8 ms·

There are a lot of good points here, but it feels like most of her compensation is explained right here To lure Ms. Mayer from Google and compensate her for

There are a lot of good points here, but it feels like most of her compensation is explained right here To lure Ms. Mayer from Google and compensate her for options she forfeited there, Yahoo’s board offered her a lucrative employment agreement. She initially received restricted stock worth $35 million and stock options worth $21 million, based on 2012 stock prices for Yahoo, along with a cash salary and bonus. It sounds like Mayer was initially making way more than the 900k/week figure quoted in the title, so it almost doesn't make sense to talk about her performance the rest of the time if we're interested in explaining here salary. There were a couple of significant missteps that the article explains resulted in meaningful pay cuts, but it sounds like the bulk of her compensation was determined from the beginning.

ebbv 9y ago
That doesn't mean it's not worth discussing. I could get hired to be the CEO of Ford and get a contract for a ton of money. But I'd do a poor job probably. It would be worth discussing afterward; how did this happen? Why are executive salaries so incredibly disproportionate to their impact and benefit to the company? What can be done? What should be done?
- korrach 9y ago
  Eat the tich comrade.
- edanm 9y ago
  It isn't clear that the salaries are in fact disproportionate. The article makes the case that there were many mistakes, but that it's hard to say if anyone else could've done better. And the shareholders did end up making a lot of money. I'm not sure anything should be done here. The shareholders chose to pay a lot to get her as CEO. Even if they lost out, it's not a reason to intervene. People make bad bets all the time.
  - pooper 9y ago
    Something must be done to rein in executive pay though. I am not talking about MM in particular. She is probably a fine executive. However, my point is that unchecked executive pay is not good for anyone. We don't live in a free market. There ought to be some way to cap pay. A progressive income tax that caps out at 90% of income above $3M a year? So if you make $3,000,001, you pay 90 cents in taxes on the last dollar you earned sounds fair to me.
    - tossaway1 9y ago
      > income tax that caps out at 90% Kind of like it was in the 50s back when America was "great again"?
      - rsync 9y ago
        I am obligated, any time these very high historical tax rates are mentioned, to point out that these were very special, very specific actions taken to discourage war profiteering during world war two. The extremely high marginal rates that did indeed exist were not implemented as part of a tax regime nor were they enacted to redistribute wealth - they were a patriotic wartime measure enacted to ensure nobody got rich on war contracts. They have almost no relation to our current discussion of tax rates and taxation.
        tossaway1 9y ago
        Maybe so, I'm not an expert on such matters, but the highest tax rate was 50% or higher from 1932-1986. I would say that is relevant to our current discussion.
      - valuearb 9y ago
        You realize that almost no one ever paid 90% or anything close to that, don't you? The tax code that had a 90% rate also had massive deductions.
    - jdmichal 9y ago
      I think you would need to start taxing equity grants for that to have the effect you want. Otherwise, executives just won't sell more equity than $3m a year. And when they found new companies and non-profits, they'll just grant the equity directly and never have paid any personal taxes on it.
  - barrkel 9y ago
    It's funny, but when people talk about CEO compensation, they refer to the value created by the company, yet when they talk about e.g. office cleaner compensation, they talk about the market price of labour. The salary of a CEO could do with more reference to the cost of the next available substitute, rather than how much the CEO changes the stock price. That would require changes in how CEOs are compensated, but it could also change short-term perspectives. Options would seem to motivate CEOs to think with a longer term, but in fact they align with shareholder interests, which are more often short term with investment decisions reviewed quarterly. And shareholder interests are not the most important reasons why we, as a society, have companies.
    - rsync 9y ago
      "It's funny, but when people talk about CEO compensation, they refer to the value created by the company, yet when they talk about e.g. office cleaner compensation, they talk about the market price of labour." Inasmuch as we are talking about either of them, the discussion of CEO involves fairly high level abstractions about jobs and tasks that most people have never done at a scale they have never done it at. So I think it makes sense that you have a deeper, more abstract discussion of value. On the other hand, all of us have cleaned an office/room/building. We've all cleaned toilets and vacuumed floors and washed a kitchen. There's no reason for abstraction or analogy or depth - we all know how it works so we can just cut to the chase.
    - edanm 9y ago
      "The salary of a CEO could do with more reference to the cost of the next available substitute, rather than how much the CEO changes the stock price. That would require changes in how CEOs are compensated [...]" Would it? I assume that just like in every market, the pay of the CEO is based on exactly this. Supply & demand tend to be the cause of prices. When we talk about the value that CEOs bring, and quite specifically talk about how no one else could've done the job that Marissa Mayer did, we're implicitly talking about supply & demand - the supply of people who can do the job she did is very small, the amount of companies who would love to have a high-functioning CEO that can raise their stock price is very high, and therefore CEO pay is what it is. I assume that if Yahoo could've gotten some other succesfull figure at a fracftion of the price, they would've done so - it's in the shareholder's interests and they more-or-less make the decisions. Of course, I'm not naive enough to think that this is a purely technical matter - I assume a lot of human psychology, precedent and culture goes into this, e.g. the amount that exectuvies make is well-known, which causes other executives to raise their price to "compete", etc. This effectively makes wages higher than they "should have been". But I do assume that none of us are smart or knoweldgeable enough to say what CEO pay really "should" be, even assuming that's a well-defined concept. I think that most people just hear a big number, say "that's way too much" and have this as the bottom-line of their thinking, then come up with all sorts of arguments for why their bottom line is right, rather than questioning the core assumption and realising that maybe, CEOs are worth their price.

