8 ms·

Yes it does. Aetna employees almost 50,000 people. Aetna owes some success to their CEO. They owe most of their success to their employees.

dymk 9y ago
Right, because those 50,000 employees were making the major directional decisions for the company, not the C level execs
- chasing 9y ago
  Directional decisions aren't the only important decisions. And, yes: Non-C-level execs make directional decisions all the time. Especially in a company the size of Aetna.
  - new-account-9 9y ago
    If you get the big decisions correct, then your company can survive many incorrect small decisions. If you get the big decisions incorrect, then your company will not survive even if all the small decisions are correct.
    - pc86 9y ago
      [citation needed]
- justicezyx 9y ago
  Can you quantify the ratio of payment vs. the ratio of contribution? And the amount of supply vs demand for 2 groups?
- psyc 9y ago
  No rationalization about value can ever hide the obvious and deep-rooted lord / serf dynamic.
  - new-account-9 9y ago
    You claim there is a lord/serf dynamic. Let's take that a step further. Let's free the "serfs" by removing every lord from power today. Now, we have just lost all of our experts in managing large companies, and global competitors come in and take over the markets our own companies used to control. Now you work for them, instead of for our own companies, because you still have to make money. Do you think that your Chinese or Israeli lords are better than the American ones?
- illvm 9y ago
  The only reason those people are able to contemplate such decisions is because of the thousands of workers supporting the enterprise.
  - Sargos 9y ago
    And the only reason those thousands of people are able to support the enterprise is because of the top level executives making sure the business stays on track
thevardanian 9y ago
Say I start building a house. I realize I can't do it all by myself, so I get other people to do all the labor involved in building it. All the while providing all the details, instructions, and architectural guidelines to get a good finished product. Not to mention sourcing the materials required, getting the plans approved by the city, and making sure that on-sight construction passes inspection by the city. Who "owes" most of the success in building the house? The labor, or the person employing the labor productively? Edit: Just to clarify. I genuinely don't know who should get credit for the success of building a house. Both are almost equally as important. However I can say that it seems, maybe, possibly that labor collectively is as important as the single person making all the decision. That is no single laborer is as important as the person trying to get the building made.
- dangerlibrary 9y ago
  That's not really a good analogy for a CEO's job, though. A CEO's job would be someone who makes a small number of very broad, directional choices (should the home be Victorian, or Brutalist?) then hires and manages a team of people to hire and manage teams of people to hire and manage teams of people to build a house. Given that the only decision they made was "Victorian vs Brutalist" and then hiring some decent managers, should they still receive that much compensation just for (in this case!) happening to have made the right choice?
- chasing 9y ago
  Aetna's CEO is an employee of Aetna. So in your tale he's part of the labor, not the person who wants a house built.
  - Cshelton 9y ago
    Typically high level executives are required to buy a certain number of shares in the company. That's not including the options earned, but actual shares they have to buy. Now yes, much of the time, the shares they have to buy are options they have to exercise, but in the end, the stakeholders always want to see the decision makers have skin in the game. So yes, the CEO is an owner as well.
bkanber 9y ago
I'm all for taxing the rich and compensating workers fairly. But: - Had the company declined, the CEO would have gotten all the blame and been crucified. Can't give blame if you can't also give credit. - The CEO negotiated this deal, the employees did not. - A good portion of this $500M is from the value of his stock, which is part of his compensation. I don't know the percentage of this payout that comes from stock (WSJ paywall...), but we certainly can't take stock AWAY from him to reduce his payout. - Employees who have cashed in their options will also make money from this deal. Other stockholders will make money too. Again -- I am NOT condoning our American trend of over-paid CEOs. More money in the working class is good for the economy. But this event specifically is not ridiculous.
- deleted 9y ago
  [deleted]
- pkaye 9y ago
  Then why not get rid of the rest of the employees and just hire a dozen like him since he is bringing all the value.
  - chrisdbaldwin 9y ago
    You need exactly 1 in the organization. No more, no less. Can you deduce why a collective or cluster hasn't replaced the role? I'd imagine the answer is blame, but I'd like to know what you think.
- Nrsolis 9y ago
  Something I find curious is the degree to which HN seems to want to break out the torches and pitchforks when a CEO profits handsomely by increasing shareholder value. There doesn't seem to be the same animus towards ordinary developers becoming millionaires in a few short years by getting lucky and landing at the right unicorn startup pre-IPO. CEOs interests are aligned perfectly in this situation: increase shareholder value. The vast bulk of CEO pay is derived from the stock that's granted to them and vested over time just like it would be for any employee that received RSUs or stock options. I don't quite grok the idea that employees with no ownership stake in the company are somehow owed a share of the capital gain when they've got no capital of their own at risk. A big part of my compensation is commission and another big part is RSUs. If I don't deliver results and if I don't align my goals with that of the major shareholders and the market, I don't make as much money. I don't see how this contravenes the startup/get-rich zeitgeist here in HN. Capitalism for me but not for thee?
lefstathiou 9y ago
I respectfully disagree with the way you are positioning this. The relative impact of a CEO, whose job is to set strategic direction and direct human (tens of thousands of employees) and financial capital (billions of dollars) at scale, dwarfs that of any of its individual employees and the vast swath of them combined. Most relevant to you, the majority of the benefit of this 7x increase in value in 7 years is actually accruing to the the shareholders, not the CEO. And guess who are the top shareholders of Aetna? #1 Blackrock #2 Capital World Investors #3 Vanguard #4 T Rowe #5 State Street Source: https://whalewisdom.com/stock/aet https://whalewisdom.com/stock/aet All of these above are money managers of "the people's" 401k's and retirements funds. So you can rest assured that the majority of the benefit is going to the people for whom Aetna owes its success.
- sverhagen 9y ago
  I don't think anyone is arguing that he has a more than average impact on the direction of the company. But, like any humble CEO would say, it's all about the people, the people below them, the people throughout the organization. So, while he deserves a decent bonus, fine, why does it need to be roughly thirty-three thousand times minimum wage. And this is just the bonus, he probably still has a very happy salary as well.
  - cabaalis 9y ago
    > why does it need to be roughly thirty-three thousand times minimum wage Because that's what he negotiated with his employers.
- eecc 9y ago
  > The relative impact of a CEO, whose job is to set strategic direction and direct human (tens of thousands of employees) and financial capital (billions of dollars) at scale Or - according to my anecdotal experience - get out of the way and stop interfering with employees that know what they’re doing? I can think of several asinine “big plans” that just ended up burning huge stashes of capital and costing even more in opportunities that were heralded as the new Advent of Christ, “and don’t you dare be the naysayer!”
refurb 9y ago
And if the company had done poorly, would be game for the employees taking a pay cut? It works both ways.
- iterati 9y ago
  They'd be fired.
- zentiggr 9y ago
  That usually works out as 100% for some, 0% for the rest.
- wmeredith 9y ago
  No it doesn't. If the company was tanking, the employees would get laid off whereas the CEO would be launched with a golden parachute, often one that's worth more than any employee will make in their entire life.
- jimbokun 9y ago
  Uh, yeah, that's probably much more likely than management taking a pay cut at almost any US company. Or getting laid off.
bfuller 9y ago
I am just curious how the system should work then?

