If executive pay packages are based on their value to the company, why do they keep increasing so much faster than wages? How have CEOs continuously become more and more valuable relative to workers over the previous 50 years?

"In 2020, the ratio of CEO-to-typical-worker compensation was 351-to-1 under the realized measure of CEO pay; that is up from 307-to-1 in 2019 and a big increase from 21-to-1 in 1965 and 61-to-1 in 1989."[0]

[0]: https://www.epi.org/publication/ceo-pay-in-2020/

Apple is worth 3 trillion dollars; The stock has surged over 1,000% since Cook took charge. Is it really surprising that he took home 100 million? It pales in comparison to Musk's $250B. If he can increase the stock value just 0.01% it pays for his entire compensation package 3x over.

The value of oxygen is incredibly high, but the supply makes it priced low. Almost by definition, the higher the value of an executive, the lower the supply.

As companies get bigger, the executives are able to add more value. If you have an executive leading the largest company,(i.e. Apple valuation wise), they have the largest ability to add value. And what is the supply for that? So far only one person, the current CEO, has experience. This creates a very limited supply where the pay matches the value created closer than in the vast majority of professions.

How did you come up with a supply of 1 person? You could find thousands of well-qualified people who would want to take Tim Cook's job.

Don't step over dollars to chase pennies. If we were to filter people by their previous experience on running a 2.8t dollar company, or growing a company to 2.8t dollars, then Tim Cook is the only person that qualifies.

Apple made 94.68 billion while paying Tim Cook 98 million. They paid him 1/1000th of their profit. If Apple knew someone else could do 10% better than him, they would very gladly replace him and could even pay his replacement ten times more. Ten percent more of 94 billion would be 9.4 billion, while the replacement would make 1 billion.

I don't know if you are a software developer, but often they will look "up" at people making more than them and claim that they make too much, without looking around understanding that no company pays new grads $200k out of the kindness of their heart. The answer to why anyone makes as much as they do is simply because the market allows them to capture that much of the value they create. Emotions and comparisons are not relevant.

Companies are larger? If the CEO used to earn 1% of cumulative salary of all workers, and now they earn 0.5% but there's 4x as many workers, that's still a 2x increase. Why would you expect entry level workers wages to increase in proportion to company size?

I can see him being a bit more valuable than the average worker. 10 times? Most probably. 100 times? Maybe. 1000 times? Don't be ridiculous.

Is a software engineer really that valuable than a hourly retail wager? You know the answer to that question because of your craft. Similar skill and perspective gaps exists between c-suite and associate employees.

As COO, Tim was responsible for reorganising Apple's supply chain. Before him, Apple had awful execution and would regularly overproduce some models that would end up unsaleable, while having shortages of other models. I'm pretty sure this was a substantial factor of the operating losses of the 1990s.

Under Tim, this changed radically. Initially Apple solved the problem by drastically reducing the number of different models, but by the time the company managed to produce iMacs in 5 different colours without noticeable misproduction of numbers, it was evident that it it had become much better at execution. And around that time, Apple also started turning a profit again.

So I'd argue that Tim may have been one of the key drivers of Apple's profitability. I'm not sure how much value he added over a hypothetical replacement level COO, but empirically, he was an enormous improvement over his predecessors.

So his big insight that makes him worth 1400x the average employee was "We make more of these phones than we sell and less of those other phones than we could sell, let's do something about that"?

*Macs, at the time. Apple did not even make iPods back then.

And it was not that insight. Lots of people knew that. But not a lot of people had the skill to "do something about that".

Seems the board of directors disagrees with you.

How much would the stock drop if he were to leave Apple today?

Given what happened to the stock when steve jobs, nothing ?

https://www.quora.com/What-happened-to-the-Apple-stocks-when...

By that logic, the members of the Fed should be on every tech company's payroll.

It would probably drop 10% or so (out of investor uncertainty) and in 1 to 2 months be back to where it was, regardless of successor.

What if they replaced him with someone currently making the average compensation at Apple?

There are probably many adequate CEOs already within Apple, making average compensation. You seem to believe CEOs are minted; they all move up the ranks like the rest of us. If the skills are there to lead a company, investors don't care what their last pay scale or job title was and trust the Board or Directors in who is appointed.