms and conditions as they may determine. The grant price of a SAR cannot be less than the fair market value of the common stock at the time of grant. The grant price and term of

a tandem SAR will be the same as the price and term of the option with which it was granted. SARs may have terms of up to ten years from grant.

     Freestanding SARs may be exercised on such terms as the committee determines. Tandem SARs may be exercised by relinquishing the related portion of the tandem option. Upon exercise of a SAR, the holder will receive cash, shares of common stock, or a combination of the two, as determined by the committee, equal in value to the difference between the fair market value of the common stock subject to the SAR at the exercise date and the grant price.

Restricted Stock and Restricted Stock Units

     The committee may award restricted stock and restricted stock units, subject to vesting schedules and limitations on transfer and such other restrictions as the committee may determine. A holder of restricted stock is a shareholder, entitled to dividend and voting rights, whereas the holder of a restricted stock unit may be entitled to dividend equivalents, but will not have voting rights.

Performance Unit and Performance Shares

     Performance unit and performance share awards may be granted under the Plan. Performance unit awards have an initial value determined by the committee, while performance shares will have an initial value based on the fair market value of the stock on the date of grant. Such awards will be earned only if performance goals over performance periods established by or under the direction of the committee are met. The performance goals and periods may vary from participant to participant, group to group, and time to time.

Performance Measures

     The performance goals for awards that are intended to constitute performance-based compensation under Section 162(m) of the Internal Revenue Code will be based upon one or more of the following performance measures for any business unit:

	•		net income;
	•		earnings per share;
	•		sales growth;
	•		income before taxes;
	•		net operating profit;
	•		return measures (including, but not limited to, return on assets, capital, equity, or sales);
	•		cash flow (including, but not limited to, operating cash flow and free cash flow);
	•		earnings before, interest, taxes, depreciation, and/or amortization;
	•		operating margins including gross profit, operating expenses and operating income as a percentage of sales;
	•		productivity ratios;

	•		share price (including, but not limited to, growth measures and total shareholder return);
	•		expense targets;
	•		operating efficiency;
	•		customer satisfaction;
	•		working capital targets; and
	•		economic value-added.

     However, except as provided below in the section entitled Covered Employee Annual Incentive Awards, the committee may determine, in its sole discretion, to grant awards that do not constitute performance-based compensation under Section 162(m) of the Internal Revenue Code, and may base vesting on performance measures in addition to, or other than, those set forth above.

     The committee will determine whether the performance targets or goals that have been chosen for a particular performance award have been met and may provide in an award that any evaluation of performance may include or exclude any of the following that are objectively determinable and that occur during the performance period to which the award is subject: asset write-downs, litigation, claims, judgments, or settlements; the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reporting results; any reorganization and restructuring programs; extraordinary items as described in APB Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” and/or in management’s discussion of financial condition and results of operations appearing in the company’s annual report to shareholders; acquisitions, divestitures, joint ventures, or alliances; and foreign exchange gains and losses.

     Awards that are designed to qualify as performance-based compensation may not be adjusted upward. However, the committee has the discretion to adjust these awards downward. Awards may be paid in the form of cash, shares of common stock, or in any combination, as determined by the committee.

     If applicable tax and/or securities laws change to permit committee discretion to alter the governing performance measures without obtaining shareholder approval of such changes, the committee shall have sole discretion to make such changes without obtaining shareholder approval.

Covered Employee Annual Incentive Awards

     Each year the committee will decide who among the company’s executive officers is likely to be a “covered” employee for purposes of Section 162(m) of the Internal Revenue Code. Within ninety days of the beginning of each year, the committee will determine performance goals for each such covered employee taken from among the measures listed under the heading “Performance Measures,” above, and the amount of the annual incentive award which could be earned based on the attainment of such goals. At the end of the year, the committee will set, in its discretion, the amount actually to be paid under each award up to but not in excess of the maximum potential award for that year. With respect to these awards, the committee does not have the discretion to act in any manner that would disqualify the award as performance-based compensation under, or would otherwise be inconsistent with the purposes of, Section 162(m) of the Internal Revenue Code.

Non-Employee Director Awards

     Under the Plan, the Board may grant awards of any kind other than ISO’s to non-employee directors. Non-employee directors have received annual awards of restricted stock units valued at $60,000. Awards made from and after the 2008 Annual Meeting will be valued at $90,000. Additional awards generally are made to non-employee directors upon joining the Board and for service as Chairman or Lead Director. The restricted stock units vest one year after the date of grant and are subject to further restrictions until one year after the director’s separation from the Board. All restricted stock units are settled in common stock after the restriction period.

     Unless a director gives written notice setting forth a different percentage, 50% of each director’s annual retainer fee is deferred and converted into units based on the fair market value of the company’s stock as of the date it would have been payable. Upon a director’s retirement from the Board (and not before then, except in the case of unforeseeable emergency need), each unit in his or her deferral account will be converted back into cash at the then current fair market value of a share of company stock.

Other Awards

     Subject to the terms of the Plan including, without limitation, Plan share limits, the committee may develop sub-plans or grant other equity or cash-based or related awards on such terms as they may determine, including, but not limited to, awards designed to comply with or take advantage of applicable local laws of jurisdictions outside of the United States.

