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The argument is that CEO salaries aren't actually determined by supply and demand, and that the uncertainties are so prevalent that any attempt at valuation is
by kerbalspacepro 8y ago
The argument is that CEO salaries aren't actually determined by supply and demand, and that the uncertainties are so prevalent that any attempt at valuation is certainly made up. It comes down to more interpersonal networks, relationships, and power then it does analytical rigor.
At least, that's the argument.
- tepidandroid 8y agoUnderstood. IMO, the argument is moot though because at the end of the day, the sole determinant of valuation is what someone else is willing to pay. A highly connected CEO with many high powered relationships is valued very highly because as it turns out, those are the things needed for a corporation to succeed.
- craftyguy 8y agoA corporation needs MUCH more than the CEO's relationship with his/her friends/connections to succeed.
- joel_ms 8y agoWhen those highly connected CEOs sit on the boards of eachothers companies and determine eachother's sallaries, "what someone else is willing to pay" is not an independent variable. "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." — Adam Smith, The Wealth of Nations, 1776