The latest incarnation of the CEO as a unique corporate asset is the saga unfolding at JP Morgan Chase, where Jamie Dimon is supposedly under the gun for being at the helm while his traders lost 3 billion or more dollars with the kind of high risk derivative trading strategy that tanked the economy back in 2008.
The most amazing thing about a public company is the way a man can walk in the front door on his first day with absolutely nothing in his briefcase, and walk out a few years later with so many millions he would need a caravan of Brink's Armored trucks to carry them if he received his golden parachute or severance pay in cash.
Why is this?
Because if you took a look at the balance of power between the shareholders (known in finance 101 as "the owners") and the C-level executives (known in finance 101 as "the managers"), you will find, in just about every public corporation in this country, that the people who have the least amount of skin in the game - "the managers" - have the most amount of power.
Think about it. If you owned a private business, lock stock and barrel, a business that was large enough for you to hire someone else to run it for you in an executive capacity while you went fishing, would you let him set his own salary? Would you smile dutifully when he requested large bonuses in the form of options on equity in your firm every year, staggered in size and date in such a way that the first award would literally fund the actual outright purchase of equity in your company without your manager putting up one dime of his own money? Would you jump and down with glee and turn handstands when he lost money for the year, happily hand over a fat bonus of cash and equity in your business to him, and then tell him you’re thinking about improving his contract in order to "retain his services?"
Probably not, because every dollar you pay your executive manager is subtracted directly from your bottom line. When we talk about "real money", as opposed to the "play money" that corporations use, the picture becomes clearer in a hurry. But the money corporations use isn’t play money. It's as real as if it came out of the cash register at a mom and pop store.
The CEO as a unique corporate asset fallacy ignores the contributions and talents of all the other professional administrators in a large organization. These are the people who operate and maintain the functions of the day to day SG&A (selling, general and administrative) operations. You know who they are - the people that actually cut the checks, create and execute the contracts, order the raw materials, manage the nuts and bolts of production, coordinate the temporary storage in-house of the finished products, and arrange for their delivery to the customers who pay for these goods when they require them.
Bad decision making and poor performance by their companies should result in harsh outcomes for guys like Jamie Dimon.