dymk 9y ago

Right, because those 50,000 employees were making the major directional decisions for the company, not the C level execs

chasing 9y ago
Directional decisions aren't the only important decisions. And, yes: Non-C-level execs make directional decisions all the time. Especially in a company the size of Aetna.
- new-account-9 9y ago
  If you get the big decisions correct, then your company can survive many incorrect small decisions. If you get the big decisions incorrect, then your company will not survive even if all the small decisions are correct.
  - pc86 9y ago
    [citation needed]
justicezyx 9y ago
Can you quantify the ratio of payment vs. the ratio of contribution? And the amount of supply vs demand for 2 groups?
psyc 9y ago
No rationalization about value can ever hide the obvious and deep-rooted lord / serf dynamic.
- new-account-9 9y ago
  You claim there is a lord/serf dynamic. Let's take that a step further. Let's free the "serfs" by removing every lord from power today. Now, we have just lost all of our experts in managing large companies, and global competitors come in and take over the markets our own companies used to control. Now you work for them, instead of for our own companies, because you still have to make money. Do you think that your Chinese or Israeli lords are better than the American ones?
illvm 9y ago
The only reason those people are able to contemplate such decisions is because of the thousands of workers supporting the enterprise.
- Sargos 9y ago
  And the only reason those thousands of people are able to support the enterprise is because of the top level executives making sure the business stays on track

thevardanian 9y ago

Say I start building a house. I realize I can't do it all by myself, so I get other people to do all the labor involved in building it. All the while providing all the details, instructions, and architectural guidelines to get a good finished product. Not to mention sourcing the materials required, getting the plans approved by the city, and making sure that on-sight construction passes inspection by the city. Who "owes" most of the success in building the house? The labor, or the person employing the labor productively? Edit: Just to clarify. I genuinely don't know who should get credit for the success of building a house. Both are almost equally as important. However I can say that it seems, maybe, possibly that labor collectively is as important as the single person making all the decision. That is no single laborer is as important as the person trying to get the building made.

