(Robert M. Gary) wrote
Perhaps I'm too conservative but I'll never understand that line of
thinking. Pilot's saleries are dictated by unions. There are 100
pilots wanting to work for every airline pilot employeed.

Yes, and these days they are probably just as good, too.

There was a time when the job of airline captain required a very high
level of skill and judgment. That was the era when airliners flew in
the weather, not above it. When autopilots were junk, and hand-flying
an approach was work. That and many other factors made it important
that if you wanted to get your passengers where they were going when
they needed to get there without losing too many, you needed a skilled
pilot in the cockpit.

The skills necessary were not very quantifiable, and could not be
effectively acquired in the training environment - they were covered
by that nebulous term called 'experience' for a reason. They're STILL
not quantifiable, nor can they really be acquired in the training
environment. Those skills, which have pretty much lost relevance in
the airline profession, are still very relevant for flying piston
singles and light twins if you want to get to where you want to be
where you need to be there without crashing. Some idiots even insist
they're not real - we've got another thread like that going now.

However, the era that requied airline pilots to have those skills is
long gone. These days, the level of regulation and (more importantly)
automation is such that the experience gained flying freight and
charter in piston singles and twins is not really all that relevant
anymore. Automation has devalued the job. Eventually, top salaries
for a senior captain are going to stabilize around the $100K mark, as
is the case for any senior non-managerial, non-self-employed
professional. I believe they are already there at JetBlue.

Executives have high saleries because they do a job few can do.

That is the theory. The problem, of course, is that they're usually
hired by people who can't do the job themselves and don't really know
what the job requies.

In that sense, hiring a CEO is a lot more like hiring a flight
instructor than it is like hiring an airline pilot. You're hiring him
for his expertise in an area where your expertise is limited (or
non-existent). Ideally, you want to evaluate him by the end-product -
how many and what percentage of his students achieved the goals you
want to achieve and how many failed - but that information is
generally very limited, and convoluted with other factors. In the
end, you will probably hire the one who gives the best sales pitch.

That's about how it is with CEO's. Getting that first CEO job is
mostly about convincing the board members (who don't know how to run
the company) that you know how to run the company. Once you've done
that, you have gained experience. That makes it easier to convince
the next board. If you have a good track record (which is a few
companies at best) you can command obscene salaries - because what's a
few million when it improves your chance of turning around a billion
dollar operation? Going with that logic, why not make the salary for
your basic CEO half a million (as was the case at Delta before he took
the pay cut?) As a minimum, you attract a better class of applicant.
I know lots of people who are willing to do the job for $100K a year,
but none who actually understand what the job entails. Just having
the necessary intellect to understand what the job entails and being
willing to put up with the unpleasantness of doing such a job is
enough to get a job that pays $100K a year - without being the 24/7
proposition that a CEO job is.

Not many people on this planet can be good CEOs.

This is true - and not many are. In fact most CEO's are lousy CEO's.
See above - there really is no process for consistently picking good
ones.

CEOs are highly paid for
the same reason NBA Basketball stars are, not many people can do those
jobs.

But most NBA players are not stars, and are still very well paid.
It's that halo effect - why not pay them a lot, the cost is small
compared to the overall cost, and you will get a better class of
applicant.

CEOs can be let go if the board thinks their saleries are too
high, pilots cannot. If another CEO offers to work for Delta for less,
the board can fire the current CEO and hire the less expensive guy at
any time.

That's objectively not true. CEO's have contracts.

Michael