Other Provisions of Awards and Individual Award Agreements

     For each manner of award, and each individual agreement granting an award, the committee shall determine, in its discretion, whether or not, and to what extent, the participant’s receipt of cash or stock under the Plan may or shall be deferred; the impact of the termination of the participant’s employment or service on any award (including variations, if any, based on the reason for such termination); the voting rights of any stock or stock equivalent granted or delivered thereunder; the transferability of any stock, stock equivalent or other right of any participant during his or her lifetime; and whether or not dividend equivalents will be paid with respect to any shares of common stock subject to an award that have not actually been issued under the award.

     Neither ISOs nor, except as the committee otherwise expressly determines, other awards may be transferred other than by will or by the laws of descent and distribution. During a recipient’s lifetime, an ISO and, except as the committee may determine, other non-transferable awards requiring exercise, may be exercised only by the recipient.

Treatment of Awards Upon a Corporate Event

     If the company is dissolved or liquidated, or if substantially all of its assets are sold (or there is a merger or consolidation) and the acquiring or surviving entity does not substitute equivalent awards for the awards then outstanding, each award granted under the Plan will become fully vested and exercisable and all restrictions on it will lapse. All options and SARs not exercised upon the occurrence of such a corporate event will terminate, and the company may, in its discretion cancel all other awards then outstanding and pay the award holder its then current value as determined by the committee.

Amendment of Awards or Plan and Adjustment of Awards

     The committee may at any time alter, amend, modify, suspend, or terminate the Plan or any form of award in whole or in part. No amendment may adversely affect the rights of any participant under an outstanding award without his or her consent.

     No option granted under the Plan will be repriced or replaced without shareholder approval, except to prevent an unintended dilution or enlargement of participants’ rights or benefits under the Plan in the event of a corporate transaction or event such as a merger or acquisition, a stock split or recapitalization, a change in accounting rules or applicable laws or regulations or other matter having such an impact. No amendment of the Plan of any kind will be made without shareholder approval if shareholder approval is required by law, regulation or stock exchange rule.

     The company or the committee may grant awards under terms differing from those provided for in the Plan, and without regard to the Plan’s share limits, where such awards are granted in substitution for awards held by employees of other corporations who become company employees as the result of a merger or other transaction.

     The committee may grant ISOs, NQSOs and/or other awards with respect to an additional 13,300,000 shares of common stock of the company under the terms differing from those provided for in the Plan, and without regard to the Plan’s share limits, where such awards are granted in substitution for awards held by employees of other corporations who become company employees as the result of a merger or other transaction described in the Plan.

Awards Net of Withholding

     Awards under the Plan may be subject to tax withholding. If so, the company may require the participant to remit the necessary taxes to the company or may allow participants to satisfy their tax withholding requirements by causing shares of common stock to be withheld.

Rights of Participants

     Nothing in the Plan or any award agreement will give any participant any right to continued employment (or provision of service as a director or third party service provider) or prevent or limit the company from terminating the participant as permitted by law. No individual in any position has the right to an award. No participant will have rights as a shareholder until he or she becomes the record holder of any such shares.

New Plan Benefits

     The future benefits or amounts that would be received under the Plan by executive officers, non-executive directors and non-executive officer employees are discretionary and are therefore not determinable at this time. In addition, the benefits or amounts that would have been received by or allocated to such persons for the last completed fiscal year if the plan had been in effect cannot be determined.

Federal Tax Effects

     The following discussion summarizes certain federal income tax consequences of the issuance and exercise of options under the Plan under the law as in effect on the date of this proxy statement. The summary does not purport to cover all federal employment tax or other federal tax consequences that may be associated with the Plan, nor does it cover state, local, or non-U.S. taxes.

Incentive Stock Options

     In general, an optionee realizes no taxable income upon the grant or exercise of an ISO. However, the exercise of an ISO may result in an alternative minimum tax liability to the optionee. With some exceptions, a disposition of shares purchased under an ISO within two (2) years from the date of grant or within one (1) year after exercise produces ordinary income to the optionee equal to the value of the shares at the time of exercise less the exercise price. For employee optionees, the same amount is deductible by the company as compensation, provided that income taxes are withheld from the employee. Any additional gain recognized in the disposition is treated as a capital gain for which Arrow is not entitled to a deduction.

     In general, an ISO that is exercised by the optionee more than three months after termination of employment is treated as an NQSO. ISOs are also treated as NQSOs to the extent they first become exercisable by an individual in any calendar year for shares having a fair market value (determined as of the date of grant) in excess of $100,000.

Non-Qualified Stock Options

     In general, in the case of a NQSO, the optionee has no taxable income at the time of grant but realizes income in connection with exercise of the option in an amount equal to the excess of the fair market value (at the time of exercise) of shares acquired upon exercise over the exercise price. For employee optionees, the same amount is deductible by Arrow as compensation, provided that income taxes are withheld from the employee. Upon a subsequent sale or exchange of the shares, any recognized gain or loss after the date of exercise is treated as capital gain or loss for which the company is not entitled to a deduction.

Section 162(m) of the Internal Revenue Code

     In general, under Section 162(m) of the Internal Revenue Code, remuneration paid by a public corporation to its chief executive officer or any of its other top three named executive officers, ranked by pay, is not deductible to the extent it exceeds $1,000,000 for any year. Taxable payments or benefits under the Plan may be subject to this deduction limit. However, under Section 162(m) of the Internal Revenue Code, qualifying performance-based compensation, including income from stock options and other performance-based awards that are made under shareholder approved plans and that meet certain other requirements, is exempt from the deduction limitation. The Plan has been designed so that the committee in its discretion may grant exempt performance-based awards under the Plan.

