One good alternative explanation of CEO salaries is by analogue to sports stars. Most people can see the impact of hiring a standout player for a team. There may a huge pool of competent players but a team full of mediocre players will most likely lose. Paying the big bucks for the best players can make sense. In a free market the amount paid to stars will be close to the perceived increase in profits that having them will provide. I'm surprised I haven't heard this argument made.
Of course running a company is a lot less transparent than sports so people can't really judge if these CEOs where ever talented enough to justify these wages. Certainly the performance of their 'teams' has lead to doubt of the value of their talent. The suspicion is of course that instead of a a free market there is essentially collusion at the top levels of these companies where all the decision makers vote to pay each other more.
I agree about the collusion bit but for another viewpoint
"Measurement alone is not enough. An example of a job with measurement but not leverage is doing piecework in a sweatshop. Your performance is measured and you get paid accordingly, but you have no scope for decisions. The only decision you get to make is how fast you work, and that can probably only increase your earnings by a factor of two or three.
An example of a job with both measurement and leverage would be lead actor in a movie. Your performance can be measured in the gross of the movie. And you have leverage in the sense that your performance can make or break it.
CEOs also have both measurement and leverage. They're measured, in that the performance of the company is their performance. And they have leverage in that their decisions set the whole company moving in one direction or another
"
PG in the essay "How to make wealth".
"Measurement and leverage" is a good way to judge if a job is worth being paid very highly for imo.
Of course running a company is a lot less transparent than sports so people can't really judge if these CEOs where ever talented enough to justify these wages. Certainly the performance of their 'teams' has lead to doubt of the value of their talent. The suspicion is of course that instead of a a free market there is essentially collusion at the top levels of these companies where all the decision makers vote to pay each other more.