text: CEO's performance is evaluated on a couple different things.\n1. The overall performance of the company.\n2. Their performance in managing the current situation of the company.   \n\n1.  The overall performance of the company is more important if, company is operating correctly and profitably in they eyes of the board and powerful shareholders before the CEO took it over.\n2.  Their performance in managing the current situation is typically more important if the company has operational problems and has been performing poorly in their marketplace before the CEO took it over.  However once a CEO has made improvements, the board and stock holders use this new improved situation of the company as the next base to gage future performance.  Hence the short life of many CEO's. \n\nAre CEOs overpaid?\nNo and yes.  Some are, many are not.   Many "average" people believe so because of all of the recent stories regarding bad CEO's.  However, salary in a capitalistic society such as the USA's, is generally based on the value of the return of the position and what that particular person brings to that position, as well as the wealth of the company or organization to pay for that position.  Therefore as a CEO of a company, their "value" is extremely high and correspondingly must be paid for.   \n    Many people are upset at CEO's salary, however this is a function of the market economy in the society.   Many think CEO's salary should be less, but this would be contrary to the capitilistic market and would create ineffectual CEO's.  It would lesson the incentive to bring out the best to pursue the CEO position and as a result all positions in a company would be weakened and the company would fail.  Much like many organizations in so called Communist countries fail as their is no "reward" for being good - so why be good, why try - basic human nature.  If you work really hard, or are "better" than the rest but receive no reward you will not work hard at that task, but instead put your efforts elsewhere where you can achieve "reward".\n\nFinally there are many CEO's as individuals who are definitely overpaid.  Typically this is the result from knowing wealthy indviduals in positions of influence who do not have the expertise to judge if a person would be a good CEO or not, who place them in the position and pay them a ridculous salary.