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Excellent points in this article - another factor is they are often paid outrageous base salaries (plus options) for the success of a company, when the success

Excellent points in this article - another factor is they are often paid outrageous base salaries (plus options) for the success of a company, when the success of that company can often be in spite of the CEO, coming from within, and embodied equally by all of the collective employees. Executive comp is a major racket, enforced by the standard that this is "what the market average is". Which is set by executives overpaying themselves. Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you. The answer is usually a definite no. I'd really like to see more fair pay in this area and a culture that treats contributions of all employees more equally.

blahi 10y ago
Compensation has nothing to do with whether somebody works harder or is smarter than everybody else. Perhaps you would like to step in Satya Nadella's shoes for a couple of weeks?
- Ensorceled 10y ago
  No. But I get the feeling almost anybody could have filled Balmer's ...
  - blahi 10y ago
    Do you have any knowledge about what Balmer's initiatives at Microsoft were? What his goals and objectives were?
    - Ensorceled 10y ago
      No. But I know their stock was pretty much flat for 14 years.
      - blahi 10y ago
        The growth during those 14 years was factored in the stock... This exact thing was actually discussed on Martin Shkreli's stream a couple of weeks ago. Maybe you shouldn't have such strong opinions about things you perhaps don't understand? And not even attempting to understand according to your own admission.
    - apalmer 10y ago
      It is known he didnt successfully lead microsoft into the mobile computing industry, and its known he didnt successfully lead microsoft into the cloud computing industry... so whatever his initiatives, goals and objectives were, they were wrong.
  - dragontamer 10y ago
    I disagree. Under Ballmer, Microsoft more than doubled its revenue, profits, and employee base. By standard measurements of CEOs, he did great. (Although the stock price didn't grow, but that may have had to do with the 2001 crash and timing more than anything) In contrast to all of Microsoft's rivals: IBM left the PC Business. Sun literally died and got bought out. Oracle's products were eaten alive by Open Source. Under Balmer, Windows 7, XBox and XBox 360, Kinect. Do remember that Windows Mobile 6 was a major competitor vs Blackberry through the early 2000s. Ballmer tripped up in his final years with Windows8 and failing to bring the success of Windows Mobile 6 to post-iPhone markets. But I think he did good from 2001 through 2011 overall.
    - Ensorceled 10y ago
      Microsoft stock was essentially flat across his entire 14 year tenure, despite being the dominate OS and Office suite that entire time. By standard measurements he was not a success.
      - deleted 10y ago
        [deleted]
      - dragontamer 10y ago
        Double the revenue, double the profits, double the employees. The CEO doesn't control the stock price. He controls employees, revenues and profits. Lets not blame Ballmer for having the unfortunate luck to become CEO at the height of the 2001 stock bubble, and instead look at the things he actually could control.
        Ensorceled 10y ago
        Wait. I was EXCLUDING the stock bubble. If you include that he's DOWN over his tenure.
    - spullara 10y ago
      Ballmer did a terrible job. Basically stalled the company for 15 years and put them far behind Google and Apple. "he did great" and "the stock price didn't grow" are the opposite of one another.
  - thesimpsons1022 10y ago
    sounds like a true comment from someone who's only seen some memes about "developers" and assumed he was smarter than Balmer. There's a reason Microsoft was used by every IT department in the world when he left. He may have had some weaknesses on the consumer front but he made MS into a juggernaut on the business side. I still don't see any other company come even close.
    - Ensorceled 10y ago
      Not at all. I believe the largest thing Nadella did was get out of the way of the individual organizational units and let them do their job; that's why he had so much success in his first few months as he simply unstoppered a blocked up product flow.
    - WallowC_33 10y ago
      Every IT department in the world is a bit dramatic, since I have direct experience working with a couple +1 million user consumer facing companies that have a couple Windows laptops around for IE testing, but that's it. Ballmer takes over with momentum on his side; XP is still going up, Windows Mobile is shit but other than Blackberry the only other player in town, Xbox launches to huge success. When he leaves their mobile platform is effectively DOA, their cloud services are years behind AWS and Google, their consumer base is being eaten by Apple portables, and the last Xbox product he oversaw is getting its ass handed to it. They just added bash to Windows to keep/attract folks that aren't developing for their platform anymore. I don't think it is all Ballmer's fault. The world got wise to their scams from the past to some extent; no more shifty deals with the governments around the world calling you a monopolist. Google rose to power, and Apple got their shit together. Revenue went up in some spots, though how much of that is real or due to creative accounting (it's well known they shift Xbox losses around to obscure the real numbers), but if not for their huge war chest of cash (thanks to shady business practices), MS would be done.
- mpdehaan2 10y ago
  Clearly it does not. However, it should. I could probably do a better job - many people here could. However one of the perks of getting out of the corporate game is getting out of the corporate game.
- 67726e 10y ago
  <something about anecdotes and data...> The point is, executive pay is entirely out of whack with the value (most) provide. Orders of magnitude out of whack. Sure I might not fill a good CEO's shoes but you or I can likely do the same job as a lot of lackluster CEOs that get paid insane multiples of our salaries.
  - mrep 10y ago
    So how much compensation do you think executives should get?
    - 67726e 10y ago
      I have no idea, but if you run a company into the ground you probably shouldn't be making more in a year than I will in a lifetime.
- existencebox 10y ago
  A common complaint (At least from my mouth as well) is that I would _love to_ but even achieving the chance to prove yourself is as much luck as it is personal direction. You might not believe the number of times I've asked to be given greater purview, more leadership opportunities, even asking for no "promotion" and offering to put my money where my mouth is re: being punished if I fail, but being told "do your time" or "you're not a high enough rank" to even try. (The insult to the injury is that I've been in industry longer than some of those with "sufficient" rank who have been 1 company tenants.) I would not look as askew at executive comp if I didn't have a nagging doubt that large portions of it are smoke and mirrors, obscured by extremely high and socio/political barriers to entry by which if you're the sort to pass, you're the sort to not "rock the boat"/"call the bluff" so to say.
  - drakonandor 10y ago
    If you're such an amazing leader then why not start your own company?
    - jack9 10y ago
      For your own benefit, please understand that suggestion sounds idiotic in context.
      - drakonandor 10y ago
        You don't say? Well perhaps then maybe not every employee is capable of doing the same quality work of their leadership.
    - existencebox 10y ago
      I intend to, and do as much to that end as my current situation allows. The barriers currently are largely wanting to be sure I have enough saved up that my family won't suffer if I end up failing. I market side projects during my personal time, and am constantly looking for opportunities on my own outside of a formal work career progression. Do not take my earlier comment to mean I simply complain and languish; merely why there might be a natural frustration to some of the judgments/environment/deifying surrounding leadership positions (notably for my argument, bigCo leadership) (To add another point I was nervous to say since it sounds arrogant; but I've ostensibly managed at a comparable scale to what some of the positions I'm aiming for would require, but in situations that don't hold the same level of credential-ism/tenure focus. This just adds to the open question in my mind of why those teams were able to find success with less rigid progression while others offer so much resistance. I mention this not to humble-brag but again, to point out mental dissonance.)
- walshemj 10y ago
