How we calculate the Obermatt CEO of the Year Obermatt Pin

The Obermatt CEO-of-the-Year rankings are an independent performance assessment of companies of a geographic region with publicly available financials. They are based on the Obermatt indexing methodology and cover three key financial indicators to arrive at a complete performance picture. We include the following indexed performance indicators:

Indexing performance has the advantage of neutralizing external factors such as business cycles, raw material price movements and investor sentiment to uncover true performance free of distorting effects.

This approach creates performance transparency for boards of directors, shareholders and the public. The CEOs in the rankings also benefit from this transparency, as their excellent performance is confirmed by an independent third party without any subjective assessments.


To determine a company’s indexed operating performance, Obermatt completes this three-stage process:

  1. Selection of Peers: The Obermatt proprietary correlation algorithm selects highly correlating comparable companies in order to determine the Peer Universe.
  2. Rank Calculation: Obermatt determines the actual performance of the assessed company stated as Growth Rank, Operating Efficiency Rank, Investment Rank, and Combined Rank.
  3. Comparison across CEOs: Companies and their executives are ranked based on the achieved ranks against their peers.

The Process in Detail

1. Selection of Companies

Selecting the companies for a competition is defined for each competition individually. The criteria used for selecting companies appear on the page for each ranking. Eligibiltiy for a certain competition is typically defined in the weeks prior to compilation of the ranking.

2. Selection of CEOs

CEOs qualify to compete in a certain competition if the company they work for has been selected for inclusion in a competition. In order to participate in this competition, the CEO must be employed by the company on the first and last day of its annual reporting period. CEOs that provide an above-market performance in one of the ranking metrics receive their individual winner page where all their Obermatt pins won in Obermatt rankings are displayed.

3. Selection of Peers

Selecting the appropriate peers for the peer universe is paramount to the ranking results. The Obermatt proprietary correlation algorithm for Peer Universes selects companies in the same line of business or subject to the same economic cycles. This includes, but is not limited to, direct product competitors. For statistical purposes, Peer Universes ideally comprise between 30 and 70 company data points. However, in some cases, the number of peer data points can divert from this range. (More information)

For its clients, Obermatt selects peers manually, assesses their correlation in additional analysis and, together with the client, agrees on the final composition of the Peer Universe and the financial metrics to be used. Obermatt performs additional, manual financial adjustments and provides clients with the financial data used for calculating their ranking.

4. Rank Calculation

The rank shows the performance on a selected financial metric of a company against those metrics of all its peer companies in a percentile rank calculation. The percentile value shows how many competitors were outperformed in respect to this metric. If the metric is derived from the balance sheet or profit and loss statement, we speak of Operating Rank. If it is derived from share price performance (in this case Total Shareholder Return, TSR), we speak of Investment Rank. Operating Rank is calculated using audited historic metrics or deltas of those metrics from one period to the next. For the Obermatt rankings, the delta from one year to the next is indexed, because it shows the period performance undiluted by historic events prior to the period.

For the CEO-of-the-Year rankings, we evaluate performance in four categories:

Growth Performance

For the Obermatt rankings, actual growth performance is based on organic sales growth. For financial institutions, sales growth is replaced by similar income metrics. Organic sales growth (or other organic income metrics, not separately mentioned thereafter) is adjusted for extraordinary effects, such as mergers and acquisitions activity and restructuring. Obermatt uses organic sales growth from public company records. Obermatt adjusts for non-operating activities such as sales of divisions and other special items. In Obermatt rankings conducted with a partner, the data research is provided by the ranking-partner. The Growth Performance Indicator was introduced in 2014. Rankings prior to 2014 have no Growth Performance Indicator.

Operating Performance

For the Obermatt rankings, actual operating performance is based on organic EBITDA or EBIT where EBITDA is not available (e.g. divisions). For financial institutions, EBITDA is replaced by similar profit growth metrics. Organic EBITDA (or other organic profit growth metrics, not separately mentioned thereafter) is adjusted for extraordinary effects, such as mergers and acquisitions activity and restructuring. Obermatt uses organic EBITDA from public company records. Obermatt adjusts for non-operating activities such as sales of divisions, one-off depreciation, restructuring costs, and other special items. In Obermatt rankings conducted with a partner, the data research is provided by the ranking-partner.

