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Dividends provide value to the shareholders. Propping up the good old boys network by overpaying for executive talent is of negative utility to the shareholder

• JumpCrisscross 11mo ago
  > Propping up the good old boys network by overpaying for executive talent is of negative utility to the shareholders We don't really have evidence executives are overpaid. The fact that even cheapskate private company owners wind up paying their executives well should communicate something about what's going on.
  • mapontosevenths 11mo ago
    There is a boatload of evidence. It's been studied repeatedly. Most of it shows that there is a small but real link between CEO pay and stock performance. This works best when CEO pay is tied directly to performance, and it isn't tied to the specific dollar value just the percentage of increase. IE - The $40m CEO doesn't actually outperform the $20m CEO, but a CEO who oversees a big jump in profits will see a big raise regardless of the reason. CEO pay DOES correlate strongly with luck. IE - They get rewarded with big bonuses when the larger market does well or taxes go down, and they don't tend to get smaller pay when the market does poorly.
    • JumpCrisscross 11mo ago
      > this works best when CEO pay is tied directly to performance, and it isn't tied to the specific dollar value just the percentage of increase This is the line the executive compensation industry peddles. It has elements of truth. But it's not from an unbiased source. Again, there are lots of companies and lots of CEOs. That nobody has unlocked this arbitrage strongly suggests the simple story isn't the whole one.