  That would be fun and at least I wouldn't shoot my self in the foot when asked an easy softball Q about diversity. MS should have gone with Alan Mulally.
- wott 10y ago
  Yes, please. In 3 weeks, I can do whatever and still earn enough money to retire before the end of October 2016. And while we're talking about shoes, a good shoe-seller could do the job of about any CEO in those huge companies. Would be harder in a small one, though.
  - blahi 10y ago
    How would you feel if somebody who saw what programmers do only on TV tells you "A very highly trained monkey can do what you do - type on a keyboard." Because that's what programmers do, isn't it?
    - kd0amg 10y ago
      One might offer to sit them down at the computer for a while and see what they accomplish. The skeptic can probably even provide his own computer. Most people don't have a large corporation they can just casually make themselves CEO of in order to prove a point.
Singletoned 10y ago
I don't disagree necessarily, but I'm definitely more cautious in criticising someone else's pay when I can't do their job. I certainly know that a lot of people who know nothing about computers think that I'm overpaid as a software developer. Why should I earn several times their salary when I just sit at a computer all day, whilst they do hard work?
- ythl 10y ago
  > Why should I earn several times their salary when I just sit at a computer all day, whilst they do hard work? Yeah, why should you? I mean, you are essentially being paid to surf Hacker News and plunk out a few lines of code every once in a while, while the janitor is working hard all day.
  - Zelphyr 10y ago
    You don’t pay engineers to write code, you pay them to understand subtleties and edges of the problem. The code is incidental. —Ted Dziuba
    - cosmie 10y ago
      Which is an argument that applies just as effectively to executive management as it does to engineers.
  - riskable 10y ago
    Actually IT as a category of jobs requires constant knowledge and skill improvements. If you aren't reading HN and/or other tech news sites very regularly you're going to become obsolete very quickly. If you're doing the same thing in IT for more than a few years chances are you're digging a hole for yourself. Just ask any Silverlight developer.
    - TeMPOraL 10y ago
      Yeah, that's the excuse I'm going to use when my boss finally realizes what that site with the orange bar at the top is ;).
djf1 10y ago
To elaborate on the sibling, comparing multiples of your salary is irrelevant. The question is, how much does the company stand to gain by putting this CEO in place? Imagine this CEO is just 1% better than you; they've just made the company millions.
- mpdehaan2 10y ago
  While that is true, they often suck too. Goes both ways. Think about how much better, say, Cisco could be, than what Cisco is. And then what their execs get paid. There's a club at the top and they value weird things. One employee's work can also make a company millions - I know in many cases many of my fellow developers have built things, often single-handed, that have made companies millions, and received less than $100k/year. The sales guy probably got a huge commission. This is the system we should - as best we can - press against.
  - bcoates 10y ago
    I guess I'm missing the part where I'm supposed to care that CEOs are in the long, long line of people fleecing dumb investors.
vehementi 10y ago
Oh come on, a level 1 argument about CEO salary? They don't work 100x as hard? Aren't we collectively past that gut feeling argument on HN? You don't have to work smarter or harder than everyone else - you're in the driver seat and make the call about strategy which will make or lose the company big %'s of its revenue which has huge value.
- mpdehaan2 10y ago
  Why should we be past it? Because new employees are generally ok with this perception, we do not IMPROVE the perception, and we allow things to continue. I've seen quite a few CEOs of companies I've worked at where most of the employees could make a lot better decisions. You probably have as well. These "people in the drivers seat" are often not very good drivers. Some are. Most are terrible, and while the company (the collective of all the people working there) may be making "huge value", it is by no means certain that it could not be making 100x more - and sharing it better with the people underneath. CEOs are just humans, like you, who happen to be leading something. They do not have magic brainpower skills.
  - vehementi 10y ago
    We should be past it because it's incomplete and wrong. So fire the bad CEOs. I did not imply that all CEOs are all good drivers, and it doesn't matter if some are. They are in the position to make decisions that change the course of the company, whereas an individual engineer or sales person isn't doing that, and doesn't have that responsibility. Magic brain power skills are not required so I am not sure why you are bringing that up.
- dvtv75 10y ago
  Well, since the research explicitly says that the abilities of the CEO are more-or-less inconsequential, I think you've rather missed the point.
darkerside 10y ago
I guess you don't believe in 10x or 100x programmers either?
- mpdehaan2 10y ago
  With a few exceptions, a "10x" programmer is in most companies making maybe 1.5x than other people his age, possibly quite less. This may be an extra $50k in some places. I have not met a 100x programmer, but there are many people who lead important projects (say Linus, Guido, etc). They also do not deserve 100x a standard programmer salary if they were employed at a corporation either :)
liquidise 10y ago
> * Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you* You price on value, not on effort. I may think CEO's are overpaid, but let's not confuse how salaries are negotiated at jobs. They are negotiated by perceived value you bring to a company as well as the supply/demand for your particular position.
beambot 10y ago
It's fine to talk about hard work and smarts, but you also need to consider risk. Let's use software engineers as an example. You make a mistake.. it's unlikely you get fired, and even more unlikely that it ruins your career. Most likely, it results in better practices and a post mortem. And even if you do leave, there will be hundreds of job openings for a competent engineer. It's different for CEOs, even competent ones. One moderately bad decision (or to your point, a little bad luck) can result in a "change of management." And it's non-trivial to just jump into another CEO role. And that's not even taking into account other aspects such as supply & demand, accountability, stress levels, etc. Is the comp "fair"? I have no idea. I don't even know how you would evaluate fairness in that regard.
- mpdehaan2 10y ago
  There can be a lot of spin in CEO exits. Connections made in even a failed position can be used to gain ability to acquire investment or useful position in other companies. Extreme networking value. Again, the obscene compensation exceeds the risk. Even going back to a VP position somewhere is still lucrative.
- jleask 10y ago
  I'd question the non-trivial part. True in some cases but also I can think of plenty of Cxx level people that have just walked off into the sunset of a new role after crashing and burning a company. Additionally the compensation is so great that I think a lot of people would gladly take that risk given the opportunity. If in a few months you can earn a x years engineer's salary why not take the risk and then worst case is a nice holiday whilst looking for the next company to ruin. I think your point holds better at middle management level.
- Retric 10y ago
  I suspect a higher percentage of developers are fired from one bad mistake than CEO's. Remember, it's often debatable if a CEO makes a bad decision and simply replacing the CEO often has significant downsides. Further, a CEO making a mid sized mistake is often seen as simply taking or not taking risks. As to pay, generally CEO's can find a high paying job easily. They simply don't need to.
MattRogish 10y ago
A general case CEO/exec job is far, far riskier than a IC software developer. If you're a fantastic (heck, halfway decent) developer, you can be fired, laid-off, or simply quit and find a new job relatively quickly. And yes, you're generally paid a lot of money (compared to the rest of America). As an executive in a general case (sure, we can all find outliers) company, there are comparatively far fewer jobs for you to go to. If you fail, you fail spectacularly/publicly and may not be employable for years. The high compensation is in exchange for the risk of the job and the low probability of finding a new one. Semi-related (not what you said - of course): "I deliver $1M in value to the company so I should be paid $1m" is a thing I see every now and again. That's not even remotely how any of this works.
- mpdehaan2 10y ago
