3 ms·

If you got fired from a job that had a potential $500M payday attached to it and only got a $25M severance package at the end of it, trust me, you'd be pretty b

If you got fired from a job that had a potential $500M payday attached to it and only got a $25M severance package at the end of it, trust me, you'd be pretty bummed about it. Go looking for CEOs that got fired and see where they landed. it's one and done for a lot of them. Again, there is no room for socialist populism here. He negotiated a package and he delivered results. His interests as a CEO are aligned with the shareholders who risk their capital with ownership of the company. They trust the board and the CEO to increase the value of their investment. Why is this controversial? Why does it matter if he's rich before or after he does the job? All of these guys are already wealthy before they even sign up. They don't need to do this work to survive. Somehow the notion seems to go around that anyone who makes a boatload of money suddenly has to kowtow to the public on whether or not they deserve that money. That's not how this works.

s73ver_ 9y ago
"If you got fired from a job that had a potential $500M payday attached to it and only got a $25M severance package at the end of it, trust me, you'd be pretty bummed about it." I'd be bummed. That's it. I wouldn't be wondering if I was going to lose my house, or if I'd still be able to eat. " His interests as a CEO are aligned with the shareholders who risk their capital with ownership of the company. " But not with the interests of the employees who risk their human capital. "Why is this controversial?" Because those who do the majority of the work making the company successful are not rewarded for it.
- Nrsolis 9y ago
  Well, in this great country, you're perfectly welcome to start your own company and distribute 95% of the shares to your first 1000 employees. Tell them they need to work for free for 4 years (or for far below market wages) in order to account for the capital contribution of their labor, comrade, and see how far that gets you. Ben and Jerry's tried to cap CEO pay at 7x their lowest paid worker and soon realized that nobody wanted the job (or at least nobody that was qualified). Now their current CEO is taking home a whole lot more than that and he's not being paid in Chubby Hubby. http://abcnews.go.com/Business/companies-follow-ben-jerrys-lead-wages/story?id=19920634 http://abcnews.go.com/Business/companies-follow-ben-jerrys-l... "I'm talking about Ben Cohen and Jerry Greenfield and their iconoclastic Ben & Jerry's ice cream company. But it's neither Cherry Garcia nor Phish Food that's on my mind right now—well, maybe just a little—as much as it is the social pact that Messrs. Cohen and Greenfield made with their employees at the start of their venture: From top to bottom, the pay ratio between the highest salaried executive and lowest-earning-worker would be no greater than 5 to 1. To their credit, the ice cream kings kept to their pay scale deal for 16 years. At that point, Cohen was set to retire and no successor who was willing to accept B&J's compensation compact could be found. End of an Era So the bar was raised to 7 to 1 to attract new talent, and ultimately to 17 to 1 over the course of a half dozen years more. The company was then acquired by Unilever USA in 2000, after which the corporate cone of silence descended on what was once a very transparent practice."
  - s73ver_ 9y ago
    "Well, in this great country, you're perfectly welcome to start your own company and distribute 95% of the shares to your first 1000 employees." That is a cop-out answer that shows that you're not interested in discussing the issue. If you don't see an issue with corporate greed in the world today, that's your prerogative, but don't make it to seem like those who do are the ones who don't know what they're talking about.
    - ryanwaggoner 9y ago
      That's not how I read their answer. In fact, they spent a lot of time explaining what they meant, while you seem to be the one trying to shut down discussion.
pg314 9y ago
> If you got fired from a job that had a potential $500M payday attached to it and only got a $25M severance package at the end of it, trust me, you'd be pretty bummed about it. Trust me, I wouldn't be. I pity the person who is bummed to have only $25M. > He negotiated a package and he delivered results. His interests as a CEO are aligned with the shareholders who risk their capital with ownership of the company. They trust the board and the CEO to increase the value of their investment. Ever tried getting a CEO's compensation reduced as a shareholder? Warren Buffett describes it as follows: "the deck is stacked against investors when it comes to the CEO’s pay" [1]. [1] http://www.berkshirehathaway.com/letters/2005ltr.pdf http://www.berkshirehathaway.com/letters/2005ltr.pdf
- jimbokun 9y ago
  That is outstanding reading. Like the closing quote of that section: "Though I have served as a director of twenty public companies, only one CEO has put me on his comp committee. Hmmmm . . ." Everyone in this thread claiming CEOs usually "earn" their compensation needs to read this and explain why Buffet's arguments are wrong. (Not because it's Buffett, because his arguments are well thought out and reflect a lot of personal experience with the topic.)

