CEO talent: A dime a dozen, or worth its weight in gold?
Date | 01 June 2018 |
DOI | http://doi.org/10.1111/eufm.12158 |
Published date | 01 June 2018 |
DOI: 10.1111/eufm.12158
ORIGINAL ARTICLE
CEO talent: A dime a dozen, or worth its weight
in gold?
Nicholas E. Donatiello
|
David F. Larcker
|
Brian Tayan
Stanford Graduate School of Business,
Stanford University, Stanford, California,
USA
Emails: nd@odysseylp.com;
dlarcker@stanford.edu;
btayan@stanford.edu
Abstract
Very little sophisticated research exists on the size, quality,
and efficiency of the labor market for CEO talent. This
paper sheds light on this labor market by considering the
perspectives of directors directly responsible for hiring and
firing the CEOs of the largest publicly traded corporations
in the United States. We find that directors overwhelmingly
believe that the CEO job is exceptionally challenging
and only a handful of executives are qualified to run their
company and others in their industry. This suggests that the
labor market for outstanding CEO talent is significantly
tighter and more competitivethan governance experts might
realize.
KEYWORDS
board of directors, CEO labor market, CEO recruitment, CEO
succession planning, corporate governance, internal talent
development
JEL CLASSIFICATION
G34
1
|
INTRODUCTION
In recent years, there has been considerable criticism of the amount of money that CEOs earn to run the
largest US companies. One prominent observer calls CEO pay ‘out of control’(Lowenstein, 2017).
Another claims that the rise of CEO pay is ‘unstoppable’(Morgenson, 2013). According to a third,
executive compensation is a ‘first-order’problem that ‘the self-correcting mechanisms of the market
cannot be relied on’to fix (‘Neither Rigged nor Fair,’2016). Implicit in these criticisms is the idea that
Eur Financ Manag. 2018;24:301–308. wileyonlinelibrary.com/journal/eufm © 2017 John Wiley & Sons, Ltd.
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