  I'll disagree with this. If you are in a position where you make $10M a year, you could effectively not work for 20 years and be completely fine. By the time they've done this for a few years, they have obscene levels of wealth and no risk. There are also the golden parachutes.
- ErikAugust 10y ago
  "The high compensation is in exchange for the risk of the job and the low probability of finding a new one." This is not how things work, either.
  - cmdrfred 10y ago
    Anything that seemingly violates supply and demand is a scam. Another way to say "The jobs are too few" is to say "The CEO's are too many"
    - __jal 10y ago
      Yes. And if there are more CEOs than available gigs, why are salaries not going down? Executive compensation has a nasty ratchet effect built in that I'm really surprised more shareholders aren't fighting.
- 10y ago
Thaxll 10y ago
The big difference is decisions that CEO take are 100x more important than the one we take. Pretty much every one on HN is tech based employee, technical problems are 'easy' compared to where a company of 10k employees should go in the next 5 years.
- dvtv75 10y ago
  You should see my earlier post about the company I worked for. It stands as evidence that this is plainly irrelevant. A terrible CEO can be rewarded far in excess of his value and competence while the true heroes are the people who keep the business afloat with massive cash injections (their uncompensated spare time).
stronglikedan 10y ago
A lot of people forget that, at least for large companies, the CEO's life is the company 24/7. They don't have to worry about work/life balance, because there is none - it's all work, all the time. Got some time off? Work is still on the mind. Got a family? Good luck getting an hour or two a week of quality time with them. The CEO's compensation isn't tied to how much work they do, but how little time they get to spend on anything else - mind, body, and soul.
- mpdehaan2 10y ago
  I wish this were true. A lot of software developers put in this much time due to abusive working conditions and still net poorly. Even if it were true, there would be no valid argument for $1M/year vs $60M/year differentials. In startups, folks are doing this for programmer-level salaries. CEOs are still finding time for some family time - maybe not a lot, but there are a lot of people under the grindstone feeling the exact same problems making low software developer and manager wages.
- striking 10y ago
  The CEO is the company. They give up their social life and personal life and family life to be the face of the company. They should be paid accordingly. (Although I won't disagree with the fact that some CEOs are indeed overpaid.)
  - jsudhams 10y ago
    >>They give up their social life and personal life and family life to be the face of the company Seriously? Look at all the big co's CEO, They make it look like , that is it.
  - dvtv75 10y ago
    The business I previously posted about robs their staff of at least 50% extra working hours every year. The staff literally give up their social and personal lives to work for free so the CEO can wander off and show the business how brilliant he is. They were threatened with dismissal for not doing so. I was threatened with dismissal for not doing so. I worked from early morning until early the next morning. I saved the core business on multiple occasions, my manager was working 14 hours a day 7 days a week at a minimum. The CEO went home at 5pm every night, when I still had a full shift ahead of me, and had weekends off with his kids, when I was working at home. He was paid three times what I was paid, and 50% more than my boss. You speak of ideology, not reality.
adamb_ 10y ago
One explanation I was given by an economist for excessive CEO glut is that it incentivizes the C-level execs directly below (which arguably are the ones responsible for the company's execution) to work their hardest, such that they could one day be considered a candidate for the next CEO.
- kwhitefoot 10y ago
  Sounds plausible. But if it is true it is a terrible thing because it means that the C-level are competing against each other for a very scarce resource instead of spending their efforts doing the best for the company.
dba7dba 10y ago
CEOs get higher and higher pay because they say that's what others are getting. Women get lower pay because they say that's what other women get. Ahh, the spinning of facts that keeps giving and giving, to the rich and powerful.
- brbsix 10y ago
  > Women get lower pay because they say that's what other women get. At least in the U.S., sex-based wage discrimination is prohibited under the Equal Pay Act of 1964. If you find an employer paying women less because "that's what other women get", be sure to let us know.
mbostleman 10y ago
The question is not whether the CEO is working harder or smarter than me. It's whether or not the CEO is returning more value or taking more risk than me. I'd like to see a culture that understands economics more clearly such that this doesn't have to be constantly explained. I think it would help if less people worked for large corporate institutions and ran their own small businesses instead. It would also help if mass media didn't play along with the ignorance.
peeters 10y ago
> Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you. That's distorting what shareholders look for in a CEO. Let's say you have two CEO candidates, one you can hire for $100,000 (A) and another for $10 million (B). Share holders would be stupid to ask themselves if B can make 100x the profits of A. They would be asking themselves if B can make at least $9,900,000 more revenue than A. If it's a billion dollar company doing ~$100 million in sales per quarter, that's not that unreasonable to expect from a CEO. It's expecting the CEO to raise revenue by ~2.5%, not 10,000%.
- brianwawok 10y ago
  And the obvious developer question is: If developer A can increase the value of your product by 1 million dollars, but developer B can only increase the value of your product by 100k.. why isn't developer A worth 900k (or at least 500k) more than developer B? The big challenge is measurability. Stock price going up is easy. Profits going up is easy. An app being 1 million dollars better? No idea what that even means.
  - peeters 10y ago
    Yep, and then the follow up is just as difficult...is this dev not delivering value because she's not a good dev, or because those above her aren't giving her opportunities in high value projects?
    - brianwawok 10y ago
      "Am I a bad CEO or does my company just stink"
      - marcosdumay 10y ago
        Who is the one person in charge of making the company not stink?
        10y ago
ArkyBeagle 10y ago
Most people with the title "CEO" don't make all that much money. Much strangeness happens just because of mutual funds and the general distorting effect of the public stock markets. We've decoupled the owners from the "runners". Prior to roughly the period of time in which Micheal Eisner became CEO of Disney, compensation was mainly salary. People complained that it was too much. So more complicated arrangements emerged - options, that sort of thing. For a modest firm of say, 1000 employees, every 100k to the CEO costs each employee $100 ( assuming all is otherwise zero-sum and perfectly linear). So it's not like there's really much that can be done to improve things for the rank and file. I was watching the beating given to John G. Stumpf by Congress on CSPAN yesterday. It seems that incentive pay/pay for performance might be on the way out if that is any sort of bellwether.
hammock 10y ago
Would you take the CEO job for your current salary?
- kwhitefoot 10y ago
  No but I know plenty of people who would take it on for say two or three times my salary.
- dvtv75 10y ago
  No, particularly because salaries and wages in my area are amongst the lowest in the nation, while CEO salaries are amongst the highest in the nation. (Which is remarkable given the region's sheer excess of corruption and incompetence at that level.)
gnicholas 10y ago
The question isn't if the CEO is working 100x as hard or is 100x as smart. Their decisions have an impact across the organization, so even if they were just a little smarter, they would make a big difference.
- dvtv75 10y ago
  As the cited research reveals, while their decisions may have an impact across the organization, the results can be mostly be attributed to luck. They are being paid astronomical amounts not for being smart, not for ability to read the markets, nor for hard work, but simply for being able to convince someone else that they are responsible for being lucky.
  - gnicholas 10y ago
