10 ms·

The Decline of the Baronial C.E.O

92 points by __derek__ 9y ago

devoply 9y ago
Only ones it seems left with privilege are those who have a lot of capital. Everyone else has been reigned in to serve them and their needs and interests. Which I guess is how meritocracy works.
- jaggederest 9y ago
  That's not meritocracy. It's just flat out rent-seeking.
  - devoply 9y ago
    Well I define meritocracy not as ability, but appearance. Because in a corporation it is often very difficult to gauge ability but much easier to gauge appearance. So everyone should appear as if they are being squeezed and kept in line. And they are doing just that.
    - wolfram74 9y ago
      That's one way to make America a meritocracy, just redefine meritocracy to loosely reflect inheritance based feudalism.
      - jaggederest 9y ago
        The divine right of meritocrats!
    - adrusi 9y ago
      That's not a reasonable definition of meritocracy. "I guess thats how meritocracy works" sounds like you're saying "meritocracy is a good thing, but look at how bad the outcomes are, or at least how bad the outcomes appear", but by how you claim to define meritocracy, it wouldn't be a good thing in almost anyone's book.
      - devoply 9y ago
        Well what is the purpose of this piece. The purpose of this piece is to play down how much more compensation CEOs get. It's basically a P/R piece to tell all the working classes that everything is fine, and the CEOs are being reigned in. So obviously some sarcasm is in order. But the picture is complicated, that on one hand CEOs are made to appear a certain way, as if they don't have privilege and are working harder than everyone else to deserve all that extra compensation. At the same time they do have much more privilege than any time in history, in terms of their compensation. Another way of looking at it is that this is exactly how the shareholders want the situation to appear, in that CEOs are working hard for them, their bosses, and they don't mind paying for that hard work with extra compensation, which I guess is the exact dynamics of the situation.
        bogomipz 9y ago
        Thank you for pointing this out and I agree. This is very much propaganda. Reigning in the total square footage of the executive wing at GE and replacing walnut with glass is just tokenism. No changes have been made to the outsized pay packages where a CEO will make 70 to 300 times what the average worker makes.
        jaggederest 9y ago
        I will certainly trade a walnut-lined suite for a $85m pay package.
        __derek__ 9y ago
        Boards have moved from investing (expecting a CEO to work for a decade or two improving the company) to speculating (betting that a new hotshot is going to bring big fast returns). The pay increases are an acknowledgement of that change, almost like hazard pay.
      - bogomipz 9y ago
        Agreed. Outwardly the definition of meritocracy sounds positive: "an elite group of people whose progress is based on ability and talent rather than on class privilege or wealth."[1] However defining what constitutes "merit" has some issues: The term "meritocracy" was originally intended as a negative concept.One of the primary concerns with meritocracy is the unclear definition of "merit" What is considered as meritorious can differ with opinions as on which qualities are considered the most worthy, raising the question of which "merit" is the highest—or, in other words, which standard is the "best" standard. As the supposed effectiveness of a meritocracy is based on the supposed competence of its officials, this standard of merit cannot be arbitrary and has to also reflect the competencies required for their roles.[2] [1] http://www.dictionary.com/browse/meritocracy http://www.dictionary.com/browse/meritocracy [2] https://en.wikipedia.org/wiki/Meritocracy https://en.wikipedia.org/wiki/Meritocracy
- hkmurakami 9y ago
  "A meritocracy is a system in which the people who are the luckiest in their health and genetic endowment; luckiest in terms of family support, encouragement, and, probably, income; luckiest in their educational and career opportunities; and luckiest in so many other ways difficult to enumerate — these are the folks who reap the largest rewards. The only way for even a putative meritocracy to hope to pass ethical muster, to be considered fair, is if those who are the luckiest in all of those respects also have the greatest responsibility to work hard, to contribute to the betterment of the world, and to share their luck with others." -- Ben Bernanke, Princeton University Commencement 2013
  - devoply 9y ago
    Well when has this ever not been the case? The way most of our economic systems are set up, the disparity of wealth between nations, between races, etc. They are all about this luck. In fact the difference between human beings and animal is exactly that as well. The concept taken to its conclusion is absurd. The point that he's trying to make is one for a more social system. But gasp that's socialism, isn't it? Capital drives the system. Those who hold capital want more capital. So obviously they are going to do everything in their power to do just that. To ask them to appeal to lower common denominators, well that's sort of like asking a General to hire less competent soldiers; how then do you expect them to win a war?