     The table below provides information as of December 31, 2007, prior to the proposed amendment of the Omnibus Incentive Plan.

Number of shares of

Common Stock

remaining available

Number of shares of

for future issuance

Common Stock to be

under equity

issued upon

Weighted-average

compensation plans

exercise of

exercise price of

(excluding shares

outstanding

outstanding

reflected in the

options, warrants

options, warrants

first column)

Plan Category

and rights

and rights

(1)

Equity compensation plans approved by stockholders

5,235,784

$

31.58

3,549,067

(2)

Equity compensation plans not approved by stockholders

—

—

—

Total

5,235,784

$

31.58

3,549,067

     The Omnibus Incentive Plan is intended to offer the variety of incentive and compensation tools to the compensation committee it requires to achieve the strategic objectives discussed under the heading “Compensation Discussion and Analysis,” below. In order to effectively utilize those tools and programs over the years to come, the committee must be able to issue additional shares under the Plan.

     Accordingly, the Board recommends that the shareholders approve the proposed amendment of the Arrow Electronics, Inc. 2004 Omnibus Incentive Plan.

     The affirmative vote of the majority of the shares of Arrow common stock voting on this proposal are required for the adoption of this amendment to the Plan, so long as the total number of shares voted represent the majority of the shares of Arrow common stock outstanding.

     If a shareholder holds shares in “street name” through a broker or other nominee, the broker or nominee is not permitted to exercise voting discretion with respect to this proposal. For this reason, if a shareholder does give its broker or nominee specific instructions, the shareholder’s shares will not be voted on this proposal.

REPORT OF THE COMPENSATION COMMITTEE

     The substantive discussion of the material elements of all of the company’s executive compensation programs and the determinations by the committee with respect to compensation and executive performance for 2007 are contained in the Compensation Discussion and Analysis that follows this report. The committee has reviewed and discussed the Compensation Discussion and Analysis with the management representatives responsible for its preparation and the committee’s compensation consultants. 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 2008 annual shareholder 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, 2007.

Karen Gordon Mills, Chair
Daniel W. Duval
John N. Hanson
Richard S. Hill
Barry W. Perry
John C. Waddell

COMPENSATION DISCUSSION AND ANALYSIS

Overview

     The compensation programs for the company’s Chief Executive Officer, Chief Financial Officer and three next most highly compensated executive officers with respect to 2007 are discussed in this section, as are the variety of compensation and benefit plans under which amounts were paid, awards were granted or vested and commitments accrued. The details of the actual amounts, awards and commitments follow this discussion under the heading “Compensation of the Named Executive Officers.”

     The company’s executive compensation and benefit plans are designed by the compensation committee to attract and retain men and women capable of leading the company’s complex international operations, to reward them for creating long-term shareholder value by growing sales and profitability while increasing operating efficiency and improving working capital management, and to insure that the company makes effective use of its investment in executive compensation. The use of compensation to drive and reward performance is reflected in the predominance of performance-based variable compensation, while the importance of alignment with shareholder interests in long-term value creation is reflected in the several equity-based components of the total compensation mix.

     The company’s financial performance is fully discussed in its Annual Report on Form 10-K for 2007. During 2007, the company made significant progress towards its long-term goals. Compensation of the senior management team for 2007 reflects their substantial success in effecting the company’s four-pillar business strategy (growth, operational excellence, financial stability and shared leadership), leading to record revenue, strong earnings growth, positive cash flow, record low working capital as a percentage of sales, and a return on invested capital in excess of the company’s cost of capital.

     While the “core” business grew well, strategic acquisitions were also a substantial factor in the company’s 2007 performance. Because the contributions of the acquired businesses to that performance were not part of the targeted financial results at the time the executives’ financial

goals were set for 2007, the actual results were adjusted under the terms of the compensation plan to eliminate their impact.

     Following are brief discussions of the company’s overall compensation philosophy, the process used to put that philosophy to work, the use of benchmarking, the various compensation and benefit plans actually used and why they were provided, and where applicable, the targets set for each one. Also discussed are the results obtained by each of the named executive officers under each plan.

Philosophy

     The company’s executive compensation and benefit plans are designed to drive the achievement of Arrow’s vision and strategy. The company’s vision — to become the worldwide, clear #1 provider in each of the markets it serves — rests on four “strategic pillars”: growth, operational excellence, financial stability and shared leadership. Each of these strategic elements is reflected in and supported by the various aspects of our compensation plan.

     Growth: Financial targets for the short- and medium-term incentives the company uses are set at levels designed to maintain growth in the selected metrics at or above historical levels. Longer-term incentives, such as stock options, help to align the interests of management with those of shareholders, ensuring that sustained, profitable growth over the long term remains of paramount importance.

     Operational excellence: In the competitive environments in which the company does business, continually driving cost out of operations is of paramount importance. This imperative is reflected in the use of metrics such as operating income as a percentage of sales and working capital as a percentage of sales in setting compensation targets and measuring achievement.

