Because the "talent" in this case is a commodity. Most of the low-wage corporation's employees tend to be front-of-house customer facing staff or brown-collar labor, which in most cases does not require any special skill set, nor rewards exceptional talent in most companies. Jobs that are easily replaceable and does not require a degree holder.
Ironically, one of the few places I've seen that actually rewards employees for going above and beyond regularly is Walmart. Entry-level staff who can rise through the ranks with exceptional work can turn from low-wage line workers to store managers who are often paid close to $250k.
Ahh, perhaps I was taught wrong. We used to be taught where I'm from that brown-collar meant dirty industries (including black-collar jobs in the above list such as oil-drilling, etc) and agriculture, while blue collar meant a step more technical but still did not require a college education (home technicians, factory jobs, delivery personnel, etc.).
In business sectors where talent matters, the reverse process absolutely does take place, and it is a positive flywheel. Ex: take US tech. Stock issuance (as opposed to buybacks) is used as incentive to attract talent, which then drives growth and valuation, which makes the company more attractive for talent, in a reflexive cycle.
But many businesses are just optimizing for lowest labor cost when it comes to their main workforce. That's where you see the arguably exploitive situation above.
Maybe this is the self correction. Consider the various CEOs of Apple. Some drove it to near bankruptcy, Jobs drove it to the richest company in the world.
Same company, same employees.
The only difference was leadership.
Consider also what happened to MSFT when Nadella took over. Same company, same employees, dramatically different results.
As a shareholder of Microsoft and Apple, I am happy with their CEO compensation. They earned it. And after all, CEO compensation comes out of the pockets of the shareholders, not the pockets of the employees.
Not really. There are a lot of external factors that could explain the difference in the company's performance. Different time, different customers, different overall market strength, different availability in capital, different interest rates. You can't pin the company's success or failure entirely on the CEO, and there is not that much correlation between CEO compensation and company success.
I think a lot of people could do Nadella’s job and you’d see similar company performance. In fact I’d be so bold to say that the higher up on the totem pole you go, the more people could do an equal or better job. The world has few CEOs simply because the world has few companies, not because the job is particularly difficult or requires niche, rare skill.
We love to hero worship, though, and the fiction we consume loves to uplift That One Person who won the day, downplaying everyone else who contributed to that win, and the environment in which the win happened.
Nadella changed the focus and direction of Microsoft. The company increased in value 10x. Maybe "anyone could have done that", in hindsight. Heck, if I went back in time with a detailed copy of Apple's history, I could have done what Jobs did.
But without that guide, I would have destroyed Apple. I'm just not that good.
All I am saying is we don't know that it was his decisions that caused the value increase and not something else, and we can't know because we can't do a controlled experiment in another otherwise identical universe to rule out other factors.
That's quite the leap though, and is just confusing correlation and causation. Maybe the previous leadership was simply getting in the way of the engineers and managers that had the good ideas. And the new leadership was more hands-off, or focused in other areas like marketing. Or those cases are just flukes. For every case like the ones you cite, I could find two where the exact opposite happened.
If you're downing a shot of vodka every morning, and suddenly stop, then yeah, your health is going to improve.
In my opinion, many (if not most) of these CEOs are business-focused people with no technical (or even non-technical) knowledge of anything they purport to manage. And on the whole, they really don't affect the value of the company one way or the other.
I'm not saying any schmuck could have done that. I'm saying that the engineers and managers at Apple (to use your example) are just as (if not more) responsible for the success than Jobs. Those lower-level engineers and managers also explain the repeated successes. And that, I would say, is the case in most market successes. The CEO is not remotely deserving of all the credit, or even most of the credit, in most situations. They don't really deserve to be paid what they're paid.
There's this certain anti-historical proclivity to create heroes for worship. Because it's a simple story to tell and it gives you the opportunity to put yourself in the hero's shoes. But the simple story is almost always wrong.
> self corrects with pitchforks. Does no one read history anymore?
The elites after the French Revolution were not only mostly the same as before, they escaped with so much money and wealth that it’s actually debated if they increased their wealth share through the chaos [1].
Like, in the country today, which wealth constituency is most pushing for overthrowing our republic?
If there's even a hint that a company is sacrificing the long term for the short term, the stockholders will run for the exits. Share prices can tank before anyone is able to make a trade.
This is why professional investors spend awful lots of money on research into the companies they invest in. They're not stupid.
Stock buybacks is sacrificing the long term. It's artificially inflating the stock price with money that should have been used to grow the company.
And speculators don't care about any of that while the line is going up. They're not stupid, they just don't care about the actual health of the company, since today it is almost completely decorellated from its share price.
Look at Tesla and tell me why the investors have not yet fleed the scene, in light of the disastrous signals that keep popping up. Because it doesn't matter to speculators.
Dividends are rightfully limited in their amount. Buybacks are a way to bypass this limitation, and used to be legally grey until they were fully legalized sometime in the 1980s.
> when the company does not have a better use for the money.
I think that's nonsense, you can always pay your talent better, invest in new equipment, diversify your offerings...
E.g. presumably companies can pay people more if they capture less value themselves. Why can’t a company do that and just hire the best talent?