    - hkmurakami 9y ago
      This speech was given to Princeton undergraduates -- 1150 of the most fortunate and well supported people in the world. He's urging them to be self aware of their immense good fortune, and to be generous and grateful rather than selfish and envious. Princeton is the epitome of a capitalistic school. Very few students will become socialists. Having more Rockefellers and Carnegies (who have both given to the university) is not a bad thing for this world.
      - cli 9y ago
        >Princeton is the epitome of a capitalistic school. Please explain this. I know little about Princeton.
- nostrademons 9y ago
  Nah, folks with capital think that they're being screwed too. It's very hard to find investments with positive inflation-adjusted returns, and when you do, the perception is that they're often overvalued and hence quite risky. Public-company shareholders who thought they had a steady dividend-paying income source are finding that even the steadiest dividend-paying income sources are going out of business or getting bought in transactions that shareholders have little leverage on. What's really happening, I suspect, is that we're living in a time of great change where all existing institutions are steadily decaying and eventually collapsing. And so if you can identify a group as a class and write about them in a news article, chances are they're getting screwed. Plenty of individuals are not getting screwed and are profiting massively off this, but they belong to groups that didn't have labels a decade ago, like "tech startup founder" or "import/export business owner" or "Chinese contract manufacturer" or even "data scientist". These individuals have a very strong incentive not to crow about their success, because when everybody else is getting screwed and you say "Oh, actually I'm doing better than I ever expected", you paint a big target on your head.
  - epistasis 9y ago
    >It's very hard to find investments with positive inflation-adjusted returns While I understand that you're perhaps not asserting this personally, and are restating the words of others it's important to say that this part is absolutely untrue. In fact, if somebody with wealth actually believes this, and isn't just using it as propaganda in class warfare, that person is a poor steward of capital and it would be best if it were in more capable hands. Trivial investment choices, like total-market stock index funds, have solid returns that easily beat inflation, and little to no risk on 10 year time scales, which is where investment should take place. If they can't stomach any temporary negative dips, TIPS will give them that. In any case there is an abundance of easy, inflation-positive investments out there just lying around. Even the middle-class that have saved small amounts can get first-class investment in index funds.
    - computerex 9y ago
      Totally agree, this drives the point home: https://www.fool.com/investing/2017/02/26/warren-buffett-just-revealed-the-best-investment-m.aspx https://www.fool.com/investing/2017/02/26/warren-buffett-jus...
- erikb 9y ago
  Plus military power. We always forget that but if we talk super rich, we also talk Sheik/President/King level. And as said in other subthreads: They are also not feeling save anymore.
bogomipz 9y ago
From the article" >"Google’s Class B shares have 10 times the voting power of normal shares, enabling the founders, Larry Page and Sergey Brin, to retain control of the holding company Alphabet without owning a majority stake." This implies that these two are the only two posses shares with voting power, is this accurate? The article also references FB and the consolidation of voting stock in one individual. My question is what is the protocol if something were to happen to person or persons who retain all these voting shares - death, or incapacitated etc?
- hkmurakami 9y ago
  Iirc Schmidt Page Brin combine to control the majority of votes. This tight control will lapse when the Schmidt estate goes through a generational estate transfer event and liquidates shares to conver taxes (since he is the oldest of the three).
  - __derek__ 9y ago
    In anticipation of that, though, the three could form a new share structure that consolidates power in Brin and Page.
  - bogomipz 9y ago
    Thanks for the responses. I guess an additional question I have is - if a small minority or in FB's case an individual control the voting stock do they automatically control who sits on the board? I guess if that's the case, why have a board at all? Is it just for optics?
- nostrademons 9y ago
  It's not quite true - holders of Google Class A shares ("GOOGL") also have voting power. However, Page, Brin, and Schmidt together control more than 50% of the voting power of the company, which means that as long as those 3 are united, it doesn't matter how many GOOGL shares activist investors can control. Where this might matter, hypothetically, is if you can separate one of the 3 from the other on an issue. If, for example, Larry did such a terrible job running the company that even Sergey believed he should be replaced, then an activist investor coalition together with Sergey's Class B shares could force a change in leadership. In such a situation, it's likely that GOOGL (class A, with voting privileges) would fetch a very hefty premium over GOOG (class C, no voting privileges), because an activist investor coalition would need to own nearly all the class A shares plus have the support of Sergey or Eric to effect change.