     Financial stability: Arrow bases executive compensation on results obtained from year to year, across three-year periods, and over the long-term, so that senior managers focus their efforts on each of the horizons, rather than on quarterly or year-end numbers. This focus on the continuity of performance also ensures that the plan designs and the actions they reward reflect good corporate governance practices and, ultimately, that the company enjoys a reasonable return on its total compensation expenditure.

     Shared leadership: While high performance and accountability require that each executive focus on and drive his or her business unit or functional area, maximizing results for the company as a whole requires that the executives as a group share a financial interest in the results obtained by the company on a consolidated basis. The company’s compensation plans are designed to foster both the focus and the shared interests as appropriate for each executive by linking individual plan targets to both business unit and corporate results. The success of the shared leadership concept also requires that the company be able to attract and retain top leadership talent by providing fully competitive total compensation opportunities and maintaining internal pay equity in an appropriate balance.

Process

     The compensation committee reviews each executive officer’s compensation annually to ensure that all of its elements, as well as each executive’s total compensation, are appropriate to his or her historical and potential contribution, market conditions and the furtherance of the company’s strategic objectives. The committee also reviews the historical detail of each executive’s prior-year compensation and performance.

     Each year, the committee analyzes the Chief Executive Officer’s performance reviews and compensation recommendations for his direct reports, and also conducts its own performance review of the Chief Executive Officer. The committee reviews the company’s performance on the metrics relevant to the execution of its strategy, such as net working capital as a percentage of sales, and evaluates the Chief Executive Officer’s performance in light of that execution.

     For executives other than the Chief Executive Officer, the committee’s review begins with the recommendations made to the committee by the Chief Executive Officer, including the recommended total target compensation (the amount the executive will earn if 100% of his or her targets and goals are achieved) and the suggested allocation of the total among the forms of compensation. These recommendations are based on individual performance, as well as benchmarked competitive compensation market data. The committee also considers the compensation of other company executives, levels of responsibility, prior experience, breadth of knowledge, and job performance. The committee considers a similar range of factors in setting compensation for the Chief Executive Officer.

     As is discussed above (under the heading, “The Board and its Committees”), the committee meets with its compensation consultant from time to time to ensure that the compensation programs for the Chief Executive Officer and other members of senior management are aligned with the company’s strategic pillars and overall corporate goals by providing competitive and benchmarking data, analyses, and recommendations with regard to plan design and target compensation.

Benchmarking

     Arrow’s executive compensation is designed to reward sustained performance in light of market conditions, industry trends and the performance of the company’s competitors. Accordingly, the committee uses benchmarking as one of its analytical tools in evaluating the types of compensation, the compensation levels selected, and the compensation packages as a whole, in order to ensure that the compensation programs will be effective in attracting and retaining talented executives capable of achieving the company’s objectives.

     The compensation committee, in consultation with management, reviews the competitiveness of the compensation offered to the company’s executives relative to those companies and industries identified as peers or competitors for talent. Such companies include Arrow’s competitors, global distributors in other industries, customers, suppliers, and other large companies with global operations.

     For 2007, the benchmarking process began with the comparison of the total compensation for each executive officer, as well as each of the major elements that comprise total compensation, with the 50th percentile for such elements as provided by the benchmarked companies to their executives. The committee’s determination of targeted compensation for 2007 reflects these benchmarked data points.

     The list of companies used for 2007 compensation benchmarking is as follows.

2007 Benchmarked Companies

Agilysys		LSI Logic
American Power Conversion		Molex
Amphenol		National Semiconductor
Analog Devices		Novellus
Anixter International		PerkinElmer
Avnet		Rockwell Collins
AVX		Sanmina-SCI
Beckman Coulter		Solectron
Bell Microproducts		Symbol Technologies
Benchmark Electronics		Synnex
CDW		Tech Data
Fairchild Semiconductor		Teradyne
Fisher Scientific International		United Stationers
Genuine Parts		Vishay International
Graybar Electric		Wesco International
Ingram Micro		Western Digital
Jabil Circuit		WW Grainger

     The list differs from the “Peer Group” used for the comparison of the five-year total return on shareholders’ investment (which appears in the company’s Annual Report on Form 10-K for 2007) because, with the exception of Avnet and Bell Microproducts, which appear on both lists and are closer in size and scope to Arrow, the other publicly-traded electronics distributors are considerably smaller and less complex than Arrow and have not historically been competitors for, or sources of, senior management personnel for the company.

Base Salary

     Base salary is an integral component of overall total compensation, and is set in recognition of the executive’s level of responsibility, immediate contributions, knowledge, skills, experience, and abilities. Base salary is also designed to attract top candidates.

     As is further discussed below under the heading “Employment Agreements,” each of the named executive officers has an employment agreement, which provides for a minimum base salary. Each year the committee evaluates whether it is appropriate to approve salaries in excess of the contractual minimums. In conducting its salary deliberations, the compensation committee does not strictly tie senior executive base salary to a defined competitive standard or the passage of time. Rather, base salary increases are based on the individual contributions expected of and contributed by each of the executives.

     The Chief Executive Officer’s base salary was evaluated based on Mr. Mitchell’s level and scope of responsibility and his contributions during the past year to the company’s success, as well as on his knowledge, skills, experience, and abilities. These were reviewed against prevailing levels of pay among chief executives of the benchmarked companies described above and relative compensation levels of the other executive officers of the company. Based upon these criteria, the committee increased Mr. Mitchell’s base salary from $990,000 in 2006 to $1,050,000 for 2007.