    The fact that some outcomes are driven by luck does not mean that there isn't still a very large difference from small differentials in skill/experience/dedication. Imagine a company with $100M in annual revenue and an annual growth rate between 10 and 20 percent. On average, the growth rate would be 15% (say), and skill of the CEO could have some impact that pushes it up or down 10% (that is, ±1.5%). The difference between 13.5% an 16.5% represents a $3,000,000 revenue differential. The impact on profits is likely much higher (due to fixed costs of production, which exist in nearly all industries). So even if you take the research findings as true, it still makes sense to prefer an executive with more skill, experience, and dedication. Even if 90% of outcomes are driven by luck, the 10% that he or she contributes is still meaningful.
FullMtlAlcoholc 10y ago
I was going to post something similar. Us humans sure do love our social hierarchies. Most people find it untenable that random chance and/or the independent actions of a multitude of phenomena make up a great deal of what we perceive as reality. We are heavily biased towards order both as a means to explain the world around us and operate within it. It's why so many people fall prey to conspiracy theories. There's a comfort in knowing everything is under control. I have a pet hypothesis that the invention of Gods went like this: Uggg: When I look up at the sky, I more or less see the same thing day after day. However, the events that happen infrequently, the eclipses, blood moons, shooting stars, gamma Ray bursts, etc. shows a level of variance and complexity beyond measure and comprehension. Krug: Even though it looks random and chaotic, there's gotta be some big guy up there behind the curtain. Otherwise, what's the point? Uggg:Yeah, that's too depressing. Life is brutish enough as it is. We're still part of the frakkin food chain! Let's not consider existentialism for another 20,000 years. Big wizard guy in the sky it is! That type of thinking permeates in all facets, so we think it's only natural the guy on top is the essential person in a company. I've had the fortune of working at startups that were comprised of intelligent and talented people from bottom to top. In fact, at a couple of gigs, the ceo doggedly tried to keep their original vision as their fortunes sank. It was the non c-level employees that recommended and executed plans to pivot. There are those rare unicorns like Elon and Jobs. Although they consistently work with some of the most talented people in the world across multiple disciplines, they set forth a vision that would be considered ludicrous by almost any standard. Yet, whether it's by cult of personality or some other rare trait they consistently have success across different fields. Also, it is important to distinguish founder/CEO's who generally risk all they have on something that is likely to fail. Just throwing numbers out there, but I'd wager that 95% of current CEO don't come up with anything groundbreaking and are executing pretty standardized plans for the duration of their tenure. Personal relationships do matter, but their importance generally has an inverse relationship to the size of your company
quietkatalyst 10y ago
On the other hand, my CEO is probably stressed 24/7 about the company, whereas I can just go home and not think about work.
coredog64 10y ago
The cost of options is borne by shareholders more than by the company's compensation budget. I picked a random large company from Yahoo finance (Proctor and Gamble). The CEO's pay is $4M/year. If you paid him nothing, the rest of the employees would get an additional ~ $.75/week. GE (another fairly large company) is in approximately the same situation. Immelt gets about 4x as much, but GE has about 3x as many employees.
aliston 10y ago
This is how the real world works. Its far less meritocratic than we're brought up to believe and based much more on perception than reality. It's also the way that the world has always worked and probably always will work so long as we have a capitalist system. Thomas Edison didn't invent the lightbulb and Elon Musk is not "the founder" of Tesla.
brbsix 10y ago
> Executive comp is a major racket, enforced by the standard that this is "what the market average is". Which is set by executives overpaying themselves. > Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you. The answer is usually a definite no. Ask yourself, does a software developer in SF work 1000x harder than a laborer in the Congo? Is a PhD Physicist really as smart as a NYC sanitation worker? Apart from the emotionally manipulative language, I'm not sure what your point is. CEO compensation is a price. What does hard work or intelligence have to do with the price of something?
- projektir 10y ago
  Reapplying it doesn't actually change the argument. Janitors can be underpaid compared to CS people and CS people could be underpaid compared to CEO's at the same time.
  - brbsix 10y ago
    Underpaid according to who? The point I was making was that salaries, like all prices, are dictated by market forces. They aren't dictated by some arbitrary metric (e.g. hard work or intelligence) that you, as some uninterested third-party, decide.
    - projektir 10y ago
      Underpaid according to people with sense. For one, market forces do not dictate reality. They are an artificial construction WE created and WE are responsible for. If they result in someone's mistreatment we should see it as it is and not wave our hands and say "well, market forces". Perhaps the mistreatment is not obvious to you but it is obvious to plenty. For another, the "market forces" aren't really market forces because there are too many other things involved because we don't live in a vacuum of perfect capitalism. There are things like collusion, there are things like threat of loss of shelter and health, etc., that corrupt it. Proper market forces would require extremely powerful and knowledgeable agents that can freely accept and reject products. We're nowhere near close such a reality. For an obvious example of immoral effects of "market forces", see googamooga's post over here: https://news.ycombinator.com/item?id=12553936 https://news.ycombinator.com/item?id=12553936 If you don't see anything wrong there and your reaction is just "well, market forces..." I think you need to take a step back and think about what we humans are doing on this planet.
deleted 10y ago
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sjg007 10y ago
This is why you get an MBA and join a couple boards.
BrandonM 10y ago
I think professional athletes make an interesting parallel with CEOs. The majority of athletes are unarguably the absolute best in the world at what they do. Superstars have a far bigger impact on their team's performance than an average player in the league. Many commenters have argued that good CEOs have large impacts on company performance. The average NFL career is 3.5 years; the average NBA career is 4.8 years. Several commenters have pointed out that CEOs of failing companies risk this being their last CEO job. Athletes are derided if they cannot save enough to ensure their retirement when they are making millions of dollars a year. Why can't we expect CEOs to manage their own finances responsibly and plan for a future where they aren't earning millions? After their playing careers, many athletes choose to work lower paying jobs as assistants, coaches, commentators, consultants, etc. Why can't a CEO take a step back after a failure and be a COO, CMO, VP of Sales, etc.? During their careers, NFL and NBA players' earnings are limited by a salary cap. LeBron James can't earn more than ~$30MM from his playing contract, even though he generates far more revenue in TV contracts, jersey sales, gate receipts, etc. Why can't we impose salary caps on CEOs?
- moduspwnens14 10y ago
  We can impose salary caps--it just means that the people who are really good at this stuff will play in a different league. If there were another NBA where LeBron would make 10x his salary, he'd play in it. All the best players would. And then that league would be more successful. Now instead of "league" and "LeBron," substitute in "country" and "the world's best corporate executives" and you'll see why it's a bad idea. We want the world's best here.
  - BrandonM 10y ago
    There are other professional basketball leagues that don't have salary caps, and LeBron doesn't play for them. The NBA salary cap is close to or exceeds what he could make in other leagues. Additionally, playing for the NBA gives him greater exposure to the American market. Do you have any countries in mind that are going to pay executives more per year than the US, even with a salary cap? My understanding is that the US is already so far above the rest of the world that it would have to come way down to lose out on a raw compensation basis. IMO, a cap would mostly serve to rein in the well-networked, measurable-performance-leveraging aspects of CEO compensation. Compared to every other employee, CEOs have a far greater ability to extract money from a company, mostly independent of their contributions to that company. Is it any surprise, then, that they leverage that ability to earn far more than their coworkers?