hammock 9y ago
Like it or not, the CEO is working class. It's a job, like yours, with a boss. And they, like the rest of the working class, had more power in the mid-recent past than they do today. Today, 40% of wealth is owned by 1% of the population. And the 1% are not CEOs. This capital concentration has greatly reduced the influence of a CEO.
- __derek__ 9y ago
  It depends on what you mean by "the CEO." If we're talking about S&P 500 CEOs (which is itself an overly broad proxy for the "corporate giants" that are the subject of this article), they're definitely members of the 1%.[1] [1]: http://www.equilar.com/reports/48-associated-press-ceo-pay-study-2017.html http://www.equilar.com/reports/48-associated-press-ceo-pay-s...
  - tehlike 9y ago
    I guess what he is trying to say is that sure they are wealthy, bu probably not powerful.
  - erikb 9y ago
    I full heartedly disagree. Maybe the number "one" is wrong, maybe it's 0.1%, but the industrial emperor is not the same kind of people as today's typcial CEO. Today's CEOs have to be hard working, good looking, result oriented people, just like you and me fearing to get wacked at any mistake or delay. It's just that they live on a higher level than we, but still the same kind of life. The "Baronical CEO" is the kind of guy who grows a belly in his fourties, and spends just as much time in the club with the other guys drinking and pretty girls as in the office. This is not today's typical CEO. However, if you want to imply that even the richest of the richest are sh*tting their pants because they also don't know how everything will continue, then I would agree as well. It's likely that fewer and fewer people have a relaxed life, and those who have mostly live that way due to lack of oversight.
    - eropple 9y ago
      > Today's CEOs have to be hard working, good looking, result oriented people, just like you and me fearing to get wacked at any mistake or delay. And their failure case is a golden parachute, not penury. Little bit different.
gwern 9y ago
Nothing about CEO salaries or compensation or wealth, though, which would seem to be the true measures of CEO status.
- maneesh 9y ago
  gwern! Are you the same from gwern.net? I think this article made clear that Fortune 500 CEOs are getting paid a lot --- more than in the past. For example, "So while boards are still willing to dole out huge golden parachutes to C.E.O.’s, even if they fail, they’ve become much more generous with money than they are with additional time." But just like any form of 'money,' it's not just dollars. Money is a form of status, but so is power, reputation, stocks, and more. It seems like 'staying power' would be a truer form of status than 'cash' alone. Frank Underwood once said: "Money is the Mc-mansion in Sarasota that starts falling apart after 10 years. Power is the old stone building that stands for centuries." Not that he is real or anything, but it's a powerful quote.
  - plafl 9y ago
    Maybe one of the reasons why they have lost political power is that the most profitable companies today employ much less people than before, as mentioned in the article. Or at least they employ less people in their own country. A huge workforce is a lot of votes.
  - gwern 9y ago
    (I am.) CEOs may have shorter durations, but that may be illusory in that they can be engaged in a revolving door between companies or the public/private/academic sectors. I'm also not too impressed by the article's talk about opulent offices seeming old-fashioned - opulence is relative, and a personal Gulfstream, however spartan, that one is riding to one's mansion in Tahiti is far more opulent than some marble floors or dumbwaiters in Michigan. If Jeff Bezos has a table made of a door from Home Depot (cough) does that make him any less baronial? Compensation, however, and cases like Snap going public with 100% non-voting shares are far more indicative of the true power of CEOs than some office design or hamhandedly publicly bloviating & dabbling in politics (rather than donating behind the scenes).
sgt101 9y ago
There are lots of issues that this article doesn't touch on. I believe that large companies have become exponentially more complex as IT has come to underpin business processes. Competition has intensified both for markets, people and capital. The CEO's job has become, in my perception, undoable. Compensation has risen because the incumbents are trying to defenestrate themselves on a daily basis, and yes, yes there is a queue of eager applicants for the hot seat, but almost all of them are dribbling lunatics. The sensible, committed super sharp of suite c start shouting and screaming and fighting as soon as it's mentioned that they might be given the CEO role in the future - they know that it's a nightmare. The problem that boards have got is that the complexity has created an ecosystem of corporate types, it's become rich enough to support niching and evolution, and what we see is The Red Queen. Peacock tails of fashion, pose and fucking powerpoint decks dominate. Not only in the corporate itself but amongst the swirling flock of carrion feeders that surround it. I've been witness to/unable to hide from three "blue skys" exercises in corporate structure and strategy from "managing consultants" "auditors" and "boutique consultants". All of which were announced as opportunities, all of which were simply shakedowns and all of which are conducted in the medium of powerpoint slides. Until a powerpoint slide is not interpreted as a signifier of understanding corporates and corporate life will decline. My only hope at this point is the punchline of the red queen story. Peacocks are great, right up until they meet a fox.
