Why executives make the big bucks

Socialists suffer seizures when the subject of CEO salaries surfaces. They never tell us how much more money than a janitor a CEO should make, so it’s clear that no matter what the salary they will harm themselves by their extreme response if it is any higher.

British socialists are advertising their envy in a new report “of companies that Theresa May said risk damaging ‘the social fabric of our country’ by paying bosses too much money,” according to comments by the Adam Smith Institute. The author explained,

"The public register was published on Tuesday by the Investment Association, a trade body of investment firms that manage the pensions of millions of Britons."

The register lists every company in the FTSE All-Share Index which has suffered at least a 20% shareholder rebellion against proposals for executive pay, re-election of directors or other resolution at their shareholder meetings.

Of course, the source of the outrage is pure envy and no amount of economic reasoning or facts will dissuade the left. But can free marketeers justify the highest CEO salaries? There are two reasons that CEOs earn such salaries: 1) marginal revenue and 2) knowledge.