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If "the vast majority" of fortune 500 CEOs are overpaid, why do boards continue to hire people that get paid so much? Why do shareholders put up with it? Couldn

If "the vast majority" of fortune 500 CEOs are overpaid, why do boards continue to hire people that get paid so much? Why do shareholders put up with it? Couldn't they just say, "We will pay half what the current CEO makes, who wants the job?" and get an endless line of qualified applicants? Or is it that when billions of dollars are on the line, quibbling over tens of millions is far too risky? I don't know about anyone else here, but when I think about being CEO of my company, it does not look like an attractive job nor one I am qualified for. Now to do this for a giant org with tens of thousands of employees. I mean I could take the job to get a golden parachute as a "Fuck you, got mine" maneuver, but I would ruin the company and destroy many lives and careers in the process. I find CEO pay to be up to the market, and I don't think the market is wrong.

geysersam 4y ago
> I don't think the market is wrong. But the market can be wrong! In many situations. In fact, it's only "right" under the most ideal of circumstances, perfect information, perfect competition etc. Then there's the question about what kind of right we're actually talking about here. To an ideal market, right is distributing resources to optimize profit. But if some people are less profitable than others, that clashes with other, arguably more natural, notions of "right".
- monero-xmr 4y ago
  I don't think the entire market is off by an order of magnitude for a huge group of people. There is a competitive market for competent CEOs and the pay reflects supply and demand. Again, if you want to go throw your hat in the ring, be my guest. Clearly it's very easy to a lot of people here. Good luck
- gwbrooks 4y ago
  I grant your point: Given imperfect information and imperfect competition, the market for top-tier CEO compensation is probably wrong by some factor. Even if we agree with that, then what? Put another way: Who has a greater right than the equity holders of those companies to set CEO pay levels/limits?
  - geysersam 4y ago
    From the article (approx. quote) > compensation to the top 25 hedge fund managers equal the combined salaries of all kindergarten teachers in the country Those are people who deserves (have the right) to be compensated better for their work. It's a failing of the market, the system, a moral and cultural failing that they are not. I refuse to belive we can not tweak our economies to value peoples work more fairly.
eastAligned 4y ago
Have a look at how the CEOs get their position in the first place; it's more of a network of people using their current positions to extract money while jerking each other off. It's not really a question of market effect or competence, it's more that if you try to find someone who asks for less and isn't in the network, the existing powers sink the stock price, buy shares and appoint a highly paid buddy to solve the problem they created in the first place.
- monero-xmr 4y ago
  If it's so easy go start your own Fortune 500 company, or figure out how to "jerk someone off" to get the job. I think your cynical vision of how operating a large business works is wildly incorrect and is a left-wing fantasy.
  - Apocryphon 4y ago
    If you want to see how large numbers of such executives can all be wrong, you need only glance over at the front page of HN as of late, at the daily layoffs mea culpa letters.
    - monero-xmr 4y ago
      Yes I am sure you could do better and for only half the pay
      - Apocryphon 4y ago
        Show me the money and let's find out.
  - eastAligned 4y ago
    There are a historical handful of fortune 500 CEOs that didn't start out with immense wealth. No matter how easy it is, I believe that success is more dependant on staying in line with the existing network than any real merit. Unfortunately the market value of a handjob from a non millionaire is closer to that of a big Mac than it is a C level position.
manicdee 4y ago
The market when it comes to CEOs is people known to the board. There’s no open recruitment, no selection criteria, no blind resumes. It’s basically nepotism/cronyism.
theironhammer 4y ago
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geysersam 4y ago

> I don't think the market is wrong. But the market can be wrong! In many situations. In fact, it's only "right" under the most ideal of circumstances, perfect information, perfect competition etc. Then there's the question about what kind of right we're actually talking about here. To an ideal market, right is distributing resources to optimize profit. But if some people are less profitable than others, that clashes with other, arguably more natural, notions of "right".

monero-xmr 4y ago
I don't think the entire market is off by an order of magnitude for a huge group of people. There is a competitive market for competent CEOs and the pay reflects supply and demand. Again, if you want to go throw your hat in the ring, be my guest. Clearly it's very easy to a lot of people here. Good luck
gwbrooks 4y ago
I grant your point: Given imperfect information and imperfect competition, the market for top-tier CEO compensation is probably wrong by some factor. Even if we agree with that, then what? Put another way: Who has a greater right than the equity holders of those companies to set CEO pay levels/limits?
- geysersam 4y ago
  From the article (approx. quote) > compensation to the top 25 hedge fund managers equal the combined salaries of all kindergarten teachers in the country Those are people who deserves (have the right) to be compensated better for their work. It's a failing of the market, the system, a moral and cultural failing that they are not. I refuse to belive we can not tweak our economies to value peoples work more fairly.

eastAligned 4y ago

Have a look at how the CEOs get their position in the first place; it's more of a network of people using their current positions to extract money while jerking each other off. It's not really a question of market effect or competence, it's more that if you try to find someone who asks for less and isn't in the network, the existing powers sink the stock price, buy shares and appoint a highly paid buddy to solve the problem they created in the first place.

monero-xmr 4y ago
If it's so easy go start your own Fortune 500 company, or figure out how to "jerk someone off" to get the job. I think your cynical vision of how operating a large business works is wildly incorrect and is a left-wing fantasy.
- Apocryphon 4y ago
  If you want to see how large numbers of such executives can all be wrong, you need only glance over at the front page of HN as of late, at the daily layoffs mea culpa letters.
  - monero-xmr 4y ago
    Yes I am sure you could do better and for only half the pay
    - Apocryphon 4y ago
      Show me the money and let's find out.
- eastAligned 4y ago
  There are a historical handful of fortune 500 CEOs that didn't start out with immense wealth. No matter how easy it is, I believe that success is more dependant on staying in line with the existing network than any real merit. Unfortunately the market value of a handjob from a non millionaire is closer to that of a big Mac than it is a C level position.

manicdee 4y ago

The market when it comes to CEOs is people known to the board. There’s no open recruitment, no selection criteria, no blind resumes. It’s basically nepotism/cronyism.

theironhammer 4y ago

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