- hammock 9y ago
  > All of which were announced as opportunities, all of which were simply shakedowns Shakedowns by the consulting firms? Can you expand bc isn't it the CEO or other exec who hire these guys in the first place
  - michaelt 9y ago
    At least in the UK, publicly traded companies must have their accounts independently audited. But they're also allowed to hire those independent auditors to provide consulting services. This presents a pretty big conflict of interests - a company making £££ in consulting fees isn't going to want to sour the business relationship by being a hardass during the audit. Essentially every time there's a major fraud or accounting scandal, it'll turn out the auditors were also retained as consultants.
not_that_noob 9y ago
I think this parallels the situation in the startup economy. Founder-CEOs are the norm today, as opposed to the older baronial CEO types who walked, talked and looked like old school VC firm partners. It used to be that you needed a lot of capital to enter markets - you had to build a data center, hire people, build and sustain in the hope of a market. For that you needed money, and for old school VCs to feel comfortable, they wanted someone in their mold, and who they could trust. So founders became CTOs and VPs of Engineering, and picked someone the VCs could get behind to raise money. But with the cost of starting a company plummeting, founders no longer have to show this deference. And as some of these companies succeed, their founder CROs are now the new rock stars. And a new breed of VCs asks looks for performance metrics and worries less about fitting a theoretical mold. If there is a mold, it's the founder-CEO in their minds, not the old school baronial CEO. I think a similar dynamic operates in larger companies as well. The necessity of capital acted as an automatic restriction on competitors emerging. Companies could charge high prices, make higher profits and build private five-star hotels. With the cost of building a business dropping however, markets are more competitive than ever, and it's much harder to charge the prices required to sustain profit growth expectations. And investors of course will have no patience for the lavish perks. The times they are a changin'.
- owebmaster 9y ago
  > It used to be that you needed a lot of capital to enter markets - you had to build a data center, hire people, build and sustain in the hope of a market. I'd say that this is still the norm with some lucky exceptions in the Valley, but the Valley itself is a huge capital investment (public and private). If you look world-wide, nobody can compete with Facebook, Google or Apple, even with high investment in data centers, people, etc. Our economical system gives a lot of benefits to monopolies.
  - rtpg 9y ago
    Perhaps more importantly nowadays with this gen of unicorns: Companies are willing to spend a looooot more on acquisition of users, beyond the actual value of the users. Mainly to try a monopolistic play. Uber is the typical example of "turn money into market share", though you can see a lot of SV companies nowadays spending a huge amount in this space.
Ericson2314 9y ago
As others have said, taking such a superficial shift as indicative of power dynamics is ludicrous. I wonder, how much can culture and fashion, rather than technology or globalization or something else directly effecting the market, change this? Could it simply be that mad men shmoozing is out, "data driven" workaholism is in?
- cylinder 9y ago
  As the article alludes, economic growth makes things easy for idiots. Once stagnation sets in, competition rises and the focus is on productivity growth and efficiency which means tech and cost cutting. Technology sector would not be doing nearly as well as it is if we had 6% GDP growth.
jorblumesea 9y ago
It's not just CEOs, all white collar workers are changing from a somewhat hallowed position to just another job. As blue collar jobs disappear competition increases for the positions left and many white collar office positions seem more like factory workers than knowledge workers. It used to be that a college degree would guarantee you a job, now it guarantees you an internship at best.
jorblumesea 9y ago
It's not just CEOs, all white collar workers are changing from a somewhat hallowed position to just another job. As blue collar jobs disappear competition increases for the positions left.
yuhong 9y ago
I have disliked the “Online Forums” approval requirement in Whole Foods Business Code of Conduct for a while now.
daxfohl 9y ago
> Not only did Mr. Immelt have his own bathroom Crazy that this is a big enough deal to be worth mentioning in the article. Honestly, after several years of working from home, the whole bathroom situation has perhaps been the hardest part of corporate life to get used to.

