Can the Problem of Executive Pay Be Reduced to a Logical Fallacy?

It's well known that executive pay has gone up dramatically relative to the wages of ordinary workers the last 20-30 years, but that in and of itself doesn't mean our current system is wrong. It might be politically problematic, and it might seem unfair, but that's a separate question from whether those executives, particularly the CEOs, deserve their comparatively enormous salaries based on value and merit.

It seems the most basic argument in favor of CEOs receiving outsized paychecks is the "but for" one. But for my being here, the company wouldn't have made x billion dollars in profits. If the last CEO were here, it would have made y billion. So I should get a significant share in x-y billion dollars.

First off, it's hard to know for sure what the former CEO would have done, or more pertinently, an average CEO. But assuming the current CEO were correct, and the company made $8 billion instead of $4 billion that year, shouldn't he be entitled to a bonus of some percentage of the $4 billion extra, say 5 percent? If that were the case, he'd be making an extra $200 million.

Assuming for a moment that the company's profits were sustainable, and the CEO's efforts helped foster long-term growth and not merely growth on paper to boost the annual numbers, I'd still argue that the CEO likely does not deserve such a large cut even if the average CEO would have only produced $4 billion in profits.

That's because the CEO is merely a "but for" cause of the company's enhanced earnings, and not by any means the sole or even primary cause. The company was obviously poised to post phenomenal earnings given proper leadership, and the CEO provided that leadership. But had the company not been amenable to such improved growth, the CEO wouldn't have been able to make the difference.

To use a sports analogy - some teams will win a title only if you hire a great coach. And some won't no matter who is coaching. That a great coach takes a capable team to the title doesn't mean the coach is solely responsible. He is a but for cause. Accordingly, while the coach deserves credit and higher pay than a mediocre one, the team he inherited must also be taken into account.

The idea that a particular executive is worth whatever they have to pay him because without him the company would be doing far worse is a false one. The executive would also be doing far worse without a company amenable to such tremendous growth.