Amazon's Bezos Ranked Best CEO, but Earns Much Less: Report
A ranking of world's "100 best CEOs" compiled by the prestigious Harvard Business Review (HBR) reveals that the top-ranked executive in the world doesn't earn the most.
Amazon founder Jeffrey Bezos' (#1 on HBR's best CEOs list) earned a compensation of $1.68 million (nearly Rs 10 crore) in 2014, which is significantly less than the median compensation for S&P 500 CEOs ($10.1 million or Rs 60 crore).
The other revelation is founder chief executives of global companies sometimes earn less (salary) than other CEOs, a trend which is not seen in India, where the most-paid executive is invariably from the promoter group.
In 2013-14, Sun TV's Kalanithi Maran and his wife Kavery Kalanithi were the highest paid Indian executives, earning nearly Rs 60 crore each. Next on the list was Hero MotoCorp CEO Pawan Munjal, who made nearly Rs 38 crore last fiscal yar.
Coming back to HBR's ranking, the CEO who earned most in 2014 and also figured on the 100 best CEO list is Walt Disney's Robert Iger. He ranked 60th on the best CEOs list, but earned around $34 million, which is 20 times more than what Mr Bezos made. HBR did not take into account Mr Bezos' stake in Amazon, valued at over $25 billion. (Read: HBR's top CEO list)
To identify the world's best CEO, HBR took into account the total shareholder returns during a chief executive's tenure. Mr Bezos, who made Amazon the world's biggest online retailer, helped the company attain a market capitalisation of $140 billion. That translates in to a return of 15,000 per cent for Amazon shareholders in the last 18 years.
The other factor HBR considered for the ranking was the long-term performance of a CEO. Mr Bezos, who frequently underperforms in the short term, has a long-term track record of delivering shareholder value that is second to none, HBR says.
On HBR's top 100 CEO list, there are only two women (Debra Cafaro of Ventas and Carol Meyrowitz of TJX). The median age of CEOs is 59 and 13 CEOs are of nationalities that differ from their companies. Among these 13 CEOs is MasterCard's Ajay Banga, who is ranked 64th on the best CEO list.
MasterCard's market cap has gone up by $66 billion, while shareholder return rose by 169 per cent since Mr Banga became CEO in 2010, HBR says.
Mr Banga earned $12.36 million (Rs 74 crore), nearly 7 times more than what Mr Bezos made, which earned him 29th rank on the compensation list.
The takeaway for a future CEO: The two preferred pathways to a CEO's job go through either engineering or B-School, HBR notes. Over a quarter of the CEOs on HBR's 100 best list have MBAs, and nearly as many had studied engineering.