92 points by __derek__ 9y ago

Only ones it seems left with privilege are those who have a lot of capital. Everyone else has been reigned in to serve them and their needs and interests. Which I guess is how meritocracy works.

jaggederest 9y ago
That's not meritocracy. It's just flat out rent-seeking.
- devoply 9y ago
  Well I define meritocracy not as ability, but appearance. Because in a corporation it is often very difficult to gauge ability but much easier to gauge appearance. So everyone should appear as if they are being squeezed and kept in line. And they are doing just that.
  - wolfram74 9y ago
    That's one way to make America a meritocracy, just redefine meritocracy to loosely reflect inheritance based feudalism.
    - jaggederest 9y ago
      The divine right of meritocrats!
  - adrusi 9y ago
    That's not a reasonable definition of meritocracy. "I guess thats how meritocracy works" sounds like you're saying "meritocracy is a good thing, but look at how bad the outcomes are, or at least how bad the outcomes appear", but by how you claim to define meritocracy, it wouldn't be a good thing in almost anyone's book.
    - devoply 9y ago
      Well what is the purpose of this piece. The purpose of this piece is to play down how much more compensation CEOs get. It's basically a P/R piece to tell all the working classes that everything is fine, and the CEOs are being reigned in. So obviously some sarcasm is in order. But the picture is complicated, that on one hand CEOs are made to appear a certain way, as if they don't have privilege and are working harder than everyone else to deserve all that extra compensation. At the same time they do have much more privilege than any time in history, in terms of their compensation. Another way of looking at it is that this is exactly how the shareholders want the situation to appear, in that CEOs are working hard for them, their bosses, and they don't mind paying for that hard work with extra compensation, which I guess is the exact dynamics of the situation.
      - bogomipz 9y ago
        Thank you for pointing this out and I agree. This is very much propaganda. Reigning in the total square footage of the executive wing at GE and replacing walnut with glass is just tokenism. No changes have been made to the outsized pay packages where a CEO will make 70 to 300 times what the average worker makes.
        jaggederest 9y ago
        I will certainly trade a walnut-lined suite for a $85m pay package.
      - __derek__ 9y ago
        Boards have moved from investing (expecting a CEO to work for a decade or two improving the company) to speculating (betting that a new hotshot is going to bring big fast returns). The pay increases are an acknowledgement of that change, almost like hazard pay.
    - bogomipz 9y ago
      Agreed. Outwardly the definition of meritocracy sounds positive: "an elite group of people whose progress is based on ability and talent rather than on class privilege or wealth."[1] However defining what constitutes "merit" has some issues: The term "meritocracy" was originally intended as a negative concept.One of the primary concerns with meritocracy is the unclear definition of "merit" What is considered as meritorious can differ with opinions as on which qualities are considered the most worthy, raising the question of which "merit" is the highest—or, in other words, which standard is the "best" standard. As the supposed effectiveness of a meritocracy is based on the supposed competence of its officials, this standard of merit cannot be arbitrary and has to also reflect the competencies required for their roles.[2] [1] http://www.dictionary.com/browse/meritocracy http://www.dictionary.com/browse/meritocracy [2] https://en.wikipedia.org/wiki/Meritocracy https://en.wikipedia.org/wiki/Meritocracy
hkmurakami 9y ago
"A meritocracy is a system in which the people who are the luckiest in their health and genetic endowment; luckiest in terms of family support, encouragement, and, probably, income; luckiest in their educational and career opportunities; and luckiest in so many other ways difficult to enumerate — these are the folks who reap the largest rewards. The only way for even a putative meritocracy to hope to pass ethical muster, to be considered fair, is if those who are the luckiest in all of those respects also have the greatest responsibility to work hard, to contribute to the betterment of the world, and to share their luck with others." -- Ben Bernanke, Princeton University Commencement 2013
- devoply 9y ago
  Well when has this ever not been the case? The way most of our economic systems are set up, the disparity of wealth between nations, between races, etc. They are all about this luck. In fact the difference between human beings and animal is exactly that as well. The concept taken to its conclusion is absurd. The point that he's trying to make is one for a more social system. But gasp that's socialism, isn't it? Capital drives the system. Those who hold capital want more capital. So obviously they are going to do everything in their power to do just that. To ask them to appeal to lower common denominators, well that's sort of like asking a General to hire less competent soldiers; how then do you expect them to win a war?
  - hkmurakami 9y ago
    This speech was given to Princeton undergraduates -- 1150 of the most fortunate and well supported people in the world. He's urging them to be self aware of their immense good fortune, and to be generous and grateful rather than selfish and envious. Princeton is the epitome of a capitalistic school. Very few students will become socialists. Having more Rockefellers and Carnegies (who have both given to the university) is not a bad thing for this world.
    - cli 9y ago
      >Princeton is the epitome of a capitalistic school. Please explain this. I know little about Princeton.
nostrademons 9y ago
Nah, folks with capital think that they're being screwed too. It's very hard to find investments with positive inflation-adjusted returns, and when you do, the perception is that they're often overvalued and hence quite risky. Public-company shareholders who thought they had a steady dividend-paying income source are finding that even the steadiest dividend-paying income sources are going out of business or getting bought in transactions that shareholders have little leverage on. What's really happening, I suspect, is that we're living in a time of great change where all existing institutions are steadily decaying and eventually collapsing. And so if you can identify a group as a class and write about them in a news article, chances are they're getting screwed. Plenty of individuals are not getting screwed and are profiting massively off this, but they belong to groups that didn't have labels a decade ago, like "tech startup founder" or "import/export business owner" or "Chinese contract manufacturer" or even "data scientist". These individuals have a very strong incentive not to crow about their success, because when everybody else is getting screwed and you say "Oh, actually I'm doing better than I ever expected", you paint a big target on your head.
- epistasis 9y ago
  >It's very hard to find investments with positive inflation-adjusted returns While I understand that you're perhaps not asserting this personally, and are restating the words of others it's important to say that this part is absolutely untrue. In fact, if somebody with wealth actually believes this, and isn't just using it as propaganda in class warfare, that person is a poor steward of capital and it would be best if it were in more capable hands. Trivial investment choices, like total-market stock index funds, have solid returns that easily beat inflation, and little to no risk on 10 year time scales, which is where investment should take place. If they can't stomach any temporary negative dips, TIPS will give them that. In any case there is an abundance of easy, inflation-positive investments out there just lying around. Even the middle-class that have saved small amounts can get first-class investment in index funds.
  - computerex 9y ago
    Totally agree, this drives the point home: https://www.fool.com/investing/2017/02/26/warren-buffett-just-revealed-the-best-investment-m.aspx https://www.fool.com/investing/2017/02/26/warren-buffett-jus...
erikb 9y ago
Plus military power. We always forget that but if we talk super rich, we also talk Sheik/President/King level. And as said in other subthreads: They are also not feeling save anymore.

