> I don't think that's a good analogy. The value of a CEO should be relatively well known before hiring into a company. CEOs are rare, and at the endgame of their career, so you're already pricing in the present and future value you think they will add to your company.
Some would say CEOs are paid to increase corporate profits, thus their value is their ability to raise corporate profits.
However, the Kalecki-Levy profit equation (an accounting identity which originated in 1908 and is still accepted as true) makes clear that in aggregate, corporate profits == government deficit.
Thus the single largest driver of corporate profits is not CEO activity, but government fiscal policy.
So CEOs are paid based on what the government does.
Some would say CEOs are paid to increase corporate profits, thus their value is their ability to raise corporate profits.
However, the Kalecki-Levy profit equation (an accounting identity which originated in 1908 and is still accepted as true) makes clear that in aggregate, corporate profits == government deficit.
Thus the single largest driver of corporate profits is not CEO activity, but government fiscal policy.
So CEOs are paid based on what the government does.