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The value of oxygen is incredibly high, but the supply makes it priced low. Almost by definition, the higher the value of an executive, the lower the supply. A
by mucle6 5y ago
The value of oxygen is incredibly high, but the supply makes it priced low.
Almost by definition, the higher the value of an executive, the lower the supply.
As companies get bigger, the executives are able to add more value. If you have an executive leading the largest company,(i.e. Apple valuation wise), they have the largest ability to add value. And what is the supply for that? So far only one person, the current CEO, has experience. This creates a very limited supply where the pay matches the value created closer than in the vast majority of professions.
- allturtles 5y agoHow did you come up with a supply of 1 person? You could find thousands of well-qualified people who would want to take Tim Cook's job.
- mucle6 5y agoDon't step over dollars to chase pennies. If we were to filter people by their previous experience on running a 2.8t dollar company, or growing a company to 2.8t dollars, then Tim Cook is the only person that qualifies. Apple made 94.68 billion while paying Tim Cook 98 million. They paid him 1/1000th of their profit. If Apple knew someone else could do 10% better than him, they would very gladly replace him and could even pay his replacement ten times more. Ten percent more of 94 billion would be 9.4 billion, while the replacement would make 1 billion. I don't know if you are a software developer, but often they will look "up" at people making more than them and claim that they make too much, without looking around understanding that no company pays new grads $200k out of the kindness of their heart. The answer to why anyone makes as much as they do is simply because the market allows them to capture that much of the value they create. Emotions and comparisons are not relevant.