The free market is an analyzable simplification of the real market, however I think the assumptions hold in this case.
If a CEO delivers a certain advantage (a profit multiplier) it's rational that a bidding war will ensue for that CEO until they are paid the entire apparent advantage of their pretense for the company. A similar effect happens for salespeople.
The key difference between free and real markets in this case is information and distortions of lobbying. That plus legal restrictions on the company. The CEO is incentivized to find ways around these issues to maximize their own pay.
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The free market is an analyzable simplification of the real market, however I think the assumptions hold in this case.
If a CEO delivers a certain advantage (a profit multiplier) it's rational that a bidding war will ensue for that CEO until they are paid the entire apparent advantage of their pretense for the company. A similar effect happens for salespeople.
The key difference between free and real markets in this case is information and distortions of lobbying. That plus legal restrictions on the company. The CEO is incentivized to find ways around these issues to maximize their own pay.