My point here does not concern the rate of actual abuse - though I tend to believe that by and large there is a reasonable correlation between top management pay and performance -, it concerns the question of who should be in charge of payment decisions.
It really shouldn’t surprise that an awful lot of people are remarkably ignorant about the world that they inhabit ...
... erroneously thinking they are competent and entitled to call the tune on executive pay.
The error though is in what is then assumed should be done about it. For of course you can already hear the screams (from people like the High Pay Commission) insisting that as the average voter doesn’t want there to be this income disparity therefore there should not be this income disparity. The error being that what the CEO of a large company gets paid is none of the damn business of the average voter.
It’s the business of those doing the paying: and if the shareholders in a company wish to pay the person managing their business handsomely then that’s entirely up to them. Nothing to do with the jealousy of the mob at all.
There is a small coda: some argue that it’s the same old interlocking boards that keep raising the CEO’s pay, knowing that their own will get raised in turn. The theory that the managerial class is ripping off the owners, the shareholders. It’s true that this could happen, principal/agent theory is true. However, if this were true then private equity would be paying their managers considerably less than public companies do as they would not be subject to this rip off. Given that in reality, out here in the world, private equity pays very much better than public companies do then this isn’t true either.