Should the President of the United States have a Swiss bank account?

Kevin Brown at the time of the contract could throw a baseball better than all but five people on the planet, yes. He ended up being terrible, which tickled me to no end, but he was pretty clearly in that realm.

I don't see any way to say "we need (insert name of CEO here) above ANYONE ELSE IN THE WORLD and we have to pay them $20 million or we will fail as a business!" and justify that. It's a closed system where they decide each other's pay packages.

 

Yeah, but my point wasn't that there aren't shitty CEOs (or even shitty people who become CEOs). of course there are.

But, by and large they have the education credentials, and have taken the necessary steps to climb the corporate ladder. Or, they founded a company. They're also largely very driven people.

These are not guys or gals juts picked out of thin air, and placed in the board room. And, too often, the folks here think that's the case, or that they could do the job just as well.

Well, if you think that, go for it.

Also, as too founders who make lousy CEOs, there are lots of them. Many are smart enough to figure that out, and will hire an experienced CEO. Some have even been fired by their board.

One guy we all now think of as one of the best CEOs, Steve Jobs, was fired from the company he founded.

And, this was my point as well.

Carl Pavano sucked as a Yankee. But, no one here thinks they should have been in the Yankees starting rotation instead of him. We can all acknowledge that he had an exceptional arm, had worked his way up through amateur baseball, and the minor leagues, and had success at the Major League level.

 

Based on her performance at Autodesk, the Yahoo! board did believe that there were not five people on the planet better suited to run their company.

She might have sucked, but again, she wasn't some unknown, who they would have been able to predict failure for.

They also got rid of her pretty damn fast. (Plus, Yahoo! was in a very tough position when they hired. I'm not sure who would have done much better. Yahoo blew it a long time ago when they didn't use their high stock valuation to purchase other companies.)

 

In 1980, CEOs earned 42 times as much as the average worker. In 2010, they earned 343 times as much.

Has the selection and development process become so refined and scientific to justify this jump?

 

And being one of the worst American CEOs of all-time like Carly Fiorina doesn't preclude you from a (thankfully unsuccessful) run for public office.

http://www.cnbc.com/id/30502091/Portfolio_s_Worst_American_CEOs_of_All_Time?slide=3

 

I would agree with this as well, and yet we get Carl Pavano & Kevin Brown.

So, we shouldn't be shocked when we get shitty CEOs either. It is harder to predict.

Plus, if you can through a fastball or hit a curveball, you should be able to continue to do it. A CEO faces a constantly changing business landscape.

Gannett & Yahoo! were companies that faced incredible challenges. I don't think it would be fair to say either of the CEOs mentioned drove their companies of a cliff.

 

Lest we forget.

Definition of 'Peter Principle'

An observation that in an organizational hierarchy, every employee will rise or get promoted to his or her level of incompetence. The Peter Principle is based on the notion that employees will get promoted as long as they are competent, but at some point will fail to get promoted beyond a certain job because it has become too challenging for them. Employees rise to their level of incompetence and stay there. Over time, every position in the hierarchy will be filled by someone who is not competent enough to carry out his or her new duties.

www.investopedia.com/terms/p/peter-principle.asp#axzz1tpMZPWko

 

What's changed between 1980 & today?

Folks, the internet is every bit as momentous as the steam engine, the telegraph, the assembly line, the cotton gin, etc.

Coupled with the modern supply chain, it has allowed for spectacular wealth, and growth for companies that could harness its potential.

1980 was a really, really shitty time.

We should be comparing now to the early years of the industrial revolution, if you want a real comparison.

 

www.epi.org/publication/ib331-ceo-pay-top-1-percent/


Using a measure of CEO compensation that includes the value of stock options granted to an executive, the CEO-to-worker compensation ratio was 18.3-to-1 in 1965, peaked at 411.3-to-1 in 2000, and sits at 209.4-to-1 in 2011.