blahi 10y ago

Compensation has nothing to do with whether somebody works harder or is smarter than everybody else. Perhaps you would like to step in Satya Nadella's shoes for a couple of weeks?

Ensorceled 10y ago
No. But I get the feeling almost anybody could have filled Balmer's ...
- blahi 10y ago
  Do you have any knowledge about what Balmer's initiatives at Microsoft were? What his goals and objectives were?
  - Ensorceled 10y ago
    No. But I know their stock was pretty much flat for 14 years.
    - blahi 10y ago
      The growth during those 14 years was factored in the stock... This exact thing was actually discussed on Martin Shkreli's stream a couple of weeks ago. Maybe you shouldn't have such strong opinions about things you perhaps don't understand? And not even attempting to understand according to your own admission.
  - apalmer 10y ago
    It is known he didnt successfully lead microsoft into the mobile computing industry, and its known he didnt successfully lead microsoft into the cloud computing industry... so whatever his initiatives, goals and objectives were, they were wrong.
- dragontamer 10y ago
  I disagree. Under Ballmer, Microsoft more than doubled its revenue, profits, and employee base. By standard measurements of CEOs, he did great. (Although the stock price didn't grow, but that may have had to do with the 2001 crash and timing more than anything) In contrast to all of Microsoft's rivals: IBM left the PC Business. Sun literally died and got bought out. Oracle's products were eaten alive by Open Source. Under Balmer, Windows 7, XBox and XBox 360, Kinect. Do remember that Windows Mobile 6 was a major competitor vs Blackberry through the early 2000s. Ballmer tripped up in his final years with Windows8 and failing to bring the success of Windows Mobile 6 to post-iPhone markets. But I think he did good from 2001 through 2011 overall.
  - Ensorceled 10y ago
    Microsoft stock was essentially flat across his entire 14 year tenure, despite being the dominate OS and Office suite that entire time. By standard measurements he was not a success.
    - deleted 10y ago
      [deleted]
    - dragontamer 10y ago
      Double the revenue, double the profits, double the employees. The CEO doesn't control the stock price. He controls employees, revenues and profits. Lets not blame Ballmer for having the unfortunate luck to become CEO at the height of the 2001 stock bubble, and instead look at the things he actually could control.
      - Ensorceled 10y ago
        Wait. I was EXCLUDING the stock bubble. If you include that he's DOWN over his tenure.
  - spullara 10y ago
    Ballmer did a terrible job. Basically stalled the company for 15 years and put them far behind Google and Apple. "he did great" and "the stock price didn't grow" are the opposite of one another.
- thesimpsons1022 10y ago
  sounds like a true comment from someone who's only seen some memes about "developers" and assumed he was smarter than Balmer. There's a reason Microsoft was used by every IT department in the world when he left. He may have had some weaknesses on the consumer front but he made MS into a juggernaut on the business side. I still don't see any other company come even close.
  - Ensorceled 10y ago
    Not at all. I believe the largest thing Nadella did was get out of the way of the individual organizational units and let them do their job; that's why he had so much success in his first few months as he simply unstoppered a blocked up product flow.
  - WallowC_33 10y ago
    Every IT department in the world is a bit dramatic, since I have direct experience working with a couple +1 million user consumer facing companies that have a couple Windows laptops around for IE testing, but that's it. Ballmer takes over with momentum on his side; XP is still going up, Windows Mobile is shit but other than Blackberry the only other player in town, Xbox launches to huge success. When he leaves their mobile platform is effectively DOA, their cloud services are years behind AWS and Google, their consumer base is being eaten by Apple portables, and the last Xbox product he oversaw is getting its ass handed to it. They just added bash to Windows to keep/attract folks that aren't developing for their platform anymore. I don't think it is all Ballmer's fault. The world got wise to their scams from the past to some extent; no more shifty deals with the governments around the world calling you a monopolist. Google rose to power, and Apple got their shit together. Revenue went up in some spots, though how much of that is real or due to creative accounting (it's well known they shift Xbox losses around to obscure the real numbers), but if not for their huge war chest of cash (thanks to shady business practices), MS would be done.
mpdehaan2 10y ago
Clearly it does not. However, it should. I could probably do a better job - many people here could. However one of the perks of getting out of the corporate game is getting out of the corporate game.
67726e 10y ago
<something about anecdotes and data...> The point is, executive pay is entirely out of whack with the value (most) provide. Orders of magnitude out of whack. Sure I might not fill a good CEO's shoes but you or I can likely do the same job as a lot of lackluster CEOs that get paid insane multiples of our salaries.
- mrep 10y ago
  So how much compensation do you think executives should get?
  - 67726e 10y ago
    I have no idea, but if you run a company into the ground you probably shouldn't be making more in a year than I will in a lifetime.
existencebox 10y ago
A common complaint (At least from my mouth as well) is that I would _love to_ but even achieving the chance to prove yourself is as much luck as it is personal direction. You might not believe the number of times I've asked to be given greater purview, more leadership opportunities, even asking for no "promotion" and offering to put my money where my mouth is re: being punished if I fail, but being told "do your time" or "you're not a high enough rank" to even try. (The insult to the injury is that I've been in industry longer than some of those with "sufficient" rank who have been 1 company tenants.) I would not look as askew at executive comp if I didn't have a nagging doubt that large portions of it are smoke and mirrors, obscured by extremely high and socio/political barriers to entry by which if you're the sort to pass, you're the sort to not "rock the boat"/"call the bluff" so to say.
- drakonandor 10y ago
  If you're such an amazing leader then why not start your own company?
  - jack9 10y ago
    For your own benefit, please understand that suggestion sounds idiotic in context.
    - drakonandor 10y ago
      You don't say? Well perhaps then maybe not every employee is capable of doing the same quality work of their leadership.
  - existencebox 10y ago
    I intend to, and do as much to that end as my current situation allows. The barriers currently are largely wanting to be sure I have enough saved up that my family won't suffer if I end up failing. I market side projects during my personal time, and am constantly looking for opportunities on my own outside of a formal work career progression. Do not take my earlier comment to mean I simply complain and languish; merely why there might be a natural frustration to some of the judgments/environment/deifying surrounding leadership positions (notably for my argument, bigCo leadership) (To add another point I was nervous to say since it sounds arrogant; but I've ostensibly managed at a comparable scale to what some of the positions I'm aiming for would require, but in situations that don't hold the same level of credential-ism/tenure focus. This just adds to the open question in my mind of why those teams were able to find success with less rigid progression while others offer so much resistance. I mention this not to humble-brag but again, to point out mental dissonance.)
walshemj 10y ago
That would be fun and at least I wouldn't shoot my self in the foot when asked an easy softball Q about diversity. MS should have gone with Alan Mulally.
wott 10y ago
Yes, please. In 3 weeks, I can do whatever and still earn enough money to retire before the end of October 2016. And while we're talking about shoes, a good shoe-seller could do the job of about any CEO in those huge companies. Would be harder in a small one, though.
- blahi 10y ago
  How would you feel if somebody who saw what programmers do only on TV tells you "A very highly trained monkey can do what you do - type on a keyboard." Because that's what programmers do, isn't it?
  - kd0amg 10y ago
    One might offer to sit them down at the computer for a while and see what they accomplish. The skeptic can probably even provide his own computer. Most people don't have a large corporation they can just casually make themselves CEO of in order to prove a point.

