6 ms·
I haven't read that book, but isn't increased negotiating power for CEOs a more likely explanation than social embarrassment? If I've been chosen as the lead ca
by skolor 11y ago
I haven't read that book, but isn't increased negotiating power for CEOs a more likely explanation than social embarrassment? If I've been chosen as the lead candidate for a CEO, it's a lot easier to justify a large salary if I can point at our competitors and say that I should be paid competitively to their CEOs.
- danieltillett 11y agoIt is more of a creeping process. Since no boards think their CEO is below average (if they did they would fire him/her). If their CEO is above average then the compensation they feel their CEO is due should also be above average. If everyone starts doing this then the average CEO salary will keep rising and rising. We end up in a world where all the CEO’s are above average and their salaries are in the stratosphere.
- dragonwriter 11y agoThe fact that board members are also themselves either executives in the same or other firms, or likely to be employed as such in the future, means that board members also have a self-interest in the trend of rising executive salaries.
- danieltillett 11y agoWell there is this effect as well, but the "above average CEO, above average pay” is much easier to defend at the annual stockholders meeting.