You not only need the best ladders for the job nut also the safest… meeting all regulatory requirements. Without making sure of safety you could leave yourself open to claims and legal action….

If, you as a company's board member, knew for certain that by hiring a certain CEO the company would increase the bottom-line by $25 million [before the cost of his or her salary, of course] a year, what would be a rational amount to spend for that certain CEO's services. The answer, of course, is any amount up to one dollar less than 25 million because up to that point, the company is still making more of a profit, right? Yes, even in this hypothetical scenario it is far more complicated than that because the salary of the CEO will change the bottom-line numbers but the priniple behind the thought experiment remains be solid.

Always keep in mind that true wealth is control over the disposition of assets and has nothing to do with who owns the deed to the asset. If I control the use of your car (who, when and where), I effectively own it except that you have to pay the taxes and beg me to use it. If we allow bureaucrats and politicians to set CEO pay, we will have the bureaucrats/politicians as the true owners/controllers of the firms and get results based upon their levels of competence (usually not very high), not the CEO's.