[sangnoir]

And who sets the standards? Their CEO-buddies on the boards. None of them would dare rock the boat.

One of the failure modes of 401ks and investment funds are large investment pools that don't vote at AGMs, leaving boards largely dominated by CxOs, to their own devices.

[s1artibartfast]

Either you dont understand my point, or I dont understand yours.

Im saying CEOs have financial skin in the game tied to company performance. They get less, often much less when the company shits the bed. This was in response to a parent post that seems to think CEO comp is entirely isolated from performance.

[sangnoir]

You probably didn't understand my point. You said CEOs are paid that way because it's the standard. In your opinion, who sets the standards for CEO compensation, and what are their day-jobs? The majority of boardmembers happen to be C-suite executives themselves.

My thesis is that the boards of public companies have been captured by the executives, and the diffuse shareholding has been ineffective in providing oversight to the boards at AGMs. If SWE (or teacher) remuneration were determined by a (nominally independent) subcommittee dominated by other SWEs (or teachers), I posit that incomes for that role would outstrip other roles at the same organization over multiple decades, due to biases and knowing who butters their bread. It would become standard practice, naturally.

[s1artibartfast]

Okay, I think we are both misunderstanding then. My original point was a fairly mundane one. Pixel was asking why CEOs don't suffer substantial financial cost for bad performance. My point was simply that they do! Poor performance often incurs millions of dollars of opportunity costs to CEOs. I suspect that the deeper question was why don't CEO suffer more than just opportunity cost, in harsher way that would be more emotionally satisfying.

You raise good questions about how prevailing compensation is set and the relative power of corporate governance. I tend to agree that executives have a lot of leverage and it seems like boards are relatively weak. They don't have a lot of incentive to pinch pennies push back on CEO compensation. There's a pretty huge cost to shareholders if they want to fire or even replace a CEO, and uncertain upside.

There might be some class/roll solidarity going on as you propose. However, I think the bigger factor is that minimizing CEO comp simply is not a priority for boards and shareholders, despite the attention it gets from outside critics.