this post was submitted on 11 Mar 2025
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I agree, but I've seen so many arguments that "you need to pay the CEO millions, otherwise you'll lose a CEO that's definitely worth millions." Not a great argument, but I think it's somewhat laid bare by breaking down their actual salary versus their bonus, which is... Over nine times their salary.
I would make more sense if the CEO was doing a good job
I think the more realistic argument is that CEOs have an inherent incentive to take big risks. If they get lucky and succeed, they get credited for the win, can put it in their portfolio and then demand better pay or move on to another company which will pay them more. If they fail, they can quietly resign, take the golden parachute and move on to the next company after a year or two as though nothing has happened. A big salary incentivizes them to keep their job, thus disincentivizing them from taking risks.