How Sudden CEO Deaths Help Us Understand Executive Compensation

It’s easy to complain that corporate executives are overpaid. It’s harder to make a rigorous case for the idea: There’s no perfect metric to show how much executives are worth to a company, thus no great way to compare an exec’s compensation to the value she delivers. Do you know what would help settle the matter? If a bunch of CEOs would just drop dead.

At least we can examine the ones who already have. By looking at market movement and compensation for about 150 public company executives who died suddenly, two business professors have concluded the following: For every dollar in extra value that the average dead executive delivered to her company, she was paid 71¢.