So the difference is merely in career security, I guess.
Now I understand why CEO pay got so high so quickly: corporate job security plumneting. It corresponded with the rise of CEOs bouncing from one company to another and being executives for hire.
If you know you're set for life as an executive of a company, who needs a huge amount of personal wealth? But if you could be cut loose from your comfortable SVP gig due to circumstances beyond your control, you have a much greater need to be personally really comfortable. The company's not going to pay your country club dues for the rest of your life, after all.
I can't believe I didn't understand this before, but then I suppose I don't think about the realities of being a senior executive at a huge company.
The unfortunate part about this is that replacing cultural security with individual economic security almost always introduces inefficiencies. In this case, giving big company execs the incentives of a founder or entrepreneur doesn't give them the attitude of one.
A good place to look is professional athletes where careers are very short on average and the amount of money they earn seems absurd. I think in football I heard something like average pro career being 6 months. It's no wonder the contracts are frontloaded/bonus based. In a sport like hockey where salary is guaranteed no matter what, you don't see the same bonus but frontloading occurs on really long contracts to circumvent salary caps. Back to CEOs, it just looks like rational behavior given average job length and amount of money needed to maintain a lifestyle.
Now I understand why CEO pay got so high so quickly: corporate job security plumneting. It corresponded with the rise of CEOs bouncing from one company to another and being executives for hire.
If you know you're set for life as an executive of a company, who needs a huge amount of personal wealth? But if you could be cut loose from your comfortable SVP gig due to circumstances beyond your control, you have a much greater need to be personally really comfortable. The company's not going to pay your country club dues for the rest of your life, after all.
I can't believe I didn't understand this before, but then I suppose I don't think about the realities of being a senior executive at a huge company.
The unfortunate part about this is that replacing cultural security with individual economic security almost always introduces inefficiencies. In this case, giving big company execs the incentives of a founder or entrepreneur doesn't give them the attitude of one.