s73ver_ 9y ago

"If you got fired from a job that had a potential $500M payday attached to it and only got a $25M severance package at the end of it, trust me, you'd be pretty bummed about it." I'd be bummed. That's it. I wouldn't be wondering if I was going to lose my house, or if I'd still be able to eat. " His interests as a CEO are aligned with the shareholders who risk their capital with ownership of the company. " But not with the interests of the employees who risk their human capital. "Why is this controversial?" Because those who do the majority of the work making the company successful are not rewarded for it.

Nrsolis 9y ago
Well, in this great country, you're perfectly welcome to start your own company and distribute 95% of the shares to your first 1000 employees. Tell them they need to work for free for 4 years (or for far below market wages) in order to account for the capital contribution of their labor, comrade, and see how far that gets you. Ben and Jerry's tried to cap CEO pay at 7x their lowest paid worker and soon realized that nobody wanted the job (or at least nobody that was qualified). Now their current CEO is taking home a whole lot more than that and he's not being paid in Chubby Hubby. http://abcnews.go.com/Business/companies-follow-ben-jerrys-lead-wages/story?id=19920634 http://abcnews.go.com/Business/companies-follow-ben-jerrys-l... "I'm talking about Ben Cohen and Jerry Greenfield and their iconoclastic Ben & Jerry's ice cream company. But it's neither Cherry Garcia nor Phish Food that's on my mind right now—well, maybe just a little—as much as it is the social pact that Messrs. Cohen and Greenfield made with their employees at the start of their venture: From top to bottom, the pay ratio between the highest salaried executive and lowest-earning-worker would be no greater than 5 to 1. To their credit, the ice cream kings kept to their pay scale deal for 16 years. At that point, Cohen was set to retire and no successor who was willing to accept B&J's compensation compact could be found. End of an Era So the bar was raised to 7 to 1 to attract new talent, and ultimately to 17 to 1 over the course of a half dozen years more. The company was then acquired by Unilever USA in 2000, after which the corporate cone of silence descended on what was once a very transparent practice."
- s73ver_ 9y ago
  "Well, in this great country, you're perfectly welcome to start your own company and distribute 95% of the shares to your first 1000 employees." That is a cop-out answer that shows that you're not interested in discussing the issue. If you don't see an issue with corporate greed in the world today, that's your prerogative, but don't make it to seem like those who do are the ones who don't know what they're talking about.
  - ryanwaggoner 9y ago
    That's not how I read their answer. In fact, they spent a lot of time explaining what they meant, while you seem to be the one trying to shut down discussion.

pg314 9y ago

> If you got fired from a job that had a potential $500M payday attached to it and only got a $25M severance package at the end of it, trust me, you'd be pretty bummed about it. Trust me, I wouldn't be. I pity the person who is bummed to have only $25M. > He negotiated a package and he delivered results. His interests as a CEO are aligned with the shareholders who risk their capital with ownership of the company. They trust the board and the CEO to increase the value of their investment. Ever tried getting a CEO's compensation reduced as a shareholder? Warren Buffett describes it as follows: "the deck is stacked against investors when it comes to the CEO’s pay" [1]. [1] http://www.berkshirehathaway.com/letters/2005ltr.pdf http://www.berkshirehathaway.com/letters/2005ltr.pdf

jimbokun 9y ago
That is outstanding reading. Like the closing quote of that section: "Though I have served as a director of twenty public companies, only one CEO has put me on his comp committee. Hmmmm . . ." Everyone in this thread claiming CEOs usually "earn" their compensation needs to read this and explain why Buffet's arguments are wrong. (Not because it's Buffett, because his arguments are well thought out and reflect a lot of personal experience with the topic.)