[durasell]

Actually the compensation consultant has to convince the committee.

But the idea is very simple -- someone/anyone's salary is tied to the amount of money they can make for the person they're working for, whether that be a single individual or a bunch of stockholders. If I'm putting up dry wall and I bring in six new jobs to the guy I work for, then I expect to be compensated for my trouble. If I'm a CEO and I add a couple hundred million in value to the company, then the board better pay up.

The people who complain about CEO salaries are almost always those who have no concept of this principle, neither do they typically add value to the company they work for -- what they do is do their jobs and add no value to the firm.

[freedomfiter2]

If I'm putting up dry wall and I bring in six new jobs to the guy I work for, then I expect to be compensated for my trouble. If I'm a CEO and I add a couple hundred million in value to the company, then the board better pay up.

Sure. The trouble is that when that 40 million dollar CEO does something stupid which costs the company hundreds of millions they still want paid big money. If people want big money they should be willing to shoulder a little risk.

[Kretek]

what they do is do their jobs and add no value to the firm.

If they're "do(ing) their jobs," then by definition they're adding value to the firm. Unless, of course, management has failed its job and "their jobs" aren't corerct or shouldn't exist.

[radicalamericannationalist]

"But the idea is very simple -- someone/anyone's salary is tied to the amount of money they can make for the person they're working for, whether that be a single individual or a bunch of stockholders."

Do the words "Carly Fiorina" mean anything to you? How about "Michael Ovitz?"

Are all CEOs overpaid? Of course not. Neil Cavuto's book had excellent examples of CEOs who were willing to tighten their belts to help their companies through lean times.

But it does appear that by negotiating contracts in which utterly failed CEOs can be canned and still get millions of dollars, the boards of some pretty major corporations have violated their fiduciary duties to stockholders. I think that's the real story, why have boards abdicated their essential responsibilities.