There is an alternative explanation for the data, which is that desperate companies that know they're in trouble have to pay more to hire a 'good' CEO who might

There is an alternative explanation for the data, which is that desperate companies that know they're in trouble have to pay more to hire a 'good' CEO who might be able to get them out (because the CEO does not want to be saddled with a bad track record). This explanation also jives with the fact that equity compensation is negatively correlated with stock performance, as the companies in trouble often give the executives less salary and more stock options, to incentivize sustainable growth.