Best Paid CEOs Fail to Offer Best Value For Money

“Executives who create the most value for shareholders relative to their peers, and relative to their pay, offer the best value for money.” The survey looks at the relationship between value created and money earned by a chief executive. The value is calculated by taking the company’s total shareholder return relative to the FTSE and its sector. Money earned is the chief executive’s three year average realised pay figure, which is adjusted for the size of the company. CEO pay correlates strongly with company size as well as performance. One head of corporate governance at a UK investment group said: “This research suggests there needs to be more pay reforms, although it is difficult to measure the value of a CEO. How do you measure intangible things like whether a CEO inspires you?”