There is no academic training to be a good CEO. They are not easily replaceable. If they were, board members wouldn’t bother offering such high pay. Shareholders don’t appreciate wasting money.
Like it or not, they've become more efficient at maximizing shareholder returns. 1978 to present included all sorts of financial shenanigans designed to turn a company from the old school "return on assets" model to a financial vehicle that profits on the spread between it's revenue stream and financing costs. I think it's shit too, but the job turned from running a company go making money appear, and the pay went with it.
Don't hate the player, hate the game (seriously, the system is screwed up horribly)
yes actually - I spoke with a contractor at giant banks, at a high level of security, and with it compensation. The casual stories he told were related to beyond-belief daily animosity, racist language, whoring references and other verbal attacks and harsh emotional content. The whole thing was told in the same breath as I get this much per hour (a lot), I travelled to this place and got this hotel, I got this bonus.. in the same breath.
There is more going on with people and work and money than most people seem to acknowledge when speaking in general.
I know it’s probably multifaceted, but my first thought was that increasing inflation since the 70s has meant that there is an incentive to have as much debt as possible, the hope being that it will be inflated away
With the complete end of the gold standard in the 1970s, the government/fed's been free to create as much USD as it wants. The benefit of newly created money goes to those who spend it first (it's essentially a wealth transfer from those who get it last to those who get it first), and it's the banking/financial system that generally gets first dibs on this newly created money. This means there's a continuous, persistent transfer of wealth from the real economy to the financial system. In theory this wouldn't happen if the fed instead created money by e.g. dropping it out of helicopters equally to everybody (or direct transfers to their bank accounts), but the whole financial industry has a vested interested in keeping the current approach.
Like Carly Fiorina? The pay for CEOs is set by the board, and the board of most large companies is made up of CEO's from other large companies. It's the private equivalent of plutocracy.
> There is no training to be a good CEO. They are not easily replaceable.
If Steve Jobs—who first created and then basically rescued Apple and started it on the path to where it is today—can be 'replaced' then any other leader can be replaced.
Similarly there are plenty of CEOs that are paid oodles of money that were or are absolute garbage: see Boeing for the last 15+ years as Exhibit A.
Steve was replaced with one of the greatest minds in Operations that history has ever known, and much of Apple's success under Steve was thanks to Tim. So Apple is not the best example if you're trying to show "CEOs don't matter."
> So Apple is not the best example if you're trying to show "CEOs don't matter."
I wasn't try to show that they don't matter, but that they are replaceable. And few companies need to have "the greatest mind in Operations that history has ever known" to function well.
Does Eli Lilly, Unitedheath, Johnson & Johnson, Procter & Gamble, Home Depot, Pepsico, Walmart, Coca Cola, Accenture, Intuit, Caterpillar, Lowes, Nike?
Heaven knows that the last few CEOs of Boeing mattered as they have completely screwed the pooch and basically wrecked that company—all the while making a whole lot of money.
Your definition of “replaceable” is so loose to be meaningless. Yes, any person can be appointed to the CEO position when another leaves. No, it is not easy to appoint one that will steer the company to greater success than the previous one.
Steve Jobs is practically an example of WHY top CEOs get paid so much. Apple was basically in its death throes when he came back. A few years later they had the iPod. A few years after that the iPhone. When he died in 2011 they were well on their way to being the worlds most valuable publicly listed company.
I do think a lot of CEOs are way overpaid. That said, if a couple hundred million package means the difference between a company folding and firing everyone, or being a multi-billion dollar business with thousands of employees, the math works out.
> That said, if a couple hundred million package means the difference between a company folding and firing everyone, or being a multi-billion dollar business with thousands of employees, the math works out.
Now do the example of packages that cost millions of dollars and the CEOs wrecked the companies, like Boeing, or Enron, or WorldCom. Or Jack Welch's financial shenanigans at GE.
He was replaced, but not with someone as good. Apple has done well under Tim Cook, but there is an obvious lack of innovative vision since Steve’s passing.
The Apple Watch launched 4 years after he died. He probably wasn't involved in that at all, or just barely. Which means that was all Cook's doing. It's now a multi-billion dollar business on its own.
AirPods launched 5 years after he died. It's highly unlikely he was involved at all. That's now also a multi-billion dollar business.
Apple Vision is about to come out. I wouldn't be surprised if that turns into a mult-billion dollar business after a few years.
Yes, Tim Cook does not have the charisma of Steve Jobs, and probably doesn't have the design sense either. But he's awfully good at putting the right people in the right places to steer the ship with him and have quite a strong vision of the future.
No one wants to hire a below average CEO! Our CEO needs to be Above Average, so we better pay above the median! And so the salaries spiral up and up......
The argument is not that CEOs are not valuable. The argument is that there's no obvious increase in their value since the 70s that might justify their relative pay increase.
Since there's no pay penalty for being a bad CEO (pay correlates almost exclusively with company size) I guess we can assume that being good at the job is not the quality most important to those who do the selection.
