Many would argue that we need to be able to pay "top dollar" to attract top talent. While this may be true in theory, it seems more problematic in practice. As previously discussed, there have been several studies that indicate there is no discernible relationship between CEO pay and company performance; that top executive compensation made no difference in its effect on return to shareholders; and that top executive pay increased at a rate of more than four times that of earnings growth. Attracting top talent by using extravagant compensation packages does not appear to be providing top performance any more than it apparently does for professional sports teams. It seems that CEO pay is being fueled by a circular argument from those who benefit most from the argument; more and more CEOs being lured by higher and higher pay, justifying each increase by the most recent pay package for their peers. This circular argument is only exacerbated by the Lake Wobegon effect previously described, where all of the executives are above average. The board of directors needs to be held directly accountable for improving the relationship between company results and CEO compensation, particularly over the long term, all the while applying the principle of having both internal equitability and external competitiveness.

The sports star analogy is often made with regard to executive compensation. That is, sports stars command huge salaries commensurate with what the market will bear; so should CEOs, the argument...