dangerlibrary 9y ago
That's not really a good analogy for a CEO's job, though. A CEO's job would be someone who makes a small number of very broad, directional choices (should the home be Victorian, or Brutalist?) then hires and manages a team of people to hire and manage teams of people to hire and manage teams of people to build a house. Given that the only decision they made was "Victorian vs Brutalist" and then hiring some decent managers, should they still receive that much compensation just for (in this case!) happening to have made the right choice?
chasing 9y ago
Aetna's CEO is an employee of Aetna. So in your tale he's part of the labor, not the person who wants a house built.
- Cshelton 9y ago
  Typically high level executives are required to buy a certain number of shares in the company. That's not including the options earned, but actual shares they have to buy. Now yes, much of the time, the shares they have to buy are options they have to exercise, but in the end, the stakeholders always want to see the decision makers have skin in the game. So yes, the CEO is an owner as well.

bkanber 9y ago

I'm all for taxing the rich and compensating workers fairly. But: - Had the company declined, the CEO would have gotten all the blame and been crucified. Can't give blame if you can't also give credit. - The CEO negotiated this deal, the employees did not. - A good portion of this $500M is from the value of his stock, which is part of his compensation. I don't know the percentage of this payout that comes from stock (WSJ paywall...), but we certainly can't take stock AWAY from him to reduce his payout. - Employees who have cashed in their options will also make money from this deal. Other stockholders will make money too. Again -- I am NOT condoning our American trend of over-paid CEOs. More money in the working class is good for the economy. But this event specifically is not ridiculous.

deleted 9y ago
[deleted]
pkaye 9y ago
Then why not get rid of the rest of the employees and just hire a dozen like him since he is bringing all the value.
- chrisdbaldwin 9y ago
  You need exactly 1 in the organization. No more, no less. Can you deduce why a collective or cluster hasn't replaced the role? I'd imagine the answer is blame, but I'd like to know what you think.
Nrsolis 9y ago
Something I find curious is the degree to which HN seems to want to break out the torches and pitchforks when a CEO profits handsomely by increasing shareholder value. There doesn't seem to be the same animus towards ordinary developers becoming millionaires in a few short years by getting lucky and landing at the right unicorn startup pre-IPO. CEOs interests are aligned perfectly in this situation: increase shareholder value. The vast bulk of CEO pay is derived from the stock that's granted to them and vested over time just like it would be for any employee that received RSUs or stock options. I don't quite grok the idea that employees with no ownership stake in the company are somehow owed a share of the capital gain when they've got no capital of their own at risk. A big part of my compensation is commission and another big part is RSUs. If I don't deliver results and if I don't align my goals with that of the major shareholders and the market, I don't make as much money. I don't see how this contravenes the startup/get-rich zeitgeist here in HN. Capitalism for me but not for thee?

lefstathiou 9y ago

I respectfully disagree with the way you are positioning this. The relative impact of a CEO, whose job is to set strategic direction and direct human (tens of thousands of employees) and financial capital (billions of dollars) at scale, dwarfs that of any of its individual employees and the vast swath of them combined. Most relevant to you, the majority of the benefit of this 7x increase in value in 7 years is actually accruing to the the shareholders, not the CEO. And guess who are the top shareholders of Aetna? #1 Blackrock #2 Capital World Investors #3 Vanguard #4 T Rowe #5 State Street Source: https://whalewisdom.com/stock/aet https://whalewisdom.com/stock/aet All of these above are money managers of "the people's" 401k's and retirements funds. So you can rest assured that the majority of the benefit is going to the people for whom Aetna owes its success.

sverhagen 9y ago
I don't think anyone is arguing that he has a more than average impact on the direction of the company. But, like any humble CEO would say, it's all about the people, the people below them, the people throughout the organization. So, while he deserves a decent bonus, fine, why does it need to be roughly thirty-three thousand times minimum wage. And this is just the bonus, he probably still has a very happy salary as well.
- cabaalis 9y ago
  > why does it need to be roughly thirty-three thousand times minimum wage Because that's what he negotiated with his employers.
eecc 9y ago
> The relative impact of a CEO, whose job is to set strategic direction and direct human (tens of thousands of employees) and financial capital (billions of dollars) at scale Or - according to my anecdotal experience - get out of the way and stop interfering with employees that know what they’re doing? I can think of several asinine “big plans” that just ended up burning huge stashes of capital and costing even more in opportunities that were heralded as the new Advent of Christ, “and don’t you dare be the naysayer!”

refurb 9y ago

And if the company had done poorly, would be game for the employees taking a pay cut? It works both ways.

iterati 9y ago
They'd be fired.
zentiggr 9y ago
That usually works out as 100% for some, 0% for the rest.
wmeredith 9y ago
No it doesn't. If the company was tanking, the employees would get laid off whereas the CEO would be launched with a golden parachute, often one that's worth more than any employee will make in their entire life.
jimbokun 9y ago
Uh, yeah, that's probably much more likely than management taking a pay cut at almost any US company. Or getting laid off.

bfuller 9y ago

I am just curious how the system should work then?