>But it appears to rather be the case that executive pay is really high just because executives get a lot of control over how much they are payed.
Why does it appear to you that way? Research suggests that CEOs are overwhelmingly important and have significant impact on the valuation of a company on a scale significantly larger compared their compensation.[1]
"For example, open-minded and curious CEOs create an entrepreneurial culture, driven and intense CEOs create a culture of results and achievement, and altruistic CEOs create a culture of empathy and cooperation. Second, as a 20-year review from 1993 to 2012 showed, CEOs’ judgment affects key strategic and managerial processes, such as staffing, financing, and marketing decisions. Third, CEOs’ reputations — their public personas — affect company valuations and stock prices.
It has been estimated that 22% of the variability in firm performance can be attributed directly to the CEO. In fact, even when researchers use transcripts of interviews and meeting conversations to infer a CEO’s psychological profile, their ability, strategic thinking skills, and communication skills predict a substantial amount of variability in company performance."
I'd suggest you evaluate whether you base your opinion around CEO pay on data evaluating CEO performance or whether it's just an emotional response because 70 workers being laid off just elicits more sympathy than a CEO receiving higher compensation.
There are several things you need to be true to make that statement false.
- CEOs having a large impact - we agree here
- It is hard to replace the current CEO with a new one who will be, on average, equal (or better) than the existing one.
It's the second statement which I question. In a few rare cases (e.g. Elon Musk) there is good evidence to support it, but in the case of Mozilla I don't see it.
The research you cite goes both ways. If we can predict who will be a good CEO through an interview CEOs are easier to replace.
you not only need to identify them but you also need to pay them market rates or something close if you want to retain them. Mozilla is a company with 500 million in revenue. If they pay their CEO 2 million bucks and that CEO has even a moderately positive impact, then that's a completely rational decision.
No, you need to pay them competitive rates compared to their other job offers, not market rates for CEOs.
Most people on HN are speculating that many (not all!) engineers would be perfectly qualified for the job for instance. Market rates for this sort of person is a few hundred thousand. not a few million.
PS. I believe the relevant organization here is a non profit with 20M in revenue, not the company with 500M, but I could be wrong I don't care that much about the specific example.
Why does it appear to you that way? Research suggests that CEOs are overwhelmingly important and have significant impact on the valuation of a company on a scale significantly larger compared their compensation.[1]
"For example, open-minded and curious CEOs create an entrepreneurial culture, driven and intense CEOs create a culture of results and achievement, and altruistic CEOs create a culture of empathy and cooperation. Second, as a 20-year review from 1993 to 2012 showed, CEOs’ judgment affects key strategic and managerial processes, such as staffing, financing, and marketing decisions. Third, CEOs’ reputations — their public personas — affect company valuations and stock prices.
It has been estimated that 22% of the variability in firm performance can be attributed directly to the CEO. In fact, even when researchers use transcripts of interviews and meeting conversations to infer a CEO’s psychological profile, their ability, strategic thinking skills, and communication skills predict a substantial amount of variability in company performance."
I'd suggest you evaluate whether you base your opinion around CEO pay on data evaluating CEO performance or whether it's just an emotional response because 70 workers being laid off just elicits more sympathy than a CEO receiving higher compensation.
[1] https://hbr.org/2016/11/are-ceos-overhyped-and-overpaid