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If we measure a leader's potential value by their potential impact/damage radius, then it follows that their actual pay should be proportional to the actual imp
by hliyan 3y ago
If we measure a leader's potential value by their potential impact/damage radius, then it follows that their actual pay should be proportional to the actual impact/damage they cause. The problem here is that leaders seem to be compensated in proportion to their impact, but not penalised in proportion to their damage, even when their success is indistinguishable from chance.
- csharpminor 3y agoI agree with you. I’m not sure what the enforcement mechanism would be though. Boards suing CEOs more frequently over negligence? CEOs buying a certain amount of equity in a company before they join? CEOs are highly leveraged. One wrong bet could cost the company/employees/shareholders more than a CEO (even a multi-millionaire) could repay. In reality this leaves the board with recouping maybe a few million from the CEO on a shortfall that may be orders of magnitude bigger. I think pragmatically most boards just move on, let the CEO take the reputations hit, and focus on trying to find someone better.