Singletoned 10y ago

I don't disagree necessarily, but I'm definitely more cautious in criticising someone else's pay when I can't do their job. I certainly know that a lot of people who know nothing about computers think that I'm overpaid as a software developer. Why should I earn several times their salary when I just sit at a computer all day, whilst they do hard work?

ythl 10y ago
> Why should I earn several times their salary when I just sit at a computer all day, whilst they do hard work? Yeah, why should you? I mean, you are essentially being paid to surf Hacker News and plunk out a few lines of code every once in a while, while the janitor is working hard all day.
- Zelphyr 10y ago
  You don’t pay engineers to write code, you pay them to understand subtleties and edges of the problem. The code is incidental. —Ted Dziuba
  - cosmie 10y ago
    Which is an argument that applies just as effectively to executive management as it does to engineers.
- riskable 10y ago
  Actually IT as a category of jobs requires constant knowledge and skill improvements. If you aren't reading HN and/or other tech news sites very regularly you're going to become obsolete very quickly. If you're doing the same thing in IT for more than a few years chances are you're digging a hole for yourself. Just ask any Silverlight developer.
  - TeMPOraL 10y ago
    Yeah, that's the excuse I'm going to use when my boss finally realizes what that site with the orange bar at the top is ;).

djf1 10y ago

To elaborate on the sibling, comparing multiples of your salary is irrelevant. The question is, how much does the company stand to gain by putting this CEO in place? Imagine this CEO is just 1% better than you; they've just made the company millions.

mpdehaan2 10y ago
While that is true, they often suck too. Goes both ways. Think about how much better, say, Cisco could be, than what Cisco is. And then what their execs get paid. There's a club at the top and they value weird things. One employee's work can also make a company millions - I know in many cases many of my fellow developers have built things, often single-handed, that have made companies millions, and received less than $100k/year. The sales guy probably got a huge commission. This is the system we should - as best we can - press against.
- bcoates 10y ago
  I guess I'm missing the part where I'm supposed to care that CEOs are in the long, long line of people fleecing dumb investors.

vehementi 10y ago

Oh come on, a level 1 argument about CEO salary? They don't work 100x as hard? Aren't we collectively past that gut feeling argument on HN? You don't have to work smarter or harder than everyone else - you're in the driver seat and make the call about strategy which will make or lose the company big %'s of its revenue which has huge value.

mpdehaan2 10y ago
Why should we be past it? Because new employees are generally ok with this perception, we do not IMPROVE the perception, and we allow things to continue. I've seen quite a few CEOs of companies I've worked at where most of the employees could make a lot better decisions. You probably have as well. These "people in the drivers seat" are often not very good drivers. Some are. Most are terrible, and while the company (the collective of all the people working there) may be making "huge value", it is by no means certain that it could not be making 100x more - and sharing it better with the people underneath. CEOs are just humans, like you, who happen to be leading something. They do not have magic brainpower skills.
- vehementi 10y ago
  We should be past it because it's incomplete and wrong. So fire the bad CEOs. I did not imply that all CEOs are all good drivers, and it doesn't matter if some are. They are in the position to make decisions that change the course of the company, whereas an individual engineer or sales person isn't doing that, and doesn't have that responsibility. Magic brain power skills are not required so I am not sure why you are bringing that up.
dvtv75 10y ago
Well, since the research explicitly says that the abilities of the CEO are more-or-less inconsequential, I think you've rather missed the point.

darkerside 10y ago

I guess you don't believe in 10x or 100x programmers either?

mpdehaan2 10y ago
With a few exceptions, a "10x" programmer is in most companies making maybe 1.5x than other people his age, possibly quite less. This may be an extra $50k in some places. I have not met a 100x programmer, but there are many people who lead important projects (say Linus, Guido, etc). They also do not deserve 100x a standard programmer salary if they were employed at a corporation either :)

liquidise 10y ago

> * Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you* You price on value, not on effort. I may think CEO's are overpaid, but let's not confuse how salaries are negotiated at jobs. They are negotiated by perceived value you bring to a company as well as the supply/demand for your particular position.

beambot 10y ago

It's fine to talk about hard work and smarts, but you also need to consider risk. Let's use software engineers as an example. You make a mistake.. it's unlikely you get fired, and even more unlikely that it ruins your career. Most likely, it results in better practices and a post mortem. And even if you do leave, there will be hundreds of job openings for a competent engineer. It's different for CEOs, even competent ones. One moderately bad decision (or to your point, a little bad luck) can result in a "change of management." And it's non-trivial to just jump into another CEO role. And that's not even taking into account other aspects such as supply & demand, accountability, stress levels, etc. Is the comp "fair"? I have no idea. I don't even know how you would evaluate fairness in that regard.

mpdehaan2 10y ago
There can be a lot of spin in CEO exits. Connections made in even a failed position can be used to gain ability to acquire investment or useful position in other companies. Extreme networking value. Again, the obscene compensation exceeds the risk. Even going back to a VP position somewhere is still lucrative.
jleask 10y ago
I'd question the non-trivial part. True in some cases but also I can think of plenty of Cxx level people that have just walked off into the sunset of a new role after crashing and burning a company. Additionally the compensation is so great that I think a lot of people would gladly take that risk given the opportunity. If in a few months you can earn a x years engineer's salary why not take the risk and then worst case is a nice holiday whilst looking for the next company to ruin. I think your point holds better at middle management level.
Retric 10y ago
I suspect a higher percentage of developers are fired from one bad mistake than CEO's. Remember, it's often debatable if a CEO makes a bad decision and simply replacing the CEO often has significant downsides. Further, a CEO making a mid sized mistake is often seen as simply taking or not taking risks. As to pay, generally CEO's can find a high paying job easily. They simply don't need to.

