I didn't mean financial risk. As a public officer, you are taking risk in terms of your public reputation and legal responsibilities. That does factor into the comp - in fact, it is fairly common in certain highly regulated industries for the CEO's entire role to just to take the burden of liability.
Re:What do executives do, anyway?
by justinjlynn on Saturday September 28, 2019 @01:09PM
(#21101503)
So, how many banking executives were found criminally liable after, say, the 2008 global financial crisis?
In places such as Iceland, where bankers have not 'integrated' so deeply with the government, the banks were allowed to crash and top executives served years in prison. [1] This included people all the way up to chairmen. It had a catastrophic short term impact, but Iceland's economy rapidly recovered and remains healthy to this day. Incidentally their current president has an approval rating upwards of 90%.
Obama in 2009 was optically in conflict with bankers. Quoting things such as "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street" [2]. 8 years later, he's getting paid $400k for 30 minute talks by them, repeatedly. For some reason banks and investors don't seem so anxious to turn Icelandic presidents into multimillionaires for a few hours of talking once they leave office.
[1] - https://www.independent.co.uk/news/world/europe/iceland-to-s...
[2] - https://www.reuters.com/article/us-financial-regulation-obam...
Negative effect of a failed CEO: $25M in severance pay [1]. Roughly 10-12 times the lifetime earnings of a college graduate [2]. When the cost of failure is to have enough income to live very comfortable for the rest of their lives, that is not a large cost.
Negative effect on employees: needing to find a new job, move to a new location, start a new social life, and that is all assuming that there is the recommended 3-6 month emergency fund. When 40% of US adults would be underwater from an unexpected $400 bill [3], this adds debt and uncertainty to be able to start up again.
[1] https://www.beckershospitalreview.com/compensation-issues/he...
[2] https://www.ssa.gov/policy/docs/research-summaries/education...
[3] https://www.fool.com/retirement/2018/05/23/guess-how-many-am...