[ryandrake]

I’ve always wondered: if CEO pay was truly tied to their “creating value” then shouldn’t they lose money if they destroy value? If the answer is yes, then why aren’t bad CEOs losing money? If the answer is no, then why do we pretend they are paid in proportion to the value they create?

[CountSessine]

I’ve always wondered: if CEO pay was truly tied to their “creating value” then shouldn’t they lose money if they destroy value?

Not necessarily. They'd be plain-old investors then. CEOs are like options traders who pay for their call options by working 60 hour weeks.

[coredog64]

In many cases, the lion's share of C-level pay is not straight up cash, but equity. They might still make money if they destroy value, but the better they do for the company, the better they do for themselves. That's what you're looking for, right?

Better still, that stock compensation isn't really paid for by the company. The costs of paying with equity accrue to shareholders in the form of dilution.

[jjoonathan]

That's why I was careful to scope my complaint to performance-independent pay.