In order to index EBITDA (or other profit growth metrics), Obermatt calculates the Operating Rank of Delta EBITDA. This value is standardized by Sales or Income to make peers of different sizes comparable (Delta EBITDA scaled by Sales, or Delta EBITDA divided by previous year Sales). For financial institutions, the Sales standardization is replaced by Income or similar standardization. This figure is resistant to influences by accounting practices and not affected by base level effects of EBITDA and, as such, also works for negative EBITDA levels. Increasing EBITDA increases the theoretical enterprise value over the long term, giving management a value to maximize over time. This is not the case for financial ratios such as margins (EBIT Margin = EBIT divided by Sales) or returns (RONOA, ROCE, etc.) which cannot be maximized in the long term. As a matter of fact, they may even provide misleading signals (e.g. provide positive signals in bad years).

For Obermatt clients, ranking data such as the Peer Universe and the adjustment of financial metrics may be compiled and verified manually by Obermatt and agreed upon with the client.

Investment Performance

The operating performance indicator Delta EBITDA of the Obermatt ranking measures businesses comprehensively and is aligned with valuation theory that measures enterprise value based on operating cash flows only. In the long term, no further performance indicator is required. However, in the short term, executive performance consists of strategic decisions such as investing and acquisition activities, too. Even if those activities are covered by the operating performance indicator in the long term, we see a need for assessing these important strategic decisions in the present performance assessment. Popular methods of accounting for investment and other strategic decisions with the profit & loss statement and balance sheet, such as Economic Profit calculations, have serious deficiencies. Depreciation periods are driven by tax considerations, impairment tests on intangible assets are based on opaque valuation models, cost of capital charges are supposed to reflect immeasurable future return expectations and many strategic decisions remain entirely unidentified in financial reporting.

This is why the Obermatt rankings refrain from using unreliable data from the balance sheet of financial reports to measure strategic performance but rather uses indexed Total Shareholder Return (TSR) as the short-term performance indicator for Investment performance. TSR is neutralized by inorganic events such as share splits or capital issuance and includes dividend payments. Since shareholder returns are notoriously diluted by investor sentiment, Obermatt indexes the metric. Indexed Total Shareholder Return is free from most of these dilutions and therefore measures changes in investor expectations about future profits only. In other words, the indexed Total Shareholder Return metric – called Investment Rank in the Obermatt ranking – measures the current strategic and investment performance of the company. This means that only current strategic decisions are reflected in the metric. Past strategies are measured as a multi-year performance by adding the single year ranks of the Investment Rank.

Combined Performance

The combined performance indicator is the average of the two operating performance indicators sales growth and profit growth, as well as the strategic (e.g. investment) performance indicator, indexed Total Shareholder Return. This provides a more comprehensive and robust result than each of the single ranks alone. By averaging Operating Ranks and Investment Rank, the Combined Rank compensates for arbitrary accounting effects and irrational behavior in the stock market.

5. Comparison Across CEOs

Once each CEO has a rank for a particular financial metric, all CEOs are compared against each other to compile a final ranking list.

The average of the individual annual rankings is used to calculate the multi-year ranking. This type of weighting puts CEOs who have achieved above-average performance over multiple years at a statistical disadvantage against CEOs who achieved strong performance in fewer years. This statistical disadvantage is corrected as follows:

Years in Ranking Correction Factor
Year 2 +8 ranking points ("8" is added to the respective CEO's ranking)
Year 3 +4 ranking points ("12" is added to the respective CEO's ranking)
Year 4 +2 ranking points ("14" is added to the respective CEO's ranking)
each additional year: +1 ranking point (i.e. "15" is added after 5 years to the respective CEO's ranking)