There is much talk these days about limiting executive compensation in companies that are receiving government bailout funds. Both sides of the current political aisle (read: divide) have members who embrace the idea of limiting executive pay as well as eliminating the "golden parachutes" that laid-off CEOs often receive--especially in companies that have been driven into the ground by those same CEOs.
The question is, what is a CEO worth? what is the executive of a company worth? supposedly, pay is supposed to reward performance (in our "free-market" system). But does it in fact reward performance? and is a CEO's value to a company actually the amount of money it pays to that CEO in any given amount of time?
What does performance mean? presumably a CEO is working the same amount of hours as the person taking out the garbage... i'm being charitable: usually the CEO is working fewer hours, but let's assume for the sake of argument that he's working the same number of hours. And a CEO is charged with executing certain specific tasks, just as the Janitor is, and just like the janitor, the CEO can be good or bad at those tasks, can perform well at the tasks he is charged with carrying out.
so the "performance" that is being talked about is probably not the relative effectiveness/efficiency of the executive's task completions, or else the executive's pay wouldn't be drastically different than that of the janitor; --rather, some executives would make lots of money, and some would live below the poverty line, while some janitors would make lots of money (presumably the really effective ones), while others would live below the poverty line (the ones who lay around on the job, who leave garbage on the desk of the executives, who come to work smelling like liquor).
So pay isn't connected to that kind of job performance--what seems like it might be able to be called "merit." Yet we like to pretend, in our society, that merit is that thing that decides the pay scales.
Isn't it odd that we like/need to pretend that?
So what is the so-called "performance" issue that is determining what a CEO is "worth," that is resulting in the payment a CEO receives on a bi-weekly (if not mre frequent) basis?
I think it might be meant as a measure of the amount of growth that executive is presumably bringing to the company. I say presumably, because the assumption is that it is the executive's actions (known as "decisions") that are bringing growth to the company, while in fact that assumption is questionable. In fact, it is the result of the collective actions of all employees performing some kind of work for the company that results in its growth, destruction, or stagnation.
Just as in any animal body, even the most effective decisions generated through the action of neural tissue cannot save the life of a creature whose bones have stopped generating the right kind of blood cells to stave off disease.
it is a particular parsing (perspective) of reality that allows executives to take credit for the successes of a company--and a different parsing that allows them to escape the blame for its failures.
head vs. body (all depend on same ... all act as one piece