bogomipz 9y ago

From the article" >"Google’s Class B shares have 10 times the voting power of normal shares, enabling the founders, Larry Page and Sergey Brin, to retain control of the holding company Alphabet without owning a majority stake." This implies that these two are the only two posses shares with voting power, is this accurate? The article also references FB and the consolidation of voting stock in one individual. My question is what is the protocol if something were to happen to person or persons who retain all these voting shares - death, or incapacitated etc?

hkmurakami 9y ago
Iirc Schmidt Page Brin combine to control the majority of votes. This tight control will lapse when the Schmidt estate goes through a generational estate transfer event and liquidates shares to conver taxes (since he is the oldest of the three).
- __derek__ 9y ago
  In anticipation of that, though, the three could form a new share structure that consolidates power in Brin and Page.
- bogomipz 9y ago
  Thanks for the responses. I guess an additional question I have is - if a small minority or in FB's case an individual control the voting stock do they automatically control who sits on the board? I guess if that's the case, why have a board at all? Is it just for optics?
nostrademons 9y ago
It's not quite true - holders of Google Class A shares ("GOOGL") also have voting power. However, Page, Brin, and Schmidt together control more than 50% of the voting power of the company, which means that as long as those 3 are united, it doesn't matter how many GOOGL shares activist investors can control. Where this might matter, hypothetically, is if you can separate one of the 3 from the other on an issue. If, for example, Larry did such a terrible job running the company that even Sergey believed he should be replaced, then an activist investor coalition together with Sergey's Class B shares could force a change in leadership. In such a situation, it's likely that GOOGL (class A, with voting privileges) would fetch a very hefty premium over GOOG (class C, no voting privileges), because an activist investor coalition would need to own nearly all the class A shares plus have the support of Sergey or Eric to effect change.

hammock 9y ago

Like it or not, the CEO is working class. It's a job, like yours, with a boss. And they, like the rest of the working class, had more power in the mid-recent past than they do today. Today, 40% of wealth is owned by 1% of the population. And the 1% are not CEOs. This capital concentration has greatly reduced the influence of a CEO.