     Mr. Reilly’s base salary increased from $425,000 to $500,000 for 2007, in recognition of the increasing value of his contributions as Chief Financial Officer, the performance of his global financial team, and the competitive and other factors discussed above.

     Mr. Long’s base salary increased from $460,000 to $550,000 for 2007 as he added management responsibility for all of the activities of the company’s components businesses in Asia and Europe to his duties and in light of the competitive and other factors discussed above.

     Mr. Brown’s base salary increased from $460,000 to $475,000 for 2007 in recognition of the increasing complexity of his responsibilities and the importance of his contributions as General Counsel and Senior Vice President, including his leadership role in acquisition activity and other complex transactions throughout Arrow’s global enterprises.

     Ms. Morris’ base salary was set at $400,000 for 2007, reflecting the fact that she had received a raise to that level (from $300,000) in September of 2006 as she assumed the presidency of Arrow’s Enterprise Computing Systems (“ECS”) business and thereafter became co-president of ECS and an executive officer of the company.

Variable Compensation

     Bonuses and equity awards linked to the achievement of certain goals play a significant role in the executives’ overall compensation. They are designed to link pay to performance, align compensation with organizational strategies and financial goals, and reward exceptional individual and organizational achievement.

     Arrow’s variable compensation is administered through Management Incentive Compensation Programs that are designed to drive and reward short-term performance (annual), medium-term performance (over a period of three years) and long-term performance (over a period of up to ten years.) Participation varies based on an individual’s performance and role in the organization as well as prevalent market practice. All of the named executive officers participate in each of the company’s variable compensation programs: the annual bonus, three-year performance shares, and stock options.

     The table below reflects, for each executive, the mix between variable and fixed compensation for 2007, based on the amounts each executive would receive for target-level performance. The substantially greater weight given to variable compensation reflects the committee’s emphasis on performance and accountability in support of the company’s strategic initiatives. The variation of the mix among the named executive officers reflects the committee’s belief that as an executive’s responsibility and ability to affect financial results increases, his or her variable compensation should become a larger component of the total.

     Each of the forms of variable compensation is discussed below.

2007 Fixed versus Variable Compensation Analysis (at target levels)

		Fixed				Variable
		Base				Short-Term				Medium-Term				Long-Term
		Salary				Incentive				Inventive				Incentive				Variable
		as a %				as a % of				as a % of				as a % of				Pay as a %
		of total				total				total				total				of total
William E. Mitchell			22	%			22	%			13	%			43	%			78	%
Paul J. Reilly			36	%			26	%			24	%			14	%			64	%
Michael J. Long			28	%			28	%			27.5	%			16.5	%			72	%
Peter S. Brown			40	%			24	%			23	%			13	%			60	%
M. Catherine Morris			41	%			24	%			22	%			13	%			59	%

Short-Term Incentive Program

     The company’s principal short-term incentives — annual bonuses — reinforce individual accountability for optimizing operating results throughout the year, driving profitability, efficiency and shareholder value. Each of the named executives has a short-term incentive program including financial targets, the achievement of which is linked to 80% of the total targeted annual incentive, and individual, non-financial goals, the achievement of which is linked to 20% of the total targeted annual incentive.

     Management, in consultation with the compensation committee, establishes annual financial targets utilizing one or more key indicators of the company’s strategic progress. For 2007, these financial targets were based on a mix of the company’s achievement of specified levels of operating income and average net working capital as a percentage of sales. For corporate executives, including Messrs. Reilly and Brown among the named executive officers, the operating income and working capital financial targets are based on the results obtained by Arrow as a whole. For operating group executives, including Mr. Long and Ms. Morris, three quarters of the financial portion of the annual incentive is determined by the performance of the executive’s operating group (Global Components and ECS, respectively) and one quarter of it is determined by the performance of Arrow overall.

     The goal reflected in the targets selected is superior performance, which is generally defined as performance beyond both the company’s historical achievements and the projected growth of the markets in which the company operates. In 2007, the committee determined that for the named executive officers (other than Mr. Mitchell, whose separate bonus plan is discussed below) to earn 100% of the financial component of their targeted bonuses, the company had to achieve specified operating income targets that ranged between $207.7 million (on an operating group level) and $714.1 million (at the consolidated corporate level) and specified targets for net working capital, expressed as a percentage of sales, that ranged between 8.2% and 20.1% Depending on the actual results, participants could earn from 0% to 200% of the target bonus.

     The non-financial goals that are a part of the annual bonus calculation are set at the beginning of each year for the Chief Executive Officer by the compensation committee and for each of the other named executive officers by the Chief Executive Officer. The goals may be strategic or tactical, but all are designed to be specific and measurable and demonstrably further the objectives of the company and/or the executive’s business unit, as appropriate.

     In light of the company’s rapid growth, penetration into new geographical and product markets, and the constant increase in operating efficiency needed to achieve the company’s objectives, each of the named executives were given several substantial, non-financial goals. Included among them for 2007 were:

	•		the development of unified global business and staff structures in place of pre-existing regional organizations;
	•		the achievement of specific service-level commitments (in staff organizations);
	•		the successful completion or integration of key acquisitions;
	•		building senior and mid-level staffing to a required level and maintaining it;
	•		insuring that the executive’s new hires and direct reports learned various aspects of the business, developed specific skills, or moved into new roles; and

•

the completion of succession planning for the company’s principal businesses.

