When I contacted Peter Swan recently about a paper he had written with colleague Jaeyoung Sung (Executive pay, talent and firm size: why has CEO pay grown so much?) I was pleasantly surprised to receive a polite holding reply and then a later follow up with the information requested.

I was after the table their paper hinted at listing the Top CEO Talent for the years 1995 to 2007. It is below:

“Talent” is a tricky notion to nail. The paper's proxy is based on post appointment CEO performance and involves 13 years of S&P 1500 data and an eight page algebraic model. A model, reassuringly for the hardcore, that is supported by a further four pages of mathematical proofs.

Once through the greek (or Maginot-like, for many, around it) the end result is the finding that talent, as estimated under the model, explains 64% of the firm's enterprise return* and 82% of the incremental quantum of salary that CEOs trouser. Steve Jobs obviously puts a small spanner in the works with his $1 pay packages of 2005 and 2007.

It is notable that ten of the thirteen on the list come from the tech world. That tends to raise question of, erm, dumb luck. Put Ellison in charge at Bear Stearns, Lehman or CIT and would the assumption he controlled enterprise returns independently of industry hold?

In that context - and perversely perhaps - intuition suggests the Top Talentless CEOs list might better showcase the Swan/Sung model. Incompetence respects no frontier (nor, increasingly, does the threat of litigation).

*The market value of year-end assets plus the difference between net distributions and net (capital equity and debt additions).

NB: ARM subscribers may recognise the paper as one featured in July's issue. The table is taken from a fine op-ed by Messers Swan and Sung that appears in today's Australian Financial Review (have to pay, I'm afraid).

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