[_uhtu]

What the CEO really has is 200x the affect on the company. A 15m bonus for a CEO may sound ridiculous but if picking that CEO led the company to 50m increase in revenue over an average CEO than it was well worth it to hire them.

Or at least, that's how CEOs sell themselves. I think that idea makes sense, but only if the company does well. If it doesn't the execs still have the power to grant themselves massive bonuses before the shareholders can react.

It's kind of like the classic 2% fee investment manager, they'll say they are the best at what they do, when of course they almost never beat the market. Still, regardless of how they do, they make bank. I think what really needs to happen is people need to learn to stop trusting people just because they talk smooth and make an optimistic pitch, and start focusing executive salaries on being entirely results based, with only a modest base salary.

[Frost1x]

If I've learned anything in my life, it's that confidence trumps competence when it comes to most people making judgement evaluations. People love confidence and falsely correlate it with competence (maybe it's an old survival trait we humans inherited before manipulative language came about).

If you're competent, you likely hesitate because most cases are truly not clear cut when viewed through a lens of knowledge with a conscious.

It's easy to come off as confident when you're ignorant or know that simply appearing confident has a positive effect. The real key is to be competent and hide your hesitations/in decisions with confidence. The real problem is discerning which a person is: ignorant, manipulative, or a great leader--so confidence isn't a good measure for me. The only good measure is a historical record of good decisions or clear communication from leadership.

[amoorthy]

I really like this thoughtful reply. One thing to add: it's unlikely that the CEO's performance will change that much after a certain payout. S/he will likely put in the same effort beyond some compensation figure, if only because most want to succeed first and foremost for their pride.

A CEO who acts like a true owner would know this and reallocate salaries as needed to keep employees happy and motivated.

[_uhtu]

I agree, the best CEO would slash their salary when the going got rough. However, there's no system to keep them accountable to this, so it doesn't happen except in places like Japan, where there's a culture around it.