ebbv 9y ago

That doesn't mean it's not worth discussing. I could get hired to be the CEO of Ford and get a contract for a ton of money. But I'd do a poor job probably. It would be worth discussing afterward; how did this happen? Why are executive salaries so incredibly disproportionate to their impact and benefit to the company? What can be done? What should be done?

korrach 9y ago
Eat the tich comrade.
edanm 9y ago
It isn't clear that the salaries are in fact disproportionate. The article makes the case that there were many mistakes, but that it's hard to say if anyone else could've done better. And the shareholders did end up making a lot of money. I'm not sure anything should be done here. The shareholders chose to pay a lot to get her as CEO. Even if they lost out, it's not a reason to intervene. People make bad bets all the time.
- pooper 9y ago
  Something must be done to rein in executive pay though. I am not talking about MM in particular. She is probably a fine executive. However, my point is that unchecked executive pay is not good for anyone. We don't live in a free market. There ought to be some way to cap pay. A progressive income tax that caps out at 90% of income above $3M a year? So if you make $3,000,001, you pay 90 cents in taxes on the last dollar you earned sounds fair to me.
  - tossaway1 9y ago
    > income tax that caps out at 90% Kind of like it was in the 50s back when America was "great again"?
    - rsync 9y ago
      I am obligated, any time these very high historical tax rates are mentioned, to point out that these were very special, very specific actions taken to discourage war profiteering during world war two. The extremely high marginal rates that did indeed exist were not implemented as part of a tax regime nor were they enacted to redistribute wealth - they were a patriotic wartime measure enacted to ensure nobody got rich on war contracts. They have almost no relation to our current discussion of tax rates and taxation.
      - tossaway1 9y ago
        Maybe so, I'm not an expert on such matters, but the highest tax rate was 50% or higher from 1932-1986. I would say that is relevant to our current discussion.
    - valuearb 9y ago
      You realize that almost no one ever paid 90% or anything close to that, don't you? The tax code that had a 90% rate also had massive deductions.
  - jdmichal 9y ago
    I think you would need to start taxing equity grants for that to have the effect you want. Otherwise, executives just won't sell more equity than $3m a year. And when they found new companies and non-profits, they'll just grant the equity directly and never have paid any personal taxes on it.
- barrkel 9y ago
  It's funny, but when people talk about CEO compensation, they refer to the value created by the company, yet when they talk about e.g. office cleaner compensation, they talk about the market price of labour. The salary of a CEO could do with more reference to the cost of the next available substitute, rather than how much the CEO changes the stock price. That would require changes in how CEOs are compensated, but it could also change short-term perspectives. Options would seem to motivate CEOs to think with a longer term, but in fact they align with shareholder interests, which are more often short term with investment decisions reviewed quarterly. And shareholder interests are not the most important reasons why we, as a society, have companies.
  - rsync 9y ago
    "It's funny, but when people talk about CEO compensation, they refer to the value created by the company, yet when they talk about e.g. office cleaner compensation, they talk about the market price of labour." Inasmuch as we are talking about either of them, the discussion of CEO involves fairly high level abstractions about jobs and tasks that most people have never done at a scale they have never done it at. So I think it makes sense that you have a deeper, more abstract discussion of value. On the other hand, all of us have cleaned an office/room/building. We've all cleaned toilets and vacuumed floors and washed a kitchen. There's no reason for abstraction or analogy or depth - we all know how it works so we can just cut to the chase.
  - edanm 9y ago
    "The salary of a CEO could do with more reference to the cost of the next available substitute, rather than how much the CEO changes the stock price. That would require changes in how CEOs are compensated [...]" Would it? I assume that just like in every market, the pay of the CEO is based on exactly this. Supply & demand tend to be the cause of prices. When we talk about the value that CEOs bring, and quite specifically talk about how no one else could've done the job that Marissa Mayer did, we're implicitly talking about supply & demand - the supply of people who can do the job she did is very small, the amount of companies who would love to have a high-functioning CEO that can raise their stock price is very high, and therefore CEO pay is what it is. I assume that if Yahoo could've gotten some other succesfull figure at a fracftion of the price, they would've done so - it's in the shareholder's interests and they more-or-less make the decisions. Of course, I'm not naive enough to think that this is a purely technical matter - I assume a lot of human psychology, precedent and culture goes into this, e.g. the amount that exectuvies make is well-known, which causes other executives to raise their price to "compete", etc. This effectively makes wages higher than they "should have been". But I do assume that none of us are smart or knoweldgeable enough to say what CEO pay really "should" be, even assuming that's a well-defined concept. I think that most people just hear a big number, say "that's way too much" and have this as the bottom-line of their thinking, then come up with all sorts of arguments for why their bottom line is right, rather than questioning the core assumption and realising that maybe, CEOs are worth their price.