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[quote=Anonymous]9 out of 10 times CEOs don't create the value their pay demands. And someone smart and motivated would do the same job for only $1-2m per year. Something doesn't add up.

The fact of the matter is the the C-suite and BoD's are incestuous cartels. They function more like a mafia. They reward one another with generous pay schemes. In addition, BoD members tend to sit on multiple boards or are former C-suite executives themselves of other companies. This is proven through the Golden Parachute clauses that are standard in many C-suite executive compensation agreements.

Why the hell would a company willing pay out 10's of millions to a loser who destroyed value and failed? Because it's rigged and not really a "free market" at that level of the corporate hierarchy.

Further, much of CEO performance can be attributable to bigger economic forces outside their control. A CEO brought in at the depths of a global recession tends to garner accolades as the economy stabilizes and improves. Further, a low interest rate environment boosts stock prices as investors chase yield. None of these factors have anything to do with executive performance, yet they get to reap the rewards of broad economic improvements. Basically, if most CEOs can cruise on auto-pilot and get rewarded spectacularly well, so long as they don't lose key heads of business lines and star performers in sales. [/quote]

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