Ezra Klein: evaluation

Transcript context

…You don’t believe CEOs are underpaid? I recognize that within the debate there is good evidence that, in a pure market way, that the returns on having a really high-quality CEO are positive, and that given where we are now, it is rational for individual firms to be paying more and more and more to try to get these star CEOs. I am not saying that individual firms are overpaying. What I am saying is that it is, by the same token, pretty clear that the compensation game has become fundamentally point scoring, that it really isn’t about the money. I don’t think anybody thinks that the kinds of pay increases we’re seeing amongst CEOs is coming from the cost of feeding a CEO’s family having risen really sharply in recent decades. What you would want is something that begins to tamp down on the collective action issue of every CEO needing to be paid more than every other CEO simply in order to prove they’re a good CEO, because it’s become a status symbol. There’s a story I love from Walter Isaacson’s book on Steve Jobs. He talks about how for years and years and years after he came back to Apple, Jobs took only a dollar a year. The board, for years, was saying to him, “Come on. Take a salary. You’re doing a great job. You’re building a great company. Take a salary.” He wasn’t, and he wasn’t, and he wasn’t. One day, he did. He said, “Listen, I think we’ve done the turnaround. It’s time for me to begin taking a salary.” They said, “Great,” and they came to him with what they thought was a really generous package. He told them to screw off and demanded something that was stratospheric. The point for him was not the money. He had been taking a dollar a year. The point for him was that if he was going to get paid, that pay was going to reflect that he was better than every other CEO in the world. That’s a very good argument for highly graduated marginal tax rates that would make that kind of thing a lot less useful for anyone. Getting back to you, you haven’t told us, what’s your key skill that makes you well suited for a leadership position, as you understand it?…

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