|
|
|
|
|
|
by nickff
2231 days ago
|
|
|
The problem is loss-aversion. Are you willing to risk losing some small percentage of revenue equivalent to many billions of dollars on the bet that Cook's replacement is as good or better? Tim Cook's salary is almost irrelevant; the important question is whether he is the absolute best person for the job. As an example: how much value did Steve Jobs add during his second tenure at Apple? Did his compensation package make a significant dent in that? The market for CEOs is a winner-takes-most deal. Similar to what happens with music artists, the top few albums of the year sell more volume than all the rest. |
|
|
Great point.
Increased risk aversion explains both the explosive growth of CEO compensation since 1960 and America's unwillingness to do bold and risky but nevertheless profitable things.
Gone are the days of [1].
[1] https://er.jsc.nasa.gov/seh/ricetalk.htm