CEO Talent: A Dime a Dozen, or Worth Its Weight in Gold?

10 Pages Posted: 30 Sep 2017 Last revised: 20 Oct 2017

See all articles by Nicholas Donatiello

Nicholas Donatiello

Stanford Graduate School of Business

David F. Larcker

Stanford University - Graduate School of Business

Brian Tayan

Stanford University - Graduate School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: September 27, 2017

Abstract

Governance experts have vigorously debated the appropriateness of CEO compensation. And yet, very little effort has been made to understand the size, quality, and efficiency of the labor market for CEO talent, which is a key determinant of pay. In this Closer Look, we review data collected from the directors of the largest 250 companies in the U.S. that suggests that the labor market for outstanding CEO talent is significantly tighter and more competitive than many governance experts realize.

We ask:

• Why hasn’t more attention been paid to the size and quality of the CEO labor market? • What factors limit this market? • How does the size of the labor market influence compensation, performance evaluation, succession planning, and talent development? • How does the size of the CEO labor market vary with company size?

The Stanford Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books Corporate Governance Matters and A Real Look at Real World Corporate Governance.

Keywords: CEO Labor Market, CEO Recruitment, CEO Succession Planning, Internal Talent Development, Board of Directors, CEO Compensation, Corporate Governance Research

JEL Classification: J33, G34

Suggested Citation

Donatiello, Nicholas and Larcker, David F. and Tayan, Brian, CEO Talent: A Dime a Dozen, or Worth Its Weight in Gold? (September 27, 2017). Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-67; Stanford University Graduate School of Business Research Paper No. 17-66. Available at SSRN: https://ssrn.com/abstract=3043876

Nicholas Donatiello (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way, C214
Stanford, CA 94305
United States
6507367420 (Phone)

David F. Larcker

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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