I don't agree that they are the "best of the best." Or at least it's not obvious to me that they are, in the same way a talented musician or athlete is.
The supply/demand theory only explains the high cost of CEOs if there is an extremely limited pool of them. Because I reject the premise that they are just so incredibly talented, there shouldn't be a limited pool of them.
I suspect the pool is limited, but not because CEOs are just so incredibly talented. I don't know exactly why, but I doubt it's raw talent. I suspect it has more to do with access, background, friends, networks, gumption, dedication, and luck.
Anyway, my objection is to the grotesque size of their compensation. Since I don't believe the "talent pool" theory, no matter how talented they may be, it cannot possibly be worth that much. Thus, the numbers are so high for some other reason, and now everyone is post-hoc convincing themselves that it makes sense. It does not. It makes no sense at all. The emperor has no clothes on. It is self-evidently absurd to imagine that this limited pool of executives has so much talent and is so small that they deserve to be paid 1000s of times more than the best physicists, physicians, artists, etc. the world has. It's bullshit. /rant
Let's say you invest $10M in your company, and I also have a competing $10M company.
I go the traditional route and hire a top CEO with a big chunk of money. The rest of the workforce gets what they get elsewhere.
You hire a CEO that is "fairly" compensated. You will basically need to make a bet on someone non-established, and hope they can perform. With the extra money, you can either hire better talent or hire more people.
The success of a company is so reliant on where the leader takes it, that 9 times out of 10 you will lose.
And that is why my company will survive and have a CEO that is grotesquely compensated.
Funny part is that when you win, either your CEO will be snatched away for a grotesque amount of money, or you will have to pay that amount to keep them.
You're just reiterating the premise that higher-paid CEOs are more talented.
I'm saying I doubt that that's actually true. I think higher-paid CEOs bring something to the table, but it isn't talent. It's something more connected to an entrenched, corrupt system that has--incredibly--achieved buy-in from global capital markets. I suspect it has more to do with access, background, friends, networks, gumption, dedication, and luck. But not talent.
My point is that anyone could have those things. To the extent there is a true supply and demand aspect to this, it is mostly just simple luck.
I agree that they also need to bring those things to the table. But "talent" is a personal trait right, so I guess that includes dedication and gumption.
Plus, being able to perform under high stress, being a great communicator, organiser, putting processes into place, dealing with all kinds of personalities, convincing customers, providing certainty in an uncertain environmemt to customers, employees and investors, etc.
Your claim that anyone can do that is simply not true.
The supply/demand theory only explains the high cost of CEOs if there is an extremely limited pool of them. Because I reject the premise that they are just so incredibly talented, there shouldn't be a limited pool of them.
I suspect the pool is limited, but not because CEOs are just so incredibly talented. I don't know exactly why, but I doubt it's raw talent. I suspect it has more to do with access, background, friends, networks, gumption, dedication, and luck.
Anyway, my objection is to the grotesque size of their compensation. Since I don't believe the "talent pool" theory, no matter how talented they may be, it cannot possibly be worth that much. Thus, the numbers are so high for some other reason, and now everyone is post-hoc convincing themselves that it makes sense. It does not. It makes no sense at all. The emperor has no clothes on. It is self-evidently absurd to imagine that this limited pool of executives has so much talent and is so small that they deserve to be paid 1000s of times more than the best physicists, physicians, artists, etc. the world has. It's bullshit. /rant