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Why doesn't supply and demand drive down executive income then? Surely we don't believe the supply of potential executives is so limited.
by arbitrarylimit 7y ago
Why doesn't supply and demand drive down executive income then?
Surely we don't believe the supply of potential executives is so limited.
- rat9988 7y agoThere is definitely a shortage of proven executives.
- ativzzz 7y agoCan we even define what a "proven" executive is? > There is almost no persistence in CEO performance [1] Meaning that a successful performance as a CEO does not indicate that future stints will be successful. [1]: https://www.institutionalinvestor.com/article/b1db3jy3201d38/The-MBA-Myth-and-the-Cult-of-the-CEO https://www.institutionalinvestor.com/article/b1db3jy3201d38...
- AdrianB1 7y agoIn a large company where a top executive earns over a million dollars per year you have multiple levels of managers, directors, VP's. They all earn more than the lower level, from 20-30% to double that, otherwise there is no incentive go invest all that time and effort in a career for a 5% increase. That means the top executives need to be paid more than the people below them, that makes it quite a high starting point. Yes, paying executives more than 10 million a year is probably too much, but the number of such position is quite small and there is still the benchmarking: you cannot offer a CEO of a top 25 Fortune 500 company the same package as the CEOs of the bottom 25 in the same list. Running successfully a larger company should be rewarded better, at least in theory.