For the most part they don't. From my experience in finance, there seems to be some sort of old-boys club, you're either in it, or you're not. Simple as that. If you're not in it you'll never get huge salaries. My former boss was a Freemason. He didn't advertise it, but I overheard certain conversations.
Well look at a CEO's role, Julie. You have every responsibility for the company on your shoulders. For your 2-6 year (or sometimes longer) term as CEO you have the heads of every department in the company calling you every day with hassles and fires to fight. The Board will have a representative calling every second day with questions and demands. Every day of the week is full of meetings you can't avoid, and possibly in a different city every day as well. Family by necessity takes a back seat most of the year and the only friends one would hang out with are people in similar situations or former CEO's who can impart advice. Looking professional and perfect for every meeting in that context no matter how much jetlag or fatigue is taxing, isn't it. In regards to why they retain bonuses when the company loses money. The Partner in charge of their internal auditors or the CFO puts a report on his desk and says "Conditions have changed for the company because of X. The projected loss this year after last year's good profit, is a 16% loss. You need to do A, B and C to turn this around." Doing A means making changes the CFO is unable to make within the company after taking the crisis to the Board and a whole round of meetings and work by department heads. Doing B involves 6 months of negotiation with suppliers on massaging costs and delivery times involving endless negotiation and using all the favours and goodwill built up in his career in industry and business. Doing C leads to a simultaneous 6 month negotiation with the banks and whoever else holds the purse strings of millions of dollars. The end result is things are turned around enough that when the accounts are finalised and the bank, auditor, Board and other executives are happy, a 4% loss is realised that is nevertheless a fortune. That is all on his shoulders. The bonus pays for the stress. I expect flippant comments and dismissiveness to this, but the people in top positions are not sitting around a pool sipping cocktails and their partners toes for half the year like the celebrities named above.
Unfortunately the above doesn't describe any CEO I've ever worked with. The most recent example where I worked was a CEO who siphoned off company funds and time (2 years) to work on his other business interests. They may not be sitting around sipping cocktails, however in a lot of cases they are only looking out for their own interests to the detriment of the company. Having worked in publicly listed companies a few times makes me avoid the share-market like the plague. I've even seen them siphon off company funds to the tune of tens of millions of dolars. Not in an obvious way, but when you see an asset acquired for XXmill then sold 2 years later for 1% of the purchase price it does look suspicious. Especially when the asset was owned by a former director who still had connections.
I am thinking of one person in particular, he arrived late, did bugger all, long private conversations on the phone, long lunches..... Not what I would call productive, he was a nice fella though. More than a few people made comment about what he did for the amount of cash he got, I think he has retired now. He must have been an exception to the rule.
Good companies are typically those that can work on auto pilot with CEOs and boards doing "minimal" work. Bad companies are typically those needing to radically change their business structure. This entails making hard decisions about staffing levels (ie firing people), costs and attempting to recapitalise the business before it goes insolvent. Management (and CEOs) are employed to prevent good companies going bad and (hopefully) turning around bad companies in such a way that preserves the capital of the current owners. Their arses are on the line for failing to meet sales expectations, experiencing preventable cost blow outs and especially for trading while insolvent when they make the hard cost cutting decisions too late or sign off on fraudulent accounts/transactions done by their underlings. Managers/CEOs of the good companies are then belittled for their pissant contribution. Over a decade ago, a company I'm very familiar with had previous management that ran the company to the point of insolvency requiring the owner-shareholders to pay in their own wages plus mortgaging their houses to physically pay the salaried employees. For months they lived on the edge while they restructured the company from the brink of death and obtained a new board and CEO. After a shite-load of effort and uncertainty, the new management succeeded to the point that they could run the business on auto-pilot. To newcomers it looks like they do frick all. To old hands it is them enjoying the just-rewards for managing to keep (most) people's jobs and keeping the sails on the ship properly trimmed. As I said, if they were superfluous to needs or paid far beyond their worth then the entrepreneurs would happily get rid of them out of the business structure and undercut their competitors. As Dilbert readers know well however, bigger companies with hands-off shareholders are far better at hiding the dead wood however (at all levels - not just management).
