The Relative Value of the CEO: Advancing Sustainable Development Goals Through Transparent Executive Evaluation

Objectives: This study aims to develop a mathematical model to objectively evaluate CEO performance by establishing a direct link between executive compensation and firm outcomes. This would contribute to Sustainable Development Goal 8 (Decent Work and Economic Growth) and Goal 16 (Peace, Justice, and Strong Institutions). Theoretical Framework: Grounded in the normative principle of accounting and human resource accounting theories, this study builds on prior research emphasizing the informativeness of performance indicators in CEO contracts and the importance of aligning compensation with actual value creation. Method: A novel model using circular functions and area-under-the-curve (AUC) techniques is proposed to construct the Relative Value of the CEO (RV.CEO) index. This index quantitatively relates CEO pay to firm performance components such as revenue, net income, and total expenses. Results and Discussion: The RV.CEO index offers a standardized, transparent approach to CEO valuation. It enhances decision-making by reducing subjectivity and aligns corporate practices with SDGs 8 and 16 through fair and accountable remuneration systems. Research Implications: The model provides a valuable tool for benchmarking CEO efficiency and contributes to improving corporate governance. Originality/Value: This is the first study to apply circular mathematical functions to CEO valuation, offering a novel contribution to performance measurement and sustainable business practices.