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I know this is beside the point you're making, but that guy at the top does not have greater risk. The right measure of risk isn't money, it's freedom. Work as
by lordnacho 4y ago
I know this is beside the point you're making, but that guy at the top does not have greater risk.
The right measure of risk isn't money, it's freedom. Work as CEO of Google or Roche for a month and you don't have to work any more. You don't risk shit, you can only win or win bigger.
This is what I don't understand. There are plenty of people who can run a business, so why is it that we pay so much for them? There's a massive queue of candidates who will all do a decent job (you won't know), so why are they paid astronomical sums? There's no way you can be sure a guy is not going to mess things up, and paying him a lot of money won't motivate him more, he's only got a 24h day. He can't go and be CEO elsewhere because he doesn't know other businesses that well, only a few places could logically use him. On top of that a huge proportion of the stock price is not in his hands.
- gnicholas 4y agoOne creative theory I heard is that a rational benefit of seemingly-irrational executive pay is to incentivize harder work among the people who desire to be executives. Not sure if it makes sense or not, but it's an interesting possibility.
- lordnacho 4y agoOnly works if the would-be CEOs are themselves irrational. You can't seriously be expecting to outcompete thousands of other prospective CEOs.
- gnicholas 4y agoIt would only really apply to companies that promote from within. That could motivate a few dozen people who have a shot at becoming an executive in their career at the company.
- gridspy 4y agoYou might feel that only a few people are qualified to be your CEO. And they all want to retire - you're competing with the "retire instead" option.
- pwpw 4y ago> that guy at the top does not have greater risk. The CEO and CFO of publicly traded companies get paid pretty handsomely in exchange for taking on a significant amount of risk by signing off on the financial statements.
- pavlov 4y agoAnd when does that risk ever materialize apart from the Enron/Wirecard/FTX cases where the CEO and CFO truly were pulling a massive scam?
- ethbr0 4y agoKenneth Lay died after being convicted but before being sentenced, so afaik his family still has the money.
- Sebguer 4y agoThey get paid well to not do crimes? That's nonsensical.
- kortilla 4y agoThey get paid to take responsibility for crimes that happen underneath them. That’s a lot different and why you got confused.