Thoughts on CEO pay

The question you commonly hear from liberals is “Are CEOs paid too much”. A conservative answers that they make whatever the market bears. My question is “are they paid more than they are worth to the corporation, and if so why”? Forget that a CEO might make 1000 times more than the lowest paid employee. Forget that they get a golden parachute. Even forget that they do well even when they are poor managers of the company. Are the power structures that have created this market, based on fair capitalism or are they based on power structures that have conflicts of interest?

Conservatives often bemoan the fact that union employees are and have been overpaid because of undue influence that a union exerts over a corporation, but is it not possible that a ruling class of corporate leaders have been able to exert the same type of power.

I don’t have all the answers, but some questions I will be asking are as follows: How are 401k, mutual fund, and pension fund holders represented by fund managers? To what extent do fund managers and CEOs have similar interests? To what extent do boards (which approve and recommend a salary for a CEO) consists of friends and others with a conflict of interest? For example, does this CEO sit on another CEOs board? How does performance actually affect CEO pay?

I have a hypothesis on this, and tend to think that it is a serious problem, but I’d like to see more actual evidence on either side of the debate.