You're right that making the CEOs of publicly traded companies helped cause them to increase (among other reasons), but wrong about the mechanism.
What actually happened was the following. Suppose you're on the Compensation Committee of a board of a publicly traded company. You're deciding the CEOs salary. How do you do this? Simple, you take a look at the other public companies that are comparable (revenue, market cap, sector, etc). You get an average.
Now you don't want pay your CEO the average rate, do you? After all, he's clearly above average. So you choose a rate that's say, 75% percentile.
But this algorithm plays out iteratively. Each iteration, compensation for CEOs go up as every company tries to pay above average.
What actually happened was the following. Suppose you're on the Compensation Committee of a board of a publicly traded company. You're deciding the CEOs salary. How do you do this? Simple, you take a look at the other public companies that are comparable (revenue, market cap, sector, etc). You get an average.
Now you don't want pay your CEO the average rate, do you? After all, he's clearly above average. So you choose a rate that's say, 75% percentile.
But this algorithm plays out iteratively. Each iteration, compensation for CEOs go up as every company tries to pay above average.