madattak t1_j5mkobo wrote

If you're a company that has multi-billion dollar profits, it makes sense to pay millions for a CEO who can improve profits by even just a percent compared to a cheaper one and this is the justification you'll often see used - as companies have gotten bigger, the potential value a CEO can bring increased and so their compensation does too.

Just one small problem - at the far end of the bell curve the differences in skill are lost entirely to statistical noise and what studies exist show that CEO pay depends primarily on factors outside their control - I.e. Luck.