     The participants’ actual 2007 awards were determined at year-end based on the performance of the company or business unit, as applicable, against the targets discussed above, and the attainment of the individual, non-financial goals. For 2007, the named executive officers other than Mr. Mitchell achieved between 95.3% and 138.4% of their respective financial targets and between 100% and 150% of their respective individual, non-financial targets.

     Both the metrics and the results actually obtained are set forth on the following table. The specific amount paid to each participant is shown in the Summary Compensation Table (with the non-financial target results under the heading “Bonus” and the financial target results included in the amount appearing under the heading “Non-Equity Incentive Plan Compensation.”)

						Results																				Weighted Multiple
		Performance																M																				M
		Range				Paul J.				Michael J.				Peter S.				Catherine								Paul J.				Michael J.				Peter S.				Catherine
Performance Measure		($ in millions)				Reilly				Long				Brown				Morris				Weight				Reilly				Long				Brown				Morris
Operating income		$	207.7 — $714.1				96.0	%			81.2	%			96.0	%			94.5	%			40	%			38.4	%			32.5	%			38.4	%			37.8	%
Net working capital as a percentage of sales			8.2% — 20.1	%			129.4	%			109.2	%			129.4	%			182.4	%			40	%			51.8	%			43.7	%			51.8	%			73	%
Non-Financial			N/A				110	%			100	%			100	%			150	%			20	%			22	%			20	%			20	%			30	%
Total			—				—				—				—				—				—				112.2	%			96.2	%			110.2	%			140.8	%

     In 2007, Mr. Mitchell’s targeted financial goals included earnings per share, operating income and net working capital as a percentage of sales. Mr. Mitchell’s bonus was designed to qualify as “performance-based compensation,” as is discussed more fully below under the heading “Tax Considerations.” The earnings per share target was used to establish the maximum bonus that could be paid to Mr. Mitchell. The operating income and net working capital targets were used to establish the amount actually to be paid to Mr. Mitchell, in the exercise of the committee’s discretion, for the achievement of financial goals. For 2007, Mr. Mitchell achieved 117.4% of his financial targets and 120% of his non-financial targets, and the committee in its discretion granted him a bonus of $1,238,160.

Medium-Term Incentive Program

     In 2007, Arrow provided medium-term incentives to its executives through awards of performance shares under the Omnibus Incentive Plan. Performance share awards are used by the committee to foster retention, and create greater alignment with shareholder interests. Because the executive will earn from 0% to 200% of the targeted number of shares depending on specific performance metrics, performance shares align compensation with the achievement of the corporate strategic goals.

     Performance share awards under the Medium-Term Incentive Program link executive compensation to improvements in financial results and the performance of the company’s common stock over a three-year period. Each year begins a new three-year performance cycle

for which the compensation committee establishes financial targets and performance share targets for participating executives. The financial targets are based on each participant’s level and breadth of responsibility, his or her potential contribution to the success of the company, and competitive considerations. Each participant’s actual award is determined at the end of each three-year cycle based on how the company‘s actual performance compares with the targets set at the beginning of the cycle, and settled with the payment of shares of Arrow common stock.

     Except in the event of death, disability or a termination (without cause or by involuntary termination) that follows a change of control of the company, under the terms of the grant performance shares are forfeited by the participant if he or she leaves the company prior to the vesting of a complete performance cycle. (Forfeiture and the impact of various termination scenarios under each of the incentive plans is discussed more fully below, under the heading “Agreements and Potential Payments upon Termination or Change of Control.”)

     The 2005-2007 performance share cycle was the second completed under the Medium-Term Incentive Program. Accordingly, the company has only limited historical data regarding the extent to which participants have attained established targets under the program. The compensation committee established the medium-term target performance metrics for each cycle at a level designed to significantly challenge the participants. Under the 2004-2006 awards, paid out last year, the then-named executive officers received 87.5% of the targeted number of shares.

     As is shown in the table below, financial targets for the 2005 — 2007 cycle were 1) an average EBIT percentage (earnings before interest and taxes divided by sales) of 4.5% over the three-year period, and 2) an ROIC (return on invested capital) of 12.5%, measured during the last quarter of the cycle. The EBIT achievement was weighted at 33.3% of the total and the ROIC achievement was weighted at 66.7%. Under the terms of the plan, the committee adjusted the financial results actually achieved during the cycle to exclude the impact of acquisitions and restructurings which occurred after the targets were set. For the cycle, each of the named executive officers received 117.1% of the target number of shares.

2005-2007 Performance Share Cycle
Metrics and Achievement
										Resulting
Performance		Performance				Adjusted				Performance								Weighted
Measure		Target				Performance				Factor				Weight				Multiple
Average EBIT percentage			4.5	%			4.8	%			127.3	%			33.3	%			42.4	%
Return on Invested Capital			12.5	%			12.8	%			112.0	%			66.7	%			74.7	%
Total															100.0	%			117.1	%

     The actual number of shares awarded to each of the named executives with respect to this cycle is set forth below. The number of shares awarded with respect to the prior cycle is also included here, because the shares were awarded early in 2007 for the cycle ending in 2006.