MattRogish 10y ago

A general case CEO/exec job is far, far riskier than a IC software developer. If you're a fantastic (heck, halfway decent) developer, you can be fired, laid-off, or simply quit and find a new job relatively quickly. And yes, you're generally paid a lot of money (compared to the rest of America). As an executive in a general case (sure, we can all find outliers) company, there are comparatively far fewer jobs for you to go to. If you fail, you fail spectacularly/publicly and may not be employable for years. The high compensation is in exchange for the risk of the job and the low probability of finding a new one. Semi-related (not what you said - of course): "I deliver $1M in value to the company so I should be paid $1m" is a thing I see every now and again. That's not even remotely how any of this works.

mpdehaan2 10y ago
I'll disagree with this. If you are in a position where you make $10M a year, you could effectively not work for 20 years and be completely fine. By the time they've done this for a few years, they have obscene levels of wealth and no risk. There are also the golden parachutes.
ErikAugust 10y ago
"The high compensation is in exchange for the risk of the job and the low probability of finding a new one." This is not how things work, either.
- cmdrfred 10y ago
  Anything that seemingly violates supply and demand is a scam. Another way to say "The jobs are too few" is to say "The CEO's are too many"
  - __jal 10y ago
    Yes. And if there are more CEOs than available gigs, why are salaries not going down? Executive compensation has a nasty ratchet effect built in that I'm really surprised more shareholders aren't fighting.
10y ago

Thaxll 10y ago

The big difference is decisions that CEO take are 100x more important than the one we take. Pretty much every one on HN is tech based employee, technical problems are 'easy' compared to where a company of 10k employees should go in the next 5 years.

dvtv75 10y ago
You should see my earlier post about the company I worked for. It stands as evidence that this is plainly irrelevant. A terrible CEO can be rewarded far in excess of his value and competence while the true heroes are the people who keep the business afloat with massive cash injections (their uncompensated spare time).

stronglikedan 10y ago

A lot of people forget that, at least for large companies, the CEO's life is the company 24/7. They don't have to worry about work/life balance, because there is none - it's all work, all the time. Got some time off? Work is still on the mind. Got a family? Good luck getting an hour or two a week of quality time with them. The CEO's compensation isn't tied to how much work they do, but how little time they get to spend on anything else - mind, body, and soul.

mpdehaan2 10y ago
I wish this were true. A lot of software developers put in this much time due to abusive working conditions and still net poorly. Even if it were true, there would be no valid argument for $1M/year vs $60M/year differentials. In startups, folks are doing this for programmer-level salaries. CEOs are still finding time for some family time - maybe not a lot, but there are a lot of people under the grindstone feeling the exact same problems making low software developer and manager wages.
striking 10y ago
The CEO is the company. They give up their social life and personal life and family life to be the face of the company. They should be paid accordingly. (Although I won't disagree with the fact that some CEOs are indeed overpaid.)
- jsudhams 10y ago
  >>They give up their social life and personal life and family life to be the face of the company Seriously? Look at all the big co's CEO, They make it look like , that is it.
- dvtv75 10y ago
  The business I previously posted about robs their staff of at least 50% extra working hours every year. The staff literally give up their social and personal lives to work for free so the CEO can wander off and show the business how brilliant he is. They were threatened with dismissal for not doing so. I was threatened with dismissal for not doing so. I worked from early morning until early the next morning. I saved the core business on multiple occasions, my manager was working 14 hours a day 7 days a week at a minimum. The CEO went home at 5pm every night, when I still had a full shift ahead of me, and had weekends off with his kids, when I was working at home. He was paid three times what I was paid, and 50% more than my boss. You speak of ideology, not reality.

adamb_ 10y ago

One explanation I was given by an economist for excessive CEO glut is that it incentivizes the C-level execs directly below (which arguably are the ones responsible for the company's execution) to work their hardest, such that they could one day be considered a candidate for the next CEO.

kwhitefoot 10y ago
Sounds plausible. But if it is true it is a terrible thing because it means that the C-level are competing against each other for a very scarce resource instead of spending their efforts doing the best for the company.

dba7dba 10y ago

CEOs get higher and higher pay because they say that's what others are getting. Women get lower pay because they say that's what other women get. Ahh, the spinning of facts that keeps giving and giving, to the rich and powerful.

brbsix 10y ago
> Women get lower pay because they say that's what other women get. At least in the U.S., sex-based wage discrimination is prohibited under the Equal Pay Act of 1964. If you find an employer paying women less because "that's what other women get", be sure to let us know.

mbostleman 10y ago

The question is not whether the CEO is working harder or smarter than me. It's whether or not the CEO is returning more value or taking more risk than me. I'd like to see a culture that understands economics more clearly such that this doesn't have to be constantly explained. I think it would help if less people worked for large corporate institutions and ran their own small businesses instead. It would also help if mass media didn't play along with the ignorance.

peeters 10y ago

> Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you. That's distorting what shareholders look for in a CEO. Let's say you have two CEO candidates, one you can hire for $100,000 (A) and another for $10 million (B). Share holders would be stupid to ask themselves if B can make 100x the profits of A. They would be asking themselves if B can make at least $9,900,000 more revenue than A. If it's a billion dollar company doing ~$100 million in sales per quarter, that's not that unreasonable to expect from a CEO. It's expecting the CEO to raise revenue by ~2.5%, not 10,000%.

brianwawok 10y ago
And the obvious developer question is: If developer A can increase the value of your product by 1 million dollars, but developer B can only increase the value of your product by 100k.. why isn't developer A worth 900k (or at least 500k) more than developer B? The big challenge is measurability. Stock price going up is easy. Profits going up is easy. An app being 1 million dollars better? No idea what that even means.
- peeters 10y ago
  Yep, and then the follow up is just as difficult...is this dev not delivering value because she's not a good dev, or because those above her aren't giving her opportunities in high value projects?
  - brianwawok 10y ago
    "Am I a bad CEO or does my company just stink"
    - marcosdumay 10y ago
      Who is the one person in charge of making the company not stink?
      - 10y ago

ArkyBeagle 10y ago

Most people with the title "CEO" don't make all that much money. Much strangeness happens just because of mutual funds and the general distorting effect of the public stock markets. We've decoupled the owners from the "runners". Prior to roughly the period of time in which Micheal Eisner became CEO of Disney, compensation was mainly salary. People complained that it was too much. So more complicated arrangements emerged - options, that sort of thing. For a modest firm of say, 1000 employees, every 100k to the CEO costs each employee $100 ( assuming all is otherwise zero-sum and perfectly linear). So it's not like there's really much that can be done to improve things for the rank and file. I was watching the beating given to John G. Stumpf by Congress on CSPAN yesterday. It seems that incentive pay/pay for performance might be on the way out if that is any sort of bellwether.

hammock 10y ago

Would you take the CEO job for your current salary?

kwhitefoot 10y ago
No but I know plenty of people who would take it on for say two or three times my salary.
dvtv75 10y ago
No, particularly because salaries and wages in my area are amongst the lowest in the nation, while CEO salaries are amongst the highest in the nation. (Which is remarkable given the region's sheer excess of corruption and incompetence at that level.)

gnicholas 10y ago

The question isn't if the CEO is working 100x as hard or is 100x as smart. Their decisions have an impact across the organization, so even if they were just a little smarter, they would make a big difference.

dvtv75 10y ago
As the cited research reveals, while their decisions may have an impact across the organization, the results can be mostly be attributed to luck. They are being paid astronomical amounts not for being smart, not for ability to read the markets, nor for hard work, but simply for being able to convince someone else that they are responsible for being lucky.
- gnicholas 10y ago
  The fact that some outcomes are driven by luck does not mean that there isn't still a very large difference from small differentials in skill/experience/dedication. Imagine a company with $100M in annual revenue and an annual growth rate between 10 and 20 percent. On average, the growth rate would be 15% (say), and skill of the CEO could have some impact that pushes it up or down 10% (that is, ±1.5%). The difference between 13.5% an 16.5% represents a $3,000,000 revenue differential. The impact on profits is likely much higher (due to fixed costs of production, which exist in nearly all industries). So even if you take the research findings as true, it still makes sense to prefer an executive with more skill, experience, and dedication. Even if 90% of outcomes are driven by luck, the 10% that he or she contributes is still meaningful.

