There's a much deeper reason for high CEO salaries: MBA-type managers have become something suspiciously like our new ruling class. The brilliant James Burnham presciently called the shot in his 1941 "The Managerial Revolution," which ought to be required reading for whoever wants to understand what's going on in the modern business world. The fundamental idea is that "management" is something that can be taught as a separate skill, so that, say, anybody who has mastered this skill to the point that he is capable of functioning as the CEO of PepsiCola can slide into the CEO slot of Apple Computer and do just as well, since managing is managing, and does not require any profound understanding of the product in question. And the cult of the manager has metastasized into other sectors of our society, Now our educational system is being run by similar "manager"-type administrators, often with meager scholarly credentials, and what is being are taught in our military academics looks a lot more like "management skills" than military science as traditionally understood. The common denominators of mangers, no matter what sphere they are operating in, are an overpowering desire to feather their own nests and a philosophy that the rewards they receive should be tied to the size of the budget they control, but not, God forbid, to the quality of their performance or their actual value to the organization.. They look and behave, in short, exceedingly like the higher clergy of the Catholic Church just before Martin Luther came along. (Getting back to Apple Computer, one of the reasons I adore that company is that the managers who ran it in the 1990's were incompetent boobs who nearly drove it into the ground, and when its co-founder Steve Jobs came back, having been given the boot by said managers, he turned Apple around almost overnight and now it is one of America's healthiest and most profitable corporations).

Not only is dfs correct but you can expand his remarks to even more spheres of human activity. When I was in the military I noticed that despite what was said they were promoting "managers" over leaders.

It's great to see that some is familiar with James Burnham. Has anyone considered Thorstein Veblen's concept of "Invidious Comparison" in analyzing the ever accelerating costs of executive compensation (or NBA, NFL, etc. compensation)? Or in non-academic terms, its a case of "keeping up with the Jones". If executive X at Company Y gets $$$$ in compensation, then executive A at Company B will want $$$$$$ copensation. And when executive A gets his way, then his senior executives can argue that given A's $$$$$$, then they certainly should receive $$$$ in total compensation, not just $$$. And so it goes; the cutoff is that workers are excluded from this loop, since they are not members of the management class.