		Performance Shares Earned				Performance Shares Earned
		2005 — 2007 Performance				2004 — 2006 Performance
		Period				Period
William E. Mitchell			76,115				43,750
Paul J. Reilly			9,368				6,825
Michael J. Long			11,710				6,825
Peter S. Brown			9,368				6,825
M. Catherine Morris			2,693				2,013

     For the 2007—2009 performance share cycle, consistent with and in furtherance of the company’s medium-term financial goals, the compensation committee elected to focus on ROIC, establishing a target for average return on invested capital over the final two years of the cycle of 12.5%. The number of performance shares which may be earned by the named executives under the 2007-2009 award is set forth below in the table entitled “Grants of Plan-Based Awards”.

     Mr. Mitchell received a performance share award with a target of 16,100 shares under the Medium -Term Incentive Program for the 2007-2009 performance cycle. The goals, targets and metrics of this award are the same as those discussed above for the other named executive officers. In 2007, the committee also awarded Mr. Mitchell a grant of 40,000 shares of restricted stock under the Omnibus Incentive Plan, vesting in four equal installments beginning with the first anniversary of the grant, in consideration of his agreement to remain continuously employed by the company for at least a year from the date of grant and in order to provide additional compensation while encouraging stock ownership in the company.

Long-Term Incentive Program

     In 2007, the company provided long-term incentives to its executives through grants of stock options under the Omnibus Incentive Plan. Stock options are designed to reinforce the importance of producing satisfactory returns to shareholders over the long-term and align the interests of the executives with those of the shareholders by providing the executives with the opportunity to acquire common stock of the company. Options are also issued to foster shared leadership by supporting executive retention.

     Each year, the compensation committee reviews the Chief Executive Officer’s recommendations for senior management stock option grants and makes grant decisions based on those recommendations, prior grant history, the committee’s own assessment of each executive’s contribution, potential contribution and performance during the prior year and on the option grant practices of the benchmarked companies discussed above.

     The committee also evaluates the Chief Executive Officer in light of the factors discussed above and determines the number of options to be granted to him under the Long-Term Incentive Plan. That grant and those for the other named executive officers are as set forth below. For more detail, including the expense to the company associated with each grant, see the Grant of Plan-Based Awards table, below.

     The exercise price of each stock option is equal to 100% of the closing market price of the company’s common stock on the grant date. Stock options become exercisable in equal amounts on the first, second, third and fourth anniversaries of the grant date and have a maximum term of ten years.

		Stock Options Awarded
William E. Mitchell			50,000
Paul J. Reilly			18,000
Michael J. Long			30,000
Peter S. Brown			15,000
M. Catherine Morris			12,000

     It is the practice of the Board to grant stock options at the first regularly scheduled board meeting of the calendar year. Grants associated with the hiring or promotion of participants are made at the next regularly scheduled meeting of the Board that follows such an event. Limiting stock option grants to regularly scheduled meetings and only issuing stock options with an exercise price based on fair market value at the grant date ensures that participants will derive benefits only as shareholders realize corresponding gains over an extended time period. None of the options granted by the company discussed elsewhere throughout this proxy statement, have been repriced, replaced or modified in any way since the time of the original grant.

Retirement Programs and Other Benefits

     In keeping with its total compensation philosophy and in light of the need to provide a total compensation and benefit package which is competitive with those offered at the benchmarked companies, the committee believes that the retirement and other benefit programs discussed below are critical elements of the compensation package made available to the company’s executive officers.

Deferred Compensation

     In order to encourage long-term retention and facilitate executive retirement and financial planning, the company maintains a compensation deferral plan pursuant to which corporate executives may defer pre-tax compensation including up to 80% of salary and 100% of bonuses, incentive compensation and performance shares. Of the named executives, only Mr. Mitchell participates in the deferral plan. His participation and “above market” earnings on the amount deferred are reflected under the heading “Change in Pension Value and NQDC Earnings” in the Summary Compensation Table, below. The deferred compensation plan is discussed in more detail under the heading “Deferred Compensation Plans,” below.

Qualified Plans

     The named executive officers also participate in the ESOP and the Arrow 401(K) Savings Plan, qualified plans available to all of Arrow’s U.S. employees. Company contributions to these plans on behalf of the named executive officers are included under the heading “All Other Compensation” in the Summary Compensation Table and detailed in the All Other Compensation — Detail table, below.

Management Insurance Plan

     All of the named executive officers participate in Arrow’s Management Insurance Plan. In the event of the death of the executive, the company provides a life insurance benefit to the executive’s named beneficiary equal to four times the executive’s final planned total annual performance-based compensation.

     Current death benefits for each executive are set forth on the Potential Payouts Upon Termination table, below. Premiums paid by the company on behalf of each executive are included under the heading “All Other Compensation” in the Summary Compensation Table and specified under the heading “Management Insurance Plan” on the All Other Compensation Table — Detail, below.

Employment and Change of Control Agreements

     Employment agreements for senior management are used by the company to establish key elements of the agreement between the company and the executive, including the promised minimum periods of employment and the fundamental elements of compensation, as well as the details of the individual arrangement which differ from the company’s standard plans and programs. The agreements also facilitate the creation of covenants, such as those prohibiting post-employment competition or hiring by executives or limitations on the reasons for which an executive may be terminated, which would not otherwise be part of the employment relationship.

