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Two points: A CEO should certainly be well rewarded for a companies growth. Should it be 1500 times the average worker? During the period of the fastest US GD

Two points: A CEO should certainly be well rewarded for a companies growth. Should it be 1500 times the average worker? During the period of the fastest US GDP growth that ratio was at least 10 times less so maybe the ratio could be lower. CEOs in the US buy back stock a lot these days. That naturally raises the price and doesn’t take a lot of skill or vision. Maybe it is a good idea (it depends) but do you really need to give out lavish compensation when you can manipulate the price?

adventured 8y ago
Jimmy Garoppolo is a mere #90 on the last Forbes Entertainers list, for most earnings for 2018 (Jun 2017 - Jun 2018). He made $36 million. Why should he be allowed to make 900 times what the janitor in the stadium does? He's not even going to be a consequential QB. We should pass a law that says no QB may earn more than $300,000. Adam Sandler earned $39.5 million to produce some mediocrity. We should obviously make that illegal, right? So if you run a $223 billion company like Disney, you should earn 1/20th what Adam Sandler does to squeeze out a few bad movies for Netflix. How about running a trillion dollar company like Microsoft, one of the most important companies in world history and critical to the US economy? Satya Nadella should probably earn less than Simon Cowell, #64 on the Forbes list at $43.5 million in earnings. Why does Lebron James get to earn $85.5 million? The retort will always be: because James is worth it. So is an elite CEO running a massive company. The reality is that today these are normal earnings figures for people operating in elite positions where enormous economic value is in play. People in these pay arguments always intentionally devalue the knowledge, experience and skill that is required to operate a company the scale of Disney (that's how they can lay out the premise with a straight face that average worker pay to CEO pay should be low): it's one of the most difficult jobs on earth, and far more difficult and challenging than anything Jimmy Garoppolo will ever do on a football field. The average Lakers employee isn't worth 1/1000th what Lebron James is to the franchise. The average worker is not worth 1/1000th what Iger is to Disney. That's entirely correct economic math. It's that reality that irrationally upsets almost everyone, because they like to pretend it takes only modest knowledge, experience and skill to operate something like Disney, when in fact being able to do it well is a more rare talent than what the typical elite athlete represents. It's excused in sports only because supposedly that's easier to measure (and yet it still doesn't change the fact that Lebron James earns so much more than the typical worker in the Lakers organization). https://www.forbes.com/celebrities/list/ https://www.forbes.com/celebrities/list/
- Sebguer 8y ago
  Can you prove these CEOs are worth it? That's the difference between CEO pay and literally every other example you've given here. In each of those other examples, the business is directly and measurably extracting value from the person getting all that money. It's far more abstract for a CEO, and it's far harder to separate their contributions from "what would've happened regardless".
  - tathougies 8y ago
    So you argue that Lebron James provides more value to society than people running the companies that actually keep society productive? America's insane obsession with sports is amazing.
    - bleriot 8y ago
      I’m not sure Disney is a productive company for society. I’d argue that Lebron James and Disney are purely for entertainment. And the owners of sports teams are able to attach value to the players by how many people they’ll draw to TV and stadium viewership and product sales, so Lebron’s value can be pretty well guessed in advance by the team that pays him that huge salary.
    - Sebguer 8y ago
      That's a really weird takeaway from what I said, which is that it's a lot easier to assign value to what Lebron James does. A team gives him a specific amount of money to perform a very specific task, which is 'perform on a basketball court'. The team paying him believes that his performance will draw in fans and money to outweigh what they're paying him. Netflix didn't pay Adam Sandler for 'thought leadership'. They paid him to deliver a certain number of films, which they know that they can extract a certain amount of value from. The only way to measure executive leadership is the impact they've had on a company's valuation, and that impact cannot be as clearly tied to a single person as Lebron James' performance on the court, or Adam Sandler's (admittedly surprising given how bad his last several movies have been) star power.
tathougies 8y ago
> CEOs in the US buy back stock a lot these days. That naturally raises the price and doesn’t take a lot of skill or vision. Maybe it is a good idea (it depends) but do you really need to give out lavish compensation when you can manipulate the price? No they don't. Boards buy back stock. CEOs cannot realistically buy back company stock themselves. I mean, Iger only made $3million in cash, so this would be a losing strategy for him.
- georgeecollins 8y ago
  A board approves a buyback that the CEO initiates.
djakjxnanjak 8y ago
A power-hungry CEO would rather hold on to the cash and use it to build a bigger empire. But it’s often in the best interest of shareholders to return cash via a dividend or buyback (buyback is preferred for tax reasons). It’s good that the CEOs interests are aligned with the shareholders here.
- georgeecollins 8y ago
  Power hungry perhaps. But if his compensation is stock options his goal will be to raise the stock price. A risky wsy is to invest in growth. A safe way is to buy back stock.
  - djakjxnanjak 8y ago
    It’s good for investors that the company can provide a sure return. If they don’t want to sell in/after a buyback, they can enjoy their more concentrated ownership. The investors can use the cash value of this increased equity to invest in more speculative growth stocks if they want, but they don’t have to.

