You can't count the upsides for the shareholders without counting the downsides as well.
That's not to say that investors shouldn't be compensated for their initial risks when an actual funds injection is required, mind you; but them being compensated ad vitam eternam - and more generally, them actually owning the structure - makes very little sense morally for me (and beyond "morally", I don't see how this can result in anything else than progressive concentration of wealth society-wide in the long term).
You also assume people can "move on to another job" without too much trouble; again, that may hold true in tech or similar popular domains but it's far from true for a lot of people.
>I'm free to find other work.
A corporation is a model of communist dictatorship. The higher-ups control the means of production, they take your labor according to your ability and give to you your need (as determined by them.) In the sense that existing in a communist dictatorship is 'voluntary' then your work for the company is voluntary. And in the sense that being able to move from one communist dictatorship to another communist dictatorship is free then you are free.
That explains why communists revered Marx! He explained to them how it all works!
Think of it this way, if there was two hundred of you all working together, would he still be adding more value than you?
Put it this way:
- Would you feel comfortable investing your money with a company run by 200 engineers?
- Would you feel comfortable entering into a contract or purchasing agreement with a company run by 200 engineers?
Its totally not because the 1% has captured all the value created by increased productivity over the past 50 years. Definitely not.
What exactly do you think separates companies like Oracle and Microsoft? Oracle has hundreds of very talented engineers. But their position in the market is stagnating.
This is hard for HN types to accept, but Engineers are not the people in software companies producing value. No individual person is producing value. Its a combination of the leadership who can lay down a plan toward something that produces value, and the line workers who can actually produce it. Both are necessary.
Here's the difference: If you need to replace an engineer, go for it. Who cares. There are millions of us. We're code-monkeys. If you need to replace a CEO, you better be careful. Github couldn't even find a good CEO, so they sold out. If you're not careful, you might get a Larry Ellison or a Marissa Meyer instead of a Satya Nadella or a Tim Cook.
Successfully leading companies legitimately requires personality characteristics that are present in less than 1% of the population. I would guarantee that if we dissected the brains of enough C-suite people from successful companies, we'd see some sort of genetic or brain matter similarities, probably something resembling sociopathism.
At least with an engineer, you can be hired by someone who could more-or-less do the job you're being hired for. Senior engineers hire entry-level devs. The CTO hires team leads. Who hires the CEO?
Often, there's no one in the company who is adequately prepared for that role, because the role doesn't have a job description. It doesn't have bullet points of what you do every day. Your job is to lead the company, set the expectations, set the results, for everyone else. That's the role of the c-suite.
Here are some examples: I've worked in the gaming industry at big company for 5 years. I've seen a ton of games fail and few succeed. I was on the most successful game team that made hundreds of millions of dollars. And, I don't believe our team was more talented than all the other teams. We simply had the right market timing with exactly the right game, inexorably leading to an enormous success. Within this company many other teams built clones, executed just as well if not better and yet, none of those games received the success as the first one with the right timing.
Market acceptance controls whether a company might fail. It doesn't control whether a company might succeed.
As a lower-level employee, sometimes you think that the company would be successful without a leader, or even is successful in spite of poor leadership - while that may sometimes be true, much of what happens at that level is hard to understand unless you've been there
Absent any, I think it is much more reasonable to conclude that there's little to no justification for current CEO compensation and that they draw their current compensations mostly "because they can".
EDIT: So collusion amongst CEOs explains why boards agree to it. Why do shareholders?
The his focus on CEO pay is nothing more than old-fashioned class warfare jealousy. Think how much more money workers could make if we cut payroll taxes by 20% — a lot more than if they paid the CEO $1. But those on the left complaining about CEO pay would go apoplectic just discussing tax cuts. Because the issue isn’t really about pay, it’s an ideological thing.
I'm sure Louis XVI was thinking the same thing right before the public summarily removed his head from his body.