     Because these arrangements are complex, are of critical importance to both the company and its executives, and involve a substantial investment by the company, Arrow has entered into employment and change of control agreements with each of the named executive officers that are discussed in detail below, in the section entitled “Agreements and Potential Payouts upon Termination or Change of Control,” below. Also detailed in that section are the potential payouts for each of the officers under the variety of potential termination scenarios covered by the agreements. Those potential payouts are part of the total compensation package for each executive reassessed by the committee each year.

SERP

     The company maintains the Arrow Electronics, Inc. Supplemental Executive Retirement Plan (the “SERP”), an unfunded retirement plan in which 27 current and former executives selected by the Board participate. The committee believes that the SERP encourages long-term retention and maintains management stability. All of the named executive officers participate in the SERP, the details of which are discussed below under the heading “Supplemental Executive Retirement Plan.”

Tax Considerations

     A variety of tax and accounting considerations inform the committee’s development and implementation of the company’s compensation and benefit plans. Among them are Section 162(m) of the Internal Revenue Code, an important factor in the design of the Omnibus Incentive Plan. Compliance with Section 162(m) insures that compensation paid to the chief Executive Officer and certain others is a deductible business expense of the company. Mr. Mitchell’s 2007 short-term incentive was a performance-based bonus as defined by Section 162(m), driven by earnings per share and net working capital targets yielding a maximum bonus which could have been awarded under the formula of $4,195,970. The committee exercised the discretion permitted under Section 162(m) and awarded Mr. Mitchell a total bonus, including amounts associated with his non-financial targets, of $1,238,160 for 2007.

     As discussed under the heading “Agreements and Potential Payments Upon Termination or Change of Control,” below, the company’s change of control agreements, and the related sections of the various executive employment and award agreements, are designed not to exceed the limitations of Section 4999 of the Internal Revenue Code, avoiding excise taxes for the executive. As is also discussed, the company has undertaken to modify all of such agreements in order to permit the executive to avoid penalty under Section 409A.

COMPENSATION OF THE NAMED EXECUTIVE OFFICERS

Summary Compensation Table

     The following table provides certain summary information concerning the compensation of the named executive officers for 2007 and 2006.

Summary Compensation Table

																										Change in
																						Non-Equity				Pension Value
														Stock				Option				Incentive Plan				and NQDC				All Other
						Salary				Bonus				Awards				Awards				Compensation				Earnings				Compensation				Total
		Year				($)				($) (1)				($) (2)				($) (3)				($) (4)				($)(5)				($) (6)				($)
William E. Mitchell Chief Executive Officer			2007				1,050,000				252,000				2,326,225				1,159,831				986,160				1,229,537				144,399				7,148,152
			2006				990,000				380,880				1,915,976				1,202,297				719,120				809,550				157,501				6,175,324
Paul J. Reilly Chief Financial Officer			2007				500,000				84,300				289,682				161,437				315,700				483,347				47,362				1,881,828
			2006				425,000				71,287				289,069				136,978				178,713				116,550				55,676				1,273,273
Michael J. Long Chief Operating Officer			2007				550,000				130,900				390,315				216,765				419,100				614,099				62,957				2,384,136
			2006				460,000				71,935				330,325				174,316				268,065				169,978				76,668				1,551,287
Peter S. Brown General Counsel			2007				475,000				57,930				248,604				138,824				257,070				279,394				53,141				1,509,963
			2006				460,000				62,595				262,331				121,188				172,405				156,205				52,614				1,287,338
M. Catherine Morris President, ECS			2007				400,000				54,320				109,940				74,174				265,680				76,182				42,915				1,023,211
			2006				300,000				109,839				86,221				55,123				140,161				—				39,119				730,463

     Each of the named executive officers has an employment agreement which impacts or defines certain of the elements of the compensation shown above. The material terms of those agreements are discussed below under the heading “Employment Agreements.”

All Other Compensation — Detail

     This table sets forth each of the elements comprising each named executive officer’s 2006 and 2007 “All Other Compensation” from the Summary Compensation Table, above.

						Perquisites												Benefits
																										20%
																										Federal
																										Tax Assist
						Management																401(K)				on
						Insurance				Car												Company				Restricted
						Program				Allowance				Other				ESOP				Contribution				Stock Vest				Total
Name		Year				($)				($)				($)(1)				($)				($)				($)				($)
William E. Mitchell			2007				25,837				—				24,827				6,750				6,750				80,235				144,399
			2006				25,837				—				39,961				6,600				6,600				78,503				157,501
Paul J. Reilly			2007				5,583				10,200				—				6,750				6,750				18,079				47,362
			2006				5,583				10,200				—				6,600				6,600				26,693				55,676
Michael J. Long			2007				7,878				10,200				13,300				6,750				6,750				18,079				62,957
			2006				7,878				10,200				18,697				6,600				6,600				26,693				76,668
Peter S. Brown			2007				10,351				10,200				2,724				6,750				6,750				16,366				53,141
			2006				10,351				10,200				—				6,600				6,600				18,863				52,614
M. Catherine Morris			2007				6,062				10,200				3,638				6,750				6,750				9,515				42,915
			2006				6,062				7,400				—				6,600				6,600				12,457				39,119