Supply and demand dictates pay. People who rise to become CEOs are not going to take bad contracts.
If everyone could be CEO like anyone could be a laborer, they would not get paid well.
When they fail, were they among the pool of qualified candidates, or is their qualification determined by whether they get hired for the job? In other words: are they highly qualified at working as a CEO, or is their specialization in getting hired as a CEO/looking like they'd be highly qualified in the actual work?
I recall a study a few years back that found that CEOs did not appear to have a large impact with regards to company success. We're looking at successes and attribute it to the CEO, but when a company fails, there are a million things they had no control over so it's not fair to attribute the failure to them.
I find it highly unlikely that people hired for CEOs do not have excellent CVs or success stories to point back to, or a strong network vouching for them. This isn't a level I networking certification. This is a top position with top pay - the idea that there is a subset of people just gaming their way to CEO is hard to believe. That's not to say they don't politik. But I don't think it's like a programmer lying on their first resume about how much of that project they really contributed to on internship.
This isn't consistent with the "rare qualifications create a positive edge, multiplied by lots of leverage" value story, but it is consistent with the "climbers get good at climbing" story. It's also consistent with my anecdotal observations where the biggest executive jumps involved dirty tricks that transferred downwards momentum to the company they springboarded up from.
Are boards stupid? Probably not. My guess is that investors have a cognitive bias towards simple stories and "qualified" CEOs help the board serve up simple stories to their investors while also providing ample opportunity for mutual backscratching. It doesn't matter whether or not they have an actual edge, the story is the product.
It's a good hustle if you can get in on it, but that's the trick, isn't it?
> "climbers get good at climbing" story.
This isn't true. There are plenty of climbers - and if all that mattered was being good at climbing, boards would work to save millions of dollars by hiring cheaper "climbers."
>My guess is that investors have a cognitive bias towards simple stories and "qualified" CEOs help the board serve up simple stories to their investors while also providing ample opportunity for mutual backscratching. It doesn't matter whether or not they have an actual edge, the story is the product.
Or, perhaps, experience matters, and they just don't want to give it to people who don't have experience leading large entities. Just like anything else.
I'm sure you trust a plumber of 15 years over his journeyman of 4. Is it some secret evil cabal working against the plumber? No, it's just common sense.
Are there though? By nature of that kind of climbing, they get thinned out quite quickly, plucked from the wall by those more adept at hyper-competitive climbing without rules and sheer randomness. Here's a short overview with a few links pointing to studies that suggest that CEOs aren't having the impact common perception attributes to them, and whether they succeed or fail often depends on luck: https://www.inc.com/will-yakowicz/study-luck-looking-the-par...
> I'm sure you trust a plumber of 15 years over his journeyman of 4. Is it some secret evil cabal working against the plumber? No, it's just common sense.
Especially in tech, we don't see a lot of old CEOs though, and if we did, that still doesn't explain why any one in particular is chosen: the pool for any age group is large, they'll all have roughly the same number of years in experience. If luck is a large part in whether they succeed or fail in their role, if you continually test, you'll end up with people who rolled the dice and got lucky multiple times in a row, or you'll end up with people who manipulated the dice (or your perception of the dice).
If I remember tonight I'll dig through my archives and pull up the study.