They'll accept a mediocre leader, and pay ludicrous amounts of money for some imagined assurance of reduced downside.
Labor is a market (supply/demand). There aren't that many people in the world who can successfully lead a large company like Alphabet.
https://observer.com/2023/02/google-ceo-sundar-pichai-bard-c...
What evidence do we have for this? How many times CEOs failed Alphabet level companies? What's your dataset?
Are you just making things up because it supports your bias that CEOs are highly skilled and it's not like almost any educated and privileged person can do their job?
Logic. It is clearly way more complicated to run a large business that operates across multiple regulatory regions and that is growing through a transition from hyper growth, than it is to do many many other types of work.
Many people could lead Alphabet just fine. But if a top CEO is just 5% better than the average candidate, that 5% is a lot of money, and the CEO can claim some of it as compensation.
Pichai for example is both CEO and one of the directors. He was groomed by Page into his current role and maintains it more by dint of internal politics than by lack of alternatives.
The board of Google are:
Larry Page - founder of Google
Sergey Brin - founder of Google
Sundar Pichai - CEO of Alphabet
John L. Hennessy - Computer Scientist (https://en.wikipedia.org/wiki/John_L._Hennessy)
Frances Arnold - Chemical Engineer and Nobel Laureate. She is the Linus Pauling Professor of Chemical Engineering, Bioengineering and Biochemistry at the California Institute of Technology (Caltech). In 2018, she was awarded the Nobel Prize in Chemistry for pioneering the use of directed evolution to engineer enzymes. (https://en.wikipedia.org/wiki/Frances_Arnold)
R. Martin “Marty” Chávez - Investment banker
L. John Doerr - Investor and VC. He backed the Google founders.
Roger W. Ferguson, Jr. - economist, attorney and corporate executive who served as the 17th vice chairman of the Federal Reserve from 1999 to 2006. Prior to his term as vice chairman, Ferguson served as a member of the Federal Reserve Board of Governors
Ann Mather - Technology and Media Board Member Ann Mather is an English business executive. She serves on the boards of directors of Alphabet, Netflix, Bumble and Blend. Her prior board experience includes Airbnb, Arista Networks, MGM Studios and Zappos.
K. Ram Shriram - Indian-American billionaire businessman and philanthropist. He is a founding board member and one of the first investors in Google. He worked earlier in Amazon.
Robin L. Washington - Has served as executive vice president and chief financial officer of Gilead Sciences, Inc.
The thing you should take away is that, contrary to the GP’s assertion, the Google board is in fact not composed of juts a bunch of CEOs from other companies.
They still have a vested interest in perpetuating high levels of executive pay.
Only two people on the board count. They hold >50% of the voting shares of Alphabet.
At that size, it's perfectly possible that there are zero people who can truly lead it.
Imagine it like a marching band. You run in and knock the drum major out of the way. You don't know much about it, so you just march in front of the band, smiling and waving to the crowd. The band keeps on doing their thing. But the crowd sees you apparently in charge, so they congratulate you on the band's performance.
So this isn't really about expected value, supply and demand. It's not as if a 10% cut would make Pichai quit, or that you'd not be able to find a comparable replacement at that price: I suspect that, not unlike Ballmer was, Pichai is worse than a random viable candidate. But there really is minimal pressure in saving money with top executives like this. CEO is not a random position, and it's basically never filled by a person the board doesn't have personal connections to. So ultimately CEOs get either raises, or get fired.
When a CEO gets a cut in compensation, it's often because their own pay sends a message to investors and employees. Here, what we are seeing is that Pichai sees no need whatsoever to send any message, because he doesn't care in the slightest about this. It's modeling behavior for executives and other employees. And I don't think it's a good example we'd like them to follow.
It’s more that there’s nobody they deem of suitable social standing for filling the position.