> 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.
There's nothing obvious about this to me - how would you distinguish that from survivorship bias? Why then do shareholders and boards often come into conflict on this issue?
Claiming that someone is worth paying 100m per year is an outrageous claim that requires commensurate evidence, not a wishy-washy statement about boards thinking its worthwhile. Boards are made of people in a very small oligarchic circle - their behavior is more easily explained by remembering that they're social animals in a hierarchical context than pretending this is all perfect economic rationality.
There's nothing obvious about this to me - how would you distinguish that from survivorship bias? Why then do shareholders and boards often come into conflict on this issue?
Claiming that someone is worth paying 100m per year is an outrageous claim that requires commensurate evidence, not a wishy-washy statement about boards thinking its worthwhile. Boards are made of people in a very small oligarchic circle - their behavior is more easily explained by remembering that they're social animals in a hierarchical context than pretending this is all perfect economic rationality.