What usually happens here is the board of a company say to themselves "Let's hire a professional CEO", the next answer then is how, you don't see these jobs advertised on LinkedIn, so they get a talent recruitment agency. For C level management positions there are usually 2 options that control the most of the market, these 2 options have rosters of people from well known business schools with experience ready to step in.
Because the supply is constrained by these companies the CEO pay increases well beyond market rates, as each CEO will earn X% more than the one before it by faking competitiveness, then the former CEOs will complain (as the Mozilla CEO did here) about relative market rates of other CEOs, even though the market rates are set by the cartel that proposed them in the first place.
The board not wanting to rock the boat for the shareholders will generally agree to this extortion for optics, and round and round the merry go round goes.
They get paid what they get paid and that is by definition market rates.
The supply constraint is not due to recruitment companies somehow cornering the CEO market - the very idea is absurd.
It’s because large companies need someone with incredibly deep and broad experience to do a job that has a 50/50 chance of going well, a 100% chance of being blamed when things go wrong, a 1% of getting due credit when it’s due, and a 100% chance of copping flak from legions of armchair critics like you.
This makes no sense. There are too many companies and too many boards that could just hire any old MBA off the street for non-CEO-cartel prices and get the job done.
There is no constrained supply of people willing to be the Mozilla CEO for, say, $2M/year.
They won’t for optics reasons, it looks incredibly foolish to shareholders to pluck any random MBA and call them a CEO. You have financial due diligence to uphold and this protects you, it shows you are conforming to industry practices.
It is a form of "corruption signalling", compared to "virtue signalling". By blatantly hiring a corrupt or incompetent CEO, the board members are advertising to the world (of finance) that they are corrupt and ready to play ball. This way they might be able to get some nice gigs for themselves.
Because the supply is constrained by these companies the CEO pay increases well beyond market rates, as each CEO will earn X% more than the one before it by faking competitiveness, then the former CEOs will complain (as the Mozilla CEO did here) about relative market rates of other CEOs, even though the market rates are set by the cartel that proposed them in the first place.
The board not wanting to rock the boat for the shareholders will generally agree to this extortion for optics, and round and round the merry go round goes.