Inside Chief Executive’s 2016 Wealth Creator’s Index

Click here for the full rankings:

One way to gauge a company’s net value creation is by using EVA, or Economic Value Added. EVA, essentially, is profit remaining after subtracting the full cost of the capital the business uses, including a minimum shareholder return to compensate for risk.

wealth-2aChief Executive’s Wealth Creation Index (WCI) ranks the performance of companies in the S&P 500 index, and their CEOs, based on the EVA model. (Only companies for which the CEOs were in their roles for the three-year period ending on June 30, 2016, were ranked.)

For this year’s rankings, the ninth annual, we chose to offer a deeper dive into the metrics used to calculate WCI scores and illustrations of why and how they work. The full list of top wealth creators can be found at

wealth-3aAs the graphs illustrate, and as Drew Morris of Great Numbers! and Bennett Stewart of EVA Dimensions explain, the rankings were calculated based on four criteria:

1) EVA Momentum, which shows the trend in the growth of the firm’s EVA over the past three years;
2) EVA Margin, which calculates how profitable the firm is per dollar of sales, blending pricing power, operating efficiency and how well assets are managed into a single net-margin score;
3) Market-Implied EVA Momentum, which measures the expected future growth rate for economic profit as reflected in the company’s stock price; and
4) MVA Margin, which calculates Market Value Added, or MVA, as a percentage of sales. MVA is the difference between a firm’s stock-market value and the overall amount of capital it has invested, or the shareholder wealth created.

A look at one company’s success

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Ranking CEO Wealth Creation: The Methodology