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Just How Much is a CEO Worth? (HBR Editors’ Blog)

Money! by Tracy O on

Scott Berinato asks the question “Just How Much is a CEO Worth?” over at the HBR Editors’ Blog this afternoon. This is certainly a hot topic and he’s laid out a host of other resources including the following excerpt from a 1962 essay by Peter Drucker:

"It is easy to dismiss criticism of corporate compensation practices as prompted by ignorance and envy. It is easy to point out that a top-notch executive contributes a great deal more than the lushest compensation plan can ever hope to pay for. It is easy to prove that, in the aggregate, all these extra-compensation plans add almost nothing to total payrolls and even less to total costs. And it is probably even true that, despite all these plans, the purchasing power of executive net income is relatively lower today than it was 25 years ago

It may be easy, but it is dangerously self-deluding, because it obscures the basic problem. For there is inherent in the executive’s position a double role, each with its own rewards: that of the ‘businessman’ and that of the ‘professional.’ The public’s view of ‘proper’ rewards for the corporate executive is in large measure determined by its understanding of this dual role and by its comprehension of the differential risks of the businessman and of others in society."  Harvard Business Review, March-April 1962

Berinato closes the post with this observation and question:

Almost half-a-century later, the words "dangerously self-deluding" seem eerily prescient. What’s more self-delusional than being rewarded–and how!–for failing?

Check out the HBR Editor’s Blog and let them know what you think.

Photo credit: Money! by Tracy O on

About the author

Peter A. Mello, Founder/Editor Founder of Weekly Leader and Sea-Fever Consulting, LLC, a leadership development and strategic communications consultancy. Previously, CEO of an international nonprofit organization and COO of a national insurance/risk management services firm. Peter has been leading people and managing organizations for over 30 years, writes a leadership column for MarineNews magazine and blogs about maritime culture at Sea-Fever. Follow him on Twitter.

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