Why stop at $100M? A company worth $250B could justify $50B salaries following this argument. And the same exact argument can justify outrageous salaries for traders who gamble huge amount of money that's not theirs. Yes, large losses/profits depend on their actions but it's unclear how much of that depends on their skills. A lot has to do with chance or market dynamics that nobody really grasps. And if they win, they win big bonuses, but if they lose, at worst they lose their job.
For traders, Daniel Kahneman has shown that they have no skills whatsoever (see http://www.nytimes.com/2011/10/23/magazine/dont-blink-the-ha...). I do believe that CEOs have some skills but the expected value of these skills is much lower than the potential impact of their decisions. Having been a company owner, I have learned that how CEO decisions are executed (by all the other people in the company who don't make outrageous salaries) is often much more important than the decisions themselves.
That seems to say that stock pickers and fund advisors have no skills, not very much about professional traders. whatsoever. I've read some stuff that said that the military has studied pit traders at NYMEX due to their skill in handling vast amounts of information and making split second decisions on it.
You are right. I used "traders" a bit too vaguely. Kanheman's research applied more to stock pickers and wealth advisors. But I think the argument applies to all: none of these people's skills justify the 8 or 9 figure bonuses that Wall Street has been distributing.
For traders, Daniel Kahneman has shown that they have no skills whatsoever (see http://www.nytimes.com/2011/10/23/magazine/dont-blink-the-ha...). I do believe that CEOs have some skills but the expected value of these skills is much lower than the potential impact of their decisions. Having been a company owner, I have learned that how CEO decisions are executed (by all the other people in the company who don't make outrageous salaries) is often much more important than the decisions themselves.