FullMtlAlcoholc 10y ago

I was going to post something similar. Us humans sure do love our social hierarchies. Most people find it untenable that random chance and/or the independent actions of a multitude of phenomena make up a great deal of what we perceive as reality. We are heavily biased towards order both as a means to explain the world around us and operate within it. It's why so many people fall prey to conspiracy theories. There's a comfort in knowing everything is under control. I have a pet hypothesis that the invention of Gods went like this: Uggg: When I look up at the sky, I more or less see the same thing day after day. However, the events that happen infrequently, the eclipses, blood moons, shooting stars, gamma Ray bursts, etc. shows a level of variance and complexity beyond measure and comprehension. Krug: Even though it looks random and chaotic, there's gotta be some big guy up there behind the curtain. Otherwise, what's the point? Uggg:Yeah, that's too depressing. Life is brutish enough as it is. We're still part of the frakkin food chain! Let's not consider existentialism for another 20,000 years. Big wizard guy in the sky it is! That type of thinking permeates in all facets, so we think it's only natural the guy on top is the essential person in a company. I've had the fortune of working at startups that were comprised of intelligent and talented people from bottom to top. In fact, at a couple of gigs, the ceo doggedly tried to keep their original vision as their fortunes sank. It was the non c-level employees that recommended and executed plans to pivot. There are those rare unicorns like Elon and Jobs. Although they consistently work with some of the most talented people in the world across multiple disciplines, they set forth a vision that would be considered ludicrous by almost any standard. Yet, whether it's by cult of personality or some other rare trait they consistently have success across different fields. Also, it is important to distinguish founder/CEO's who generally risk all they have on something that is likely to fail. Just throwing numbers out there, but I'd wager that 95% of current CEO don't come up with anything groundbreaking and are executing pretty standardized plans for the duration of their tenure. Personal relationships do matter, but their importance generally has an inverse relationship to the size of your company

quietkatalyst 10y ago

On the other hand, my CEO is probably stressed 24/7 about the company, whereas I can just go home and not think about work.

coredog64 10y ago

The cost of options is borne by shareholders more than by the company's compensation budget. I picked a random large company from Yahoo finance (Proctor and Gamble). The CEO's pay is $4M/year. If you paid him nothing, the rest of the employees would get an additional ~ $.75/week. GE (another fairly large company) is in approximately the same situation. Immelt gets about 4x as much, but GE has about 3x as many employees.

aliston 10y ago

This is how the real world works. Its far less meritocratic than we're brought up to believe and based much more on perception than reality. It's also the way that the world has always worked and probably always will work so long as we have a capitalist system. Thomas Edison didn't invent the lightbulb and Elon Musk is not "the founder" of Tesla.

brbsix 10y ago

> Executive comp is a major racket, enforced by the standard that this is "what the market average is". Which is set by executives overpaying themselves. > Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you. The answer is usually a definite no. Ask yourself, does a software developer in SF work 1000x harder than a laborer in the Congo? Is a PhD Physicist really as smart as a NYC sanitation worker? Apart from the emotionally manipulative language, I'm not sure what your point is. CEO compensation is a price. What does hard work or intelligence have to do with the price of something?

projektir 10y ago
Reapplying it doesn't actually change the argument. Janitors can be underpaid compared to CS people and CS people could be underpaid compared to CEO's at the same time.
- brbsix 10y ago
  Underpaid according to who? The point I was making was that salaries, like all prices, are dictated by market forces. They aren't dictated by some arbitrary metric (e.g. hard work or intelligence) that you, as some uninterested third-party, decide.
  - projektir 10y ago
    Underpaid according to people with sense. For one, market forces do not dictate reality. They are an artificial construction WE created and WE are responsible for. If they result in someone's mistreatment we should see it as it is and not wave our hands and say "well, market forces". Perhaps the mistreatment is not obvious to you but it is obvious to plenty. For another, the "market forces" aren't really market forces because there are too many other things involved because we don't live in a vacuum of perfect capitalism. There are things like collusion, there are things like threat of loss of shelter and health, etc., that corrupt it. Proper market forces would require extremely powerful and knowledgeable agents that can freely accept and reject products. We're nowhere near close such a reality. For an obvious example of immoral effects of "market forces", see googamooga's post over here: https://news.ycombinator.com/item?id=12553936 https://news.ycombinator.com/item?id=12553936 If you don't see anything wrong there and your reaction is just "well, market forces..." I think you need to take a step back and think about what we humans are doing on this planet.

deleted 10y ago

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sjg007 10y ago

This is why you get an MBA and join a couple boards.

BrandonM 10y ago

I think professional athletes make an interesting parallel with CEOs. The majority of athletes are unarguably the absolute best in the world at what they do. Superstars have a far bigger impact on their team's performance than an average player in the league. Many commenters have argued that good CEOs have large impacts on company performance. The average NFL career is 3.5 years; the average NBA career is 4.8 years. Several commenters have pointed out that CEOs of failing companies risk this being their last CEO job. Athletes are derided if they cannot save enough to ensure their retirement when they are making millions of dollars a year. Why can't we expect CEOs to manage their own finances responsibly and plan for a future where they aren't earning millions? After their playing careers, many athletes choose to work lower paying jobs as assistants, coaches, commentators, consultants, etc. Why can't a CEO take a step back after a failure and be a COO, CMO, VP of Sales, etc.? During their careers, NFL and NBA players' earnings are limited by a salary cap. LeBron James can't earn more than ~$30MM from his playing contract, even though he generates far more revenue in TV contracts, jersey sales, gate receipts, etc. Why can't we impose salary caps on CEOs?

moduspwnens14 10y ago
We can impose salary caps--it just means that the people who are really good at this stuff will play in a different league. If there were another NBA where LeBron would make 10x his salary, he'd play in it. All the best players would. And then that league would be more successful. Now instead of "league" and "LeBron," substitute in "country" and "the world's best corporate executives" and you'll see why it's a bad idea. We want the world's best here.
- BrandonM 10y ago
  There are other professional basketball leagues that don't have salary caps, and LeBron doesn't play for them. The NBA salary cap is close to or exceeds what he could make in other leagues. Additionally, playing for the NBA gives him greater exposure to the American market. Do you have any countries in mind that are going to pay executives more per year than the US, even with a salary cap? My understanding is that the US is already so far above the rest of the world that it would have to come way down to lose out on a raw compensation basis. IMO, a cap would mostly serve to rein in the well-networked, measurable-performance-leveraging aspects of CEO compensation. Compared to every other employee, CEOs have a far greater ability to extract money from a company, mostly independent of their contributions to that company. Is it any surprise, then, that they leverage that ability to earn far more than their coworkers?