“Executive Pay and Layoffs: Decoding the Dynamics Behind the Elusive Pay Cuts”

More importantly, boards see handcuffing the executive to the stock-price roller coaster as a good thing. If the CEO doesn’t fix the cost problem, their compensation takes a huge hit. If they take action that increases the company’s value and its stock price, everyone wins. Or at least all the stockholders win, which includes the executive, the board, many employees, and investors.

Much like the salary, because these grants don’t affect the current bottom line, cutting them won’t save the money they need to trim. The company, the board, and the CEO will say when asked that it wouldn’t make a dent in the problem.

3. It’s the competition

Another factor is the fierce competition for talent for these executive positions.

Much like in the sports world, very few people can play at this level. Precious few executives have the experience to lead nearly trillion-dollar companies with hundreds of thousands of employees and operations on a global scale.

Like star athletes, those who can perform at this level look to their peers. They compare and contrast, often with envy. There’s a reason base compensation in the Fortune 500 is very similar. The talent competition is tight, and those who play at that level know their worth.


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