__derek__ 9y ago
It depends on what you mean by "the CEO." If we're talking about S&P 500 CEOs (which is itself an overly broad proxy for the "corporate giants" that are the subject of this article), they're definitely members of the 1%.[1] [1]: http://www.equilar.com/reports/48-associated-press-ceo-pay-study-2017.html http://www.equilar.com/reports/48-associated-press-ceo-pay-s...
- tehlike 9y ago
  I guess what he is trying to say is that sure they are wealthy, bu probably not powerful.
- erikb 9y ago
  I full heartedly disagree. Maybe the number "one" is wrong, maybe it's 0.1%, but the industrial emperor is not the same kind of people as today's typcial CEO. Today's CEOs have to be hard working, good looking, result oriented people, just like you and me fearing to get wacked at any mistake or delay. It's just that they live on a higher level than we, but still the same kind of life. The "Baronical CEO" is the kind of guy who grows a belly in his fourties, and spends just as much time in the club with the other guys drinking and pretty girls as in the office. This is not today's typical CEO. However, if you want to imply that even the richest of the richest are sh*tting their pants because they also don't know how everything will continue, then I would agree as well. It's likely that fewer and fewer people have a relaxed life, and those who have mostly live that way due to lack of oversight.
  - eropple 9y ago
    > Today's CEOs have to be hard working, good looking, result oriented people, just like you and me fearing to get wacked at any mistake or delay. And their failure case is a golden parachute, not penury. Little bit different.

gwern 9y ago

Nothing about CEO salaries or compensation or wealth, though, which would seem to be the true measures of CEO status.

maneesh 9y ago
gwern! Are you the same from gwern.net? I think this article made clear that Fortune 500 CEOs are getting paid a lot --- more than in the past. For example, "So while boards are still willing to dole out huge golden parachutes to C.E.O.’s, even if they fail, they’ve become much more generous with money than they are with additional time." But just like any form of 'money,' it's not just dollars. Money is a form of status, but so is power, reputation, stocks, and more. It seems like 'staying power' would be a truer form of status than 'cash' alone. Frank Underwood once said: "Money is the Mc-mansion in Sarasota that starts falling apart after 10 years. Power is the old stone building that stands for centuries." Not that he is real or anything, but it's a powerful quote.
- plafl 9y ago
  Maybe one of the reasons why they have lost political power is that the most profitable companies today employ much less people than before, as mentioned in the article. Or at least they employ less people in their own country. A huge workforce is a lot of votes.
- gwern 9y ago
  (I am.) CEOs may have shorter durations, but that may be illusory in that they can be engaged in a revolving door between companies or the public/private/academic sectors. I'm also not too impressed by the article's talk about opulent offices seeming old-fashioned - opulence is relative, and a personal Gulfstream, however spartan, that one is riding to one's mansion in Tahiti is far more opulent than some marble floors or dumbwaiters in Michigan. If Jeff Bezos has a table made of a door from Home Depot (cough) does that make him any less baronial? Compensation, however, and cases like Snap going public with 100% non-voting shares are far more indicative of the true power of CEOs than some office design or hamhandedly publicly bloviating & dabbling in politics (rather than donating behind the scenes).

sgt101 9y ago

There are lots of issues that this article doesn't touch on. I believe that large companies have become exponentially more complex as IT has come to underpin business processes. Competition has intensified both for markets, people and capital. The CEO's job has become, in my perception, undoable. Compensation has risen because the incumbents are trying to defenestrate themselves on a daily basis, and yes, yes there is a queue of eager applicants for the hot seat, but almost all of them are dribbling lunatics. The sensible, committed super sharp of suite c start shouting and screaming and fighting as soon as it's mentioned that they might be given the CEO role in the future - they know that it's a nightmare. The problem that boards have got is that the complexity has created an ecosystem of corporate types, it's become rich enough to support niching and evolution, and what we see is The Red Queen. Peacock tails of fashion, pose and fucking powerpoint decks dominate. Not only in the corporate itself but amongst the swirling flock of carrion feeders that surround it. I've been witness to/unable to hide from three "blue skys" exercises in corporate structure and strategy from "managing consultants" "auditors" and "boutique consultants". All of which were announced as opportunities, all of which were simply shakedowns and all of which are conducted in the medium of powerpoint slides. Until a powerpoint slide is not interpreted as a signifier of understanding corporates and corporate life will decline. My only hope at this point is the punchline of the red queen story. Peacocks are great, right up until they meet a fox.

