I don’t think “skillset” is the right word either. It’s the financial outcome of the decisions the CEO makes which is the only thing that really matters. Which is notoriously hard to measure and impossible to do in advance. So companies tend to use various proxies when hiring like past experience and less useful ones like skills, education, character, personal connections, work ethic etc.
Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid.
So if the board of 100 billion company believes that a CEO they can hire for 100 million will increase growth/profits by more than 10 million CEO would it seems perfectly rational to pay him as much (they might be awful at picking the ’best’ person but that does not invalidate the core principle)
Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid.
So if the board of 100 billion company believes that a CEO they can hire for 100 million will increase growth/profits by more than 10 million CEO would it seems perfectly rational to pay him as much (they might be awful at picking the ’best’ person but that does not invalidate the core principle)