CEO should exist, and it's normal that their compensation is the highest of the company.
However it shouldn't be a 268 to 1 ratio with the median worker like the SP500 average. There is no way the CEO is worth that much money to the company.
However it shouldn't be a 268 to 1 ratio with the median worker like the SP500 average. There is no way the CEO is worth that much money to the company.
However, most ceos aren’t genius superstars. And I don’t think CEO pay really makes sense given supply and demand. I think there’s plenty of people who could do at least as good a job as many CEOs do, and would happily do so for a lot less money.
I suspect a lot of CEO pay is an arse-covering exercise by the board. If the board hires a super expensive CEO, and that person turns out to be terrible, the board can say they did everything they could do to get the best ceo. But if the board hires someone for much less money who turns out to be a turkey, they might be blamed for cheaping out on the ceo - and thus the company’s downfall is their fault.
Is the Mozilla CEO really so amazing at their job that they deserve such insane compensation? I doubt it. I bet there’s dozens of people at Mozilla today who are probably smart enough to do a great job as CEO. They just won’t be considered for the role for stupid reasons.
Investors (and the boards they hire) pay CEOs for results. That range of results is very wide for large companies.
Guess who turned Sears and J.C. Penny into what they are today?
From that, I’d conclude that CEO capability and effectiveness really matters and paying up for a good one is worth it.
Also possible is that the CEOs grossly overcentralized the companies such that they increased the apparent importance of CEO decisions and then just took some big gambles. Heads they get paid a lot of money; tails their bets pay off and they get hailed as geniuses who get paid even more money.