hammock 9y ago
> All of which were announced as opportunities, all of which were simply shakedowns Shakedowns by the consulting firms? Can you expand bc isn't it the CEO or other exec who hire these guys in the first place
- michaelt 9y ago
  At least in the UK, publicly traded companies must have their accounts independently audited. But they're also allowed to hire those independent auditors to provide consulting services. This presents a pretty big conflict of interests - a company making £££ in consulting fees isn't going to want to sour the business relationship by being a hardass during the audit. Essentially every time there's a major fraud or accounting scandal, it'll turn out the auditors were also retained as consultants.

not_that_noob 9y ago

I think this parallels the situation in the startup economy. Founder-CEOs are the norm today, as opposed to the older baronial CEO types who walked, talked and looked like old school VC firm partners. It used to be that you needed a lot of capital to enter markets - you had to build a data center, hire people, build and sustain in the hope of a market. For that you needed money, and for old school VCs to feel comfortable, they wanted someone in their mold, and who they could trust. So founders became CTOs and VPs of Engineering, and picked someone the VCs could get behind to raise money. But with the cost of starting a company plummeting, founders no longer have to show this deference. And as some of these companies succeed, their founder CROs are now the new rock stars. And a new breed of VCs asks looks for performance metrics and worries less about fitting a theoretical mold. If there is a mold, it's the founder-CEO in their minds, not the old school baronial CEO. I think a similar dynamic operates in larger companies as well. The necessity of capital acted as an automatic restriction on competitors emerging. Companies could charge high prices, make higher profits and build private five-star hotels. With the cost of building a business dropping however, markets are more competitive than ever, and it's much harder to charge the prices required to sustain profit growth expectations. And investors of course will have no patience for the lavish perks. The times they are a changin'.

owebmaster 9y ago
> It used to be that you needed a lot of capital to enter markets - you had to build a data center, hire people, build and sustain in the hope of a market. I'd say that this is still the norm with some lucky exceptions in the Valley, but the Valley itself is a huge capital investment (public and private). If you look world-wide, nobody can compete with Facebook, Google or Apple, even with high investment in data centers, people, etc. Our economical system gives a lot of benefits to monopolies.
- rtpg 9y ago
  Perhaps more importantly nowadays with this gen of unicorns: Companies are willing to spend a looooot more on acquisition of users, beyond the actual value of the users. Mainly to try a monopolistic play. Uber is the typical example of "turn money into market share", though you can see a lot of SV companies nowadays spending a huge amount in this space.

Ericson2314 9y ago

As others have said, taking such a superficial shift as indicative of power dynamics is ludicrous. I wonder, how much can culture and fashion, rather than technology or globalization or something else directly effecting the market, change this? Could it simply be that mad men shmoozing is out, "data driven" workaholism is in?

cylinder 9y ago
As the article alludes, economic growth makes things easy for idiots. Once stagnation sets in, competition rises and the focus is on productivity growth and efficiency which means tech and cost cutting. Technology sector would not be doing nearly as well as it is if we had 6% GDP growth.

jorblumesea 9y ago

It's not just CEOs, all white collar workers are changing from a somewhat hallowed position to just another job. As blue collar jobs disappear competition increases for the positions left and many white collar office positions seem more like factory workers than knowledge workers. It used to be that a college degree would guarantee you a job, now it guarantees you an internship at best.

jorblumesea 9y ago

It's not just CEOs, all white collar workers are changing from a somewhat hallowed position to just another job. As blue collar jobs disappear competition increases for the positions left.

yuhong 9y ago

I have disliked the “Online Forums” approval requirement in Whole Foods Business Code of Conduct for a while now.

daxfohl 9y ago

> Not only did Mr. Immelt have his own bathroom Crazy that this is a big enough deal to be worth mentioning in the article. Honestly, after several years of working from home, the whole bathroom situation has perhaps been the hardest part of corporate life to get used to.