In the banking world, how a CEO looks can significantly impact how much they earn. In American banks, CEOs who are considered more attractive make, on average, a million dollars more each year compared to their less good-looking peers.
This finding comes from a recent study conducted by researchers at the University of Vaasa. They investigated the connection between a CEO’s looks and how much money they make in the banking industry.
“CEOs who are more attractive, on average, receive an annual total compensation approximately 24 percent higher than their less attractive colleagues,” the researchers explain.
Looks matter
In their research, the scientists looked into something called a “beauty bonus.” This means that good-looking people often get paid more than others who do the same job.
To study this, they gathered data from 167 American banks and 272 CEOs (the top bosses of the banks). They used a computer program to rate how good-looking these CEOs were, giving them scores from one to five.
These scores were based on what a lot of different people thought about the CEOs’ looks. To do this, they collected lots of pictures of the CEOs and asked people to say how attractive they thought each CEO was.
“American bank CEOs form a highly homogeneous group: white males who are around 50 to 60 years old. We tested our machine-learning model on images of the actor George Clooney, who represents this age group and is generally considered attractive. The model gave him scores ranging from 4.2 to 4.5 depending on the image. In contrast, the average attractiveness score for bank CEOs’ facial features was 2.7,” the researchers explain.
The beauty premium found among CEOs could not be explained by other factors, such as the age, gender, or ethnicity of the CEO. As a result, the researchers are confident that the beauty premium is something that is purely based on the appearance of the boss.
“Good looks benefit bank CEOs. Our research findings indicate that appearance has a significant positive impact on the total compensation of bank CEOs and especially on their discretionary, performance-based compensation,” they conclude.
