Edit: slightly more apples-to-apples: their 2007 profit was $3.6B. Their 2006 profit was $21.5B.

But more important, how much does it cost to find someone who can run a company like that competently? I work for a lot cheaper, but I'm also not capable of managing all of Citigroup. And conversely, if I were someone who had proven that I could do that, I'd likely have enough money to retire; you'd have to pay me quite a lot to convince me to subject myself to that kind of stress rather than sipping pina coladas on the beach.

Obviously it's more complicated than that, but the "we have to pay for the best and brightest!" meme starts to sound a lot more like self-dealing when it turns out the best and brightest do approximately the same quality job as one of those dipper things that replaced Homer Simpson at the nuclear plant for a week once.

Well said. My post above explains why CEO pay actually results in a worse product.

The "best and the brightest are not the ones who end up as CEOs of big companies." Pick one at random out of the Fortune 500. Give me a year to study the company and then replace him with me; I'm now the top dog. There is a 60% chance I will do a better job. I'm 26 and have no advanced degree. Do the same with a small business or a farm. There is almost a 0% chance I will do a better job. What does this say about large companies and their management?

On what grounds do you believe that you can do better than the average Fortune 500 CEO? I assert that you're engaging in empty boasting, with absolutely nothing to back this up. How could there be? Have you any experience near the top management of a company this large and complex?

1. The extreme disparity between CEO pay and other vital executives encourages people to backstab in order to ascend the hierarchy. So "work" for those who are in line to be CEOs is more about jockeying for position and trading favors than about building a company.

2. In addition to (1), such disparities are bad for morale, especially when the CEO is a "hired gun" instead of someone who has been part of the company for a long time.

Except in athletics, where talent is objectively measurable, the "star system" tends to piss off everyone but the stars, and let's be realistic: non-stars are 99% of people, and probably 3/4 of those who would be considered objectively the most competent.

3. When the CEO makes $500,000/year, he's drawing a good salary but still has the incentive to build a legitimately strong company for the long-term. When he has a "performance bonus" that will give him fuck-you money in 12 months if he plays his cards right, his incentives are in the short term.

4. When there are massive discrepancies in pay between the bosses and the people they are managing, the social class and lifestyle disconnects become problematic and can damage morale. This is why the best CEOs try to appear middle-class in terms of dress and work habits.

CEO pay is at such a level that it actually brings lower quality of management. This is what's truly alarming. Decades ago, when CEO pay was much lower, American companies were well-managed and produced great products like (imagine this for a second) cars that people actually wanted to buy. Now, big-company CEOs command stratospheric salaries and generally such ass. This is because executive pay is so high that it has pushed these people completely out of touch with reality.

CEO pay has simply increased in line with the market capitalization of the largest public companies.

Let me offer you another possible explanation. When people are making this much money, it's not really about the money at all; they've already got FU money, and they're taking what they can get only because that's the arbiter of where their skills are most needed. Instead, they're doing what they do because they really like the business, or the challenge, or they really want to contribute something to society. I know the CEO of my company (not Fortune 500-sized, but nothing to sneeze at), and I'm absolutely certain that this is the reason that she does it.