That's the excuse given to make you accept those higher salaries. The truth is that there are not infinitely many positions for a CEO. There are certainly more people who can be competent CEOs than CEO positions.
If you give an indecent salary to your CEO, you will get a CEO who looks for a crazy salary. That doesn't mean it's the most competent CEO you could get. Try offering a decent salary and you'll see that people still apply. You may not get the typical narcissistic profile, but it's probably not a loss.
I feel the role of a CEO and CTO is to suck souls and make sure everyone is under constant surveillance. If people work less as a result they don't really care.
In my experience, a CEO pretty much sets the company culture. And it feels really weird to choose someone who's here for money/title to set your culture. But of course, the CEO is not chosen by the employees, but rather by other people who are also here for the money/title :-).
In a startup, the CEO also convinces VCs to invest. And again it's interesting: VCs have no clue about the technology, so you would think they try to invest for CEOs who set a good company culture. But instead they get convinced by the CEOs who bullshit them the best. Which makes sense: not only VCs don't have a clue about the technology, but somehow they think they actually do understand. I have heard a few discussions between CEO and VCs in startups (talking about the technology I was actually working on), and it was hilarious.
> If people work less as a result they don't really care.
They just don't know. Even if they genuinely try to ask feedback from the employees, it's biased. Employees generally don't give honest feedback because it's a risk for them (especially if the company culture is bad, which is where the feedbacks would matter the most).
That's the excuse given to make you accept those higher salaries. The truth is that there are not infinitely many positions for a CEO. There are certainly more people who can be competent CEOs than CEO positions.
If you give an indecent salary to your CEO, you will get a CEO who looks for a crazy salary. That doesn't mean it's the most competent CEO you could get. Try offering a decent salary and you'll see that people still apply. You may not get the typical narcissistic profile, but it's probably not a loss.