A chief executive officer (CEO) wields tremendous power in a company's corporate structure. Although the board of directors has the ultimate say in most matters, the board's power is focused into the CEO. This concentration of power is good when the CEO uses his or her power to improve the company, but a bad CEO can use this same authority to run a company into the ground. In this article we will look at how a bad CEO can hurt a good company and ultimately cost the investors who own it.
Compensation - Surviving on just $140,000 a day?
Like professional athletes, CEOs sign multi-year contracts based on what their performance is predicted to be rather than getting paid an hourly or monthly wage that can be changed to suit their actual performance. The rationale behind this is that no CEO would take on the pressure of the job if the paycheck wasn't guaranteed. The problem is that the base compensation levels, not including bonuses, are sometimes inflated beyond all reasonable expectations. (Find out what it takes for a CEO to be successful in Is Your CEO Street Savvy?)