adventured 8y ago

Jimmy Garoppolo is a mere #90 on the last Forbes Entertainers list, for most earnings for 2018 (Jun 2017 - Jun 2018). He made $36 million. Why should he be allowed to make 900 times what the janitor in the stadium does? He's not even going to be a consequential QB. We should pass a law that says no QB may earn more than $300,000. Adam Sandler earned $39.5 million to produce some mediocrity. We should obviously make that illegal, right? So if you run a $223 billion company like Disney, you should earn 1/20th what Adam Sandler does to squeeze out a few bad movies for Netflix. How about running a trillion dollar company like Microsoft, one of the most important companies in world history and critical to the US economy? Satya Nadella should probably earn less than Simon Cowell, #64 on the Forbes list at $43.5 million in earnings. Why does Lebron James get to earn $85.5 million? The retort will always be: because James is worth it. So is an elite CEO running a massive company. The reality is that today these are normal earnings figures for people operating in elite positions where enormous economic value is in play. People in these pay arguments always intentionally devalue the knowledge, experience and skill that is required to operate a company the scale of Disney (that's how they can lay out the premise with a straight face that average worker pay to CEO pay should be low): it's one of the most difficult jobs on earth, and far more difficult and challenging than anything Jimmy Garoppolo will ever do on a football field. The average Lakers employee isn't worth 1/1000th what Lebron James is to the franchise. The average worker is not worth 1/1000th what Iger is to Disney. That's entirely correct economic math. It's that reality that irrationally upsets almost everyone, because they like to pretend it takes only modest knowledge, experience and skill to operate something like Disney, when in fact being able to do it well is a more rare talent than what the typical elite athlete represents. It's excused in sports only because supposedly that's easier to measure (and yet it still doesn't change the fact that Lebron James earns so much more than the typical worker in the Lakers organization). https://www.forbes.com/celebrities/list/ https://www.forbes.com/celebrities/list/

Sebguer 8y ago
Can you prove these CEOs are worth it? That's the difference between CEO pay and literally every other example you've given here. In each of those other examples, the business is directly and measurably extracting value from the person getting all that money. It's far more abstract for a CEO, and it's far harder to separate their contributions from "what would've happened regardless".
- tathougies 8y ago
  So you argue that Lebron James provides more value to society than people running the companies that actually keep society productive? America's insane obsession with sports is amazing.
  - bleriot 8y ago
    I’m not sure Disney is a productive company for society. I’d argue that Lebron James and Disney are purely for entertainment. And the owners of sports teams are able to attach value to the players by how many people they’ll draw to TV and stadium viewership and product sales, so Lebron’s value can be pretty well guessed in advance by the team that pays him that huge salary.
  - Sebguer 8y ago
    That's a really weird takeaway from what I said, which is that it's a lot easier to assign value to what Lebron James does. A team gives him a specific amount of money to perform a very specific task, which is 'perform on a basketball court'. The team paying him believes that his performance will draw in fans and money to outweigh what they're paying him. Netflix didn't pay Adam Sandler for 'thought leadership'. They paid him to deliver a certain number of films, which they know that they can extract a certain amount of value from. The only way to measure executive leadership is the impact they've had on a company's valuation, and that impact cannot be as clearly tied to a single person as Lebron James' performance on the court, or Adam Sandler's (admittedly surprising given how bad his last several movies have been) star power.

tathougies 8y ago

> CEOs in the US buy back stock a lot these days. That naturally raises the price and doesn’t take a lot of skill or vision. Maybe it is a good idea (it depends) but do you really need to give out lavish compensation when you can manipulate the price? No they don't. Boards buy back stock. CEOs cannot realistically buy back company stock themselves. I mean, Iger only made $3million in cash, so this would be a losing strategy for him.

georgeecollins 8y ago
A board approves a buyback that the CEO initiates.

djakjxnanjak 8y ago

A power-hungry CEO would rather hold on to the cash and use it to build a bigger empire. But it’s often in the best interest of shareholders to return cash via a dividend or buyback (buyback is preferred for tax reasons). It’s good that the CEOs interests are aligned with the shareholders here.

georgeecollins 8y ago
Power hungry perhaps. But if his compensation is stock options his goal will be to raise the stock price. A risky wsy is to invest in growth. A safe way is to buy back stock.
- djakjxnanjak 8y ago
  It’s good for investors that the company can provide a sure return. If they don’t want to sell in/after a buyback, they can enjoy their more concentrated ownership. The investors can use the cash value of this increased equity to invest in more speculative growth stocks if they want, but they don’t have to.