It’s a helluva deal they got going.
Marissa Mayer got a nice compensation package because she did well by Yahoo investors: she managed to trick Verizon into paying real money to buy the hulking wreck of Yahoo.
If you start out thinking that Yahoo could ever possibly have been saved in any alternate universe, you can get all-kinds of angry or disappointed in Mayer's performance. But if you see Yahoo for what it was, you realize she really did arrange the best possible deal that Yahoo shareholders could have hoped for.
Well, clearly a huge difference. Under Platt HP had good consistent growth, and we enjoyed record profit sharing and bonuses. Fiorina joined and managed to cut the company's value by 50% in three years. Hurd joined and the company's value went right back up. The difference in execution and competence was startling.
IDK, but the real story must surely be the board of directors (which hires, fires and sets the salary for the CEO). How can a board be so incompetent that it negotiates a severance package whereby Fiorina receives $42 Million to leave after loosing half of the company's value.
When you look at the following graph, keep in mind the Great Recession in 2008.
https://commons.wikimedia.org/wiki/File:HPQ_Stock_Price_Sinc...
There's this claim that CEO compensation doesn't correlate well performance. I could see your Carly Fiorina and raise you Steve Jobs or Jack Welch or any other number of anecdotes. What's the real statistical correlation in the S&P 500?
What is true is the myth of individual efficacy. That a good CEO will have a successful company, and that a successful company is a sign of a great CEO. The reality is obviously that there are countless factors that affect company performance.
It's not that people think they are special, it's that we are very bad at correctly apportioning responsibility, especially when there is also a power imbalance that extends to determining that apportionment itself. We don't instinctively seek royalty (as in we assume leaders are special as a rule, though obviously in some contexts/positions we do), we seek simplicity (and pinning everything on a single leader is about as simple as it gets).
It's much like how military battle outcomes are clearly dependent on the decision the general makes, for better or worse.
Many board members are in entirely different industries and sectors and some only serve exclusively on boards. Many others are investors whose money is being used to pay those executives. There's also a layer of shareholders above the board and voting is required for all major decisions.
It's not as simple as you make it out to be.
On the other hand, I don't think that is the only source of problem. Companies have gotten way too big and the experience of running global conglomerates is simply not common. Add risk aversion to it and the same people, whether succeeding or failing, end up getting hired over and over. It's a lack of supply and lack of competition.
Until they don't: https://en.wikipedia.org/wiki/French_Revolution
So CEOs just get paid more period. And there's this funny set of myths as to why that is the case. In reality, I think it just boils down to the fact that humans sort of instinctively (or maybe culturally?) like the idea of royalty. And so we're okay with some people just getting more for no good reason other than the fact that they're somehow anointed or divine.