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How much is a CEO worth?

Outrage over executive compensation is now widespread. Linking pay to economic valued added rather than more easily manipulated EBITDA might be an improvement.

       
Pay package in the spotlight
Chris Grant, Vodafone

Vodafone's announcement last month of a new pay deal for chief executive Chris Gent raised a predictable investor outcry. Gent's package, shareholders argued, was too much for too little and set a dangerous precedent for patterns of compensation at Vodafone and other blue-chip companies. The news that Gent was paid £2.4 million ($3.5 million) - an increase of almost a third - in a year in which Vodafone recorded a loss of £13.5 billion was difficult for shareholders to swallow. But the fact that he also pocketed a £1.5 million bonus relating to the takeover of Mannesmann in 2000 - the second payment he had received for this deal - leaves a much sourer taste in investors' mouths.

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