Unified Metrics Library - CEO pay rate

The CEO pay rate aims to ensure that organizations have fair pay structures and it provides insights into the level of income inequality within the organization, specifically focusing on the compensation of top management compared to the rest of the workforce. Annual total compensation includes salary, bonus, stock awards, option awards, non-equity incentive plan compensation, change in pension value, and nonqualified deferred compensation earnings provided over the course of a year.

Regulatory Definition

According to the (EU) 2022/1288 of 6 April 2022, the metric is defined as "Average ratio within investee companies of the annual total compensation for the highest compensated individual to the median annual total compensation for all employees (excluding the highest-compensated individual)".

Ratio = "CEO annual compensation" / "Median annual compensation" xx 100

• Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing Regulation (EU) 2019/2088 of the European Parliament and of the Council with regard to regulatory technical standards specifying the details of the content and presentation of the information in relation to the principle of do no significant harm . ANNEX I (Table 3, Additional indicators for social and employee, respect for human rights, anti-corruption and anti-bribery matters, Social and employee matters, Indicator 8)

If you have a designated CEO pay rate within your organisation, it should be disclosed in comparison to the rest of the workforce. For instance, CEO X’s annual total income is 10 Million EUR. The median value of the annual compensation of all employees (excluding the CEO) is 60,000 EUR. Excessive CEO Pay rate would be 10,000,000 / 60,000 = 166.67 %