4 ms·

Because they take on the risk and burden of carrying a company with 1,000’s of employees and a similar number of shareholders. It’s incredibly stressful whether

by aantix 8y ago

Because they take on the risk and burden of carrying a company with 1,000’s of employees and a similar number of shareholders. It’s incredibly stressful whether successful or not. It’s not like 5pm rolls around and these people get to roll home and forget about things. You’re an absolute outlier if you even want one of these positions. (And no, I am not one of these people, I like seeing my kids in the evenings).

lovich 8y ago
They literally are not taking on the risk if they get the high pay whether they succeed or lose. The not being able to see your kids in the evening is one thing, but the high paid executives also get around that too. For instance Marissa Mayer having an office in the headquarters converted into a daycare for her child. Did her employees who were also on call(and forced to stop working remotely) get the opportunity to use company property for a daycare for their children? My point is that these arguments about why it's worth it to pay executives these super high salaries no longer hold any water, because we've seen that they've rigged the game to be effectively riskless to them. Only getting 80% of your expected payout when you run a company into the ground _and_ remove payouts to the other employees is not a risk to justify being paid 100s of times more than an average employee. It's just another case of making the risks public and the gains private
- anonuser123456 8y ago
  The risks are entirely private. Shareholders and lender capital is at risk, not the general public.
  - lovich 8y ago
    The general public includes these employees who are not getting their bonuses/severance that was promised because executives need to be paid out first. Then we have people who need unemployment to cover their lives that would have been covered by said payments. It's the same issue with Walmart and McDonald's paying too little to live on and teaching their employees how to sign up for benefits
  - eigenvector 8y ago
    When a big company goes bust and lays off thousands of workers or even defaults on pension obligations (I know Sears did in Canada I don't know if they did in the US), it's the public who pick up the costs through unemployment benefits and welfare payments.
    - rlucas 8y ago
      Your point is well taken when extremes occur (public purse ultimately probably backstops both unemployment and pensions via PBGC) but it’s important for readers to know that’s not the normal case even in a bankruptcy. Unemployment is structured as an insurance program, not a dole, and in theory an employer has paid in over the years enough to actuarially pay for it. Same thing with pensions. The system does have some “normal accident” anti-fragility type stuff built in. But yes, 1. in a catastrophic outcome the public purse will get hit for hard costs and 2. even the “insured” benefits mask lots of externalities that the corporation doesn’t bear but employees and municipalities etc do.
brianpgordon 8y ago
Is shouldering the burden of running the company really 312 times as stressful as the average worker's job though? https://www.theguardian.com/business/2018/aug/16/ceo-versus-worker-wage-american-companies-pay-gap-study-2018 https://www.theguardian.com/business/2018/aug/16/ceo-versus-...
- aantix 8y ago
  Stress is part of the comp. What is needed in a restructuring - access to the right people with capital, long hours to get the deals done, offloading of dead inventory, answering to shareholders, nervous employees, continue making payroll. It's an outlier job. There's not an average employee that has that pedigree and access to take over the job. Nor would the average employee ever want the hours nor are they productive enough.
  - lovich 8y ago
    > There's not an average employee that has that pedigree and access to take over the job. Either this is a tautology or citation needed here. So far the argument for this has been that they bring in the big bucks so of course they deserve high compensation. The empirical evidence so far is that they have the title so they get high compensation, and their performance has little to no affect on that compensation. Risk is normally commensurate with reward, thus if we are observing that there is little to no difference in reward, there must be no little to no risk. I would need to see concrete proof that an exec was worth this high pay beyond, "well what if they weren't there, maybe it would be worse!?!?" Before I believed the argument again
- aantix 8y ago
  Steve Easterbrook earns $21 million, the average worker just $7,000. But Steve Easterbrook's corporate and branding directives scale across the company and produce 2billion in profit. While local employees service just the customer. Paying someone $21 million that can decisions that result in 2 billion in profit is solid business.
  - 8y ago

by aantix 8y ago

lovich 8y ago

They literally are not taking on the risk if they get the high pay whether they succeed or lose. The not being able to see your kids in the evening is one thing, but the high paid executives also get around that too. For instance Marissa Mayer having an office in the headquarters converted into a daycare for her child. Did her employees who were also on call(and forced to stop working remotely) get the opportunity to use company property for a daycare for their children? My point is that these arguments about why it's worth it to pay executives these super high salaries no longer hold any water, because we've seen that they've rigged the game to be effectively riskless to them. Only getting 80% of your expected payout when you run a company into the ground _and_ remove payouts to the other employees is not a risk to justify being paid 100s of times more than an average employee. It's just another case of making the risks public and the gains private

anonuser123456 8y ago
The risks are entirely private. Shareholders and lender capital is at risk, not the general public.
- lovich 8y ago
  The general public includes these employees who are not getting their bonuses/severance that was promised because executives need to be paid out first. Then we have people who need unemployment to cover their lives that would have been covered by said payments. It's the same issue with Walmart and McDonald's paying too little to live on and teaching their employees how to sign up for benefits
- eigenvector 8y ago
  When a big company goes bust and lays off thousands of workers or even defaults on pension obligations (I know Sears did in Canada I don't know if they did in the US), it's the public who pick up the costs through unemployment benefits and welfare payments.
  - rlucas 8y ago
    Your point is well taken when extremes occur (public purse ultimately probably backstops both unemployment and pensions via PBGC) but it’s important for readers to know that’s not the normal case even in a bankruptcy. Unemployment is structured as an insurance program, not a dole, and in theory an employer has paid in over the years enough to actuarially pay for it. Same thing with pensions. The system does have some “normal accident” anti-fragility type stuff built in. But yes, 1. in a catastrophic outcome the public purse will get hit for hard costs and 2. even the “insured” benefits mask lots of externalities that the corporation doesn’t bear but employees and municipalities etc do.

brianpgordon 8y ago

Is shouldering the burden of running the company really 312 times as stressful as the average worker's job though? https://www.theguardian.com/business/2018/aug/16/ceo-versus-worker-wage-american-companies-pay-gap-study-2018 https://www.theguardian.com/business/2018/aug/16/ceo-versus-...

aantix 8y ago
Stress is part of the comp. What is needed in a restructuring - access to the right people with capital, long hours to get the deals done, offloading of dead inventory, answering to shareholders, nervous employees, continue making payroll. It's an outlier job. There's not an average employee that has that pedigree and access to take over the job. Nor would the average employee ever want the hours nor are they productive enough.
- lovich 8y ago
  > There's not an average employee that has that pedigree and access to take over the job. Either this is a tautology or citation needed here. So far the argument for this has been that they bring in the big bucks so of course they deserve high compensation. The empirical evidence so far is that they have the title so they get high compensation, and their performance has little to no affect on that compensation. Risk is normally commensurate with reward, thus if we are observing that there is little to no difference in reward, there must be no little to no risk. I would need to see concrete proof that an exec was worth this high pay beyond, "well what if they weren't there, maybe it would be worse!?!?" Before I believed the argument again
aantix 8y ago
Steve Easterbrook earns $21 million, the average worker just $7,000. But Steve Easterbrook's corporate and branding directives scale across the company and produce 2billion in profit. While local employees service just the customer. Paying someone $21 million that can decisions that result in 2 billion in profit is solid business.
- 8y ago