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It feels to me that just because you’re the CEO doesn’t mean you’re singlehandedly responsible for all that wealth being created. A whole bunch of employees wor

It feels to me that just because you’re the CEO doesn’t mean you’re singlehandedly responsible for all that wealth being created. A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars. I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Just as you say it makes sense to align the CEOs interests, the same is true for every worker at the company. And one very committed CEO is great, but thousands of appreciated workers who can afford to live would be great for the company too.

tathougies 8y ago
> A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars. But the CEO was only paid $3million in cash, which is a different order of magnitude in wage multiplier when compared with the lowest employee. I'm unsure what the stock distribution program that disney may or may not have to employees. I actually have no doubt that disney shortchanges their lowest level employees. But, that is not the question at hand. The company is being asked to provide equivalent wages. To do that, the lowest level employees would get paid cash + stock. That would allow us to make a fairer comparison, but it would not look like what the article wants. > Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Morally, I don't disagree with you, but this is certainly not what people mean when they make these wage comparisons. Can you imagine if an employee got minimum wage + hundreds of stock? Most people would think that is the company short changing the employee. > I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. The shareholders of disney think so. Perhaps he did not. I don't know. They are free to fire him if they don't like him.
polishTar 8y ago
Since Iger took over as CEO in 2005, Disney has outpaced the growth of the S&P 500 by 6x (not adjusting for dividends). In aggregate, this higher growth rate is responsible for >$150B of market cap. It certainly wasn't just Iger's decisions that led to this growth, but it isn't much of a stretch for investors to believe his decisions were responsible for at least a small portion of that. Iger's $60M equity grant dilutes shareholders by roughly 0.02%. If the only thing Iger did was make decisions that resulted in Disney being 0.03% more valuable than they otherwise would've been, then Disney investors got a great deal. The existence of $12/hr jobs at Disney is a totally legitimate concern, but I believe that's a separate issue.
- TaylorAlexander 8y ago
  I understand that he contributed to a portion of the $150B growth, but that’s true of every other employee too. Literally every employee works to create that growth. Why is the CEO’s high compensation so obviously justified but the thousands of underpaid workers are viewed as “a separate issue?”
  - Agustus 8y ago
    Because they do CEO work. Look at any CEO who is doing a good job and you will see insane people who are getting low amounts of sleep, focused solely on the company growth to the exclusion of family time, and actually doing work. The work is comprised of tons of knowledge and skill sets. Let’s take Elon Musk for example; disregarding whether the the company is well run or not. If you look at his work schedule, he is saying things like sleeping at the Tesla factory, working longer shifts, handling regulatory and politician issues, etc. The skill set required and time commitment is something that most people shy away from. Look at the horrified responses to Ma’s work dedication missives and you are on target where the normal person holds up. The insanes go to the political meeting on Capitol Hill, hire and fire subordinates, identify the direction of the company, and then execute on those decisions. The skill set for the underpaid workers is easy to develop and put together. The dynamic life of a CEO is an item that is difficult as it operates in a dynamic environment that constantly changes and requires time and money investments that mean the employees who report to you may not have Christmas presents for their kids.
csallen 8y ago
As an investor, you'll want a business' value to improve in the future. Thus, you'll want to take actions in the present that maximize the chances and magnitude of success. It is generally not the case that simply rewarding everyone in perfect proportion to their contribution (an impossible goal to begin with) is the best way to improve future outcomes. One of the biggest confounding factors is the external market. The price of something/someone isn't determine solely by their value, but also by their rarity in the market. Water is essential to life, but you won't pay $infinity for it, because someone else will offer it for cheaper. Whereas a golden nugget may be close to useless in your eyes, but you still can't get one for cheap, because someone else who values it is willing to pay more. That's the market at work. Analogously, many rank-and-file employees (us programmers included) are easily replaceable. We've developed a well-defined set of skills that slot perfectly into some box that was defined by business owners, so of course many others have squished themselves to fit into the same shape. They're our competition. So yeah, perhaps we contribute meaningful value to our companies, great. But why should they pay us $X if someone else will come along and do the exact same job providing the exact same value for $X-1? Whereas many stellar CEO candidates highly sought after and will have many competing offers and opportunities, driving up their price. If you were easily willing to hire your perfect CEO candidate for $Y, will you also hire her for $Y + $1? What about $Y + $100K? What about $Y + $10MM? Obviously there's a cutoff, yes, but obviously it's significantly higher than $Y if you really value this person and can't easily find an equivalent replacement. Okay, what about rewarding employees en masse? If you pay _all_ of your developers a higher salary, won't that attract a higher tier of developers than your competition is hiring? Probably. A lot of companies do exactly that. But it's not universally true. It depends on your industry, your competition, the role, etc. For example, due to diminishing returns, your business might not _need_ the highest tier employees at certain roles to have a significant impact. Or there might be such a massive surplus of people to fill that role that it doesn't matter what you pay, you'll still get good people. Etc. My personal takeaway from all of this is that, as an employee, you should think of yourself as a business. That means you have to consider your competition (other ppl who have your skillset) as well as your customers (the businesses that pay you for your services). More specifically, you need to figure out how to differentiate yourself from the competition so your price isn't easily driven down. At the same time, you should work to maximize the value you provide to your employer's bottom line, so they have a stronger reason to pay you more. And of course you'll need to be able to do so in a measurable way if you want them to believe you. This last part is why salespeople can easily charge commission, but programmer #5532 working on Tiny Part of Major System cannot. On a broader scale, I personally believe that it's society's responsibility to create a safety net that prevents people from going hungry or living on the streets. If you're not particularly skilled at, interested in, or capable of playing the capitalism game, it shouldn't mean that you aren't guaranteed basic human rights and dignity. Let the people who want to run fast do so, and let everyone else live happy lives regardless.

tathougies 8y ago

> A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars. But the CEO was only paid $3million in cash, which is a different order of magnitude in wage multiplier when compared with the lowest employee. I'm unsure what the stock distribution program that disney may or may not have to employees. I actually have no doubt that disney shortchanges their lowest level employees. But, that is not the question at hand. The company is being asked to provide equivalent wages. To do that, the lowest level employees would get paid cash + stock. That would allow us to make a fairer comparison, but it would not look like what the article wants. > Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Morally, I don't disagree with you, but this is certainly not what people mean when they make these wage comparisons. Can you imagine if an employee got minimum wage + hundreds of stock? Most people would think that is the company short changing the employee. > I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. The shareholders of disney think so. Perhaps he did not. I don't know. They are free to fire him if they don't like him.

polishTar 8y ago

Since Iger took over as CEO in 2005, Disney has outpaced the growth of the S&P 500 by 6x (not adjusting for dividends). In aggregate, this higher growth rate is responsible for >$150B of market cap. It certainly wasn't just Iger's decisions that led to this growth, but it isn't much of a stretch for investors to believe his decisions were responsible for at least a small portion of that. Iger's $60M equity grant dilutes shareholders by roughly 0.02%. If the only thing Iger did was make decisions that resulted in Disney being 0.03% more valuable than they otherwise would've been, then Disney investors got a great deal. The existence of $12/hr jobs at Disney is a totally legitimate concern, but I believe that's a separate issue.

TaylorAlexander 8y ago
I understand that he contributed to a portion of the $150B growth, but that’s true of every other employee too. Literally every employee works to create that growth. Why is the CEO’s high compensation so obviously justified but the thousands of underpaid workers are viewed as “a separate issue?”
- Agustus 8y ago
  Because they do CEO work. Look at any CEO who is doing a good job and you will see insane people who are getting low amounts of sleep, focused solely on the company growth to the exclusion of family time, and actually doing work. The work is comprised of tons of knowledge and skill sets. Let’s take Elon Musk for example; disregarding whether the the company is well run or not. If you look at his work schedule, he is saying things like sleeping at the Tesla factory, working longer shifts, handling regulatory and politician issues, etc. The skill set required and time commitment is something that most people shy away from. Look at the horrified responses to Ma’s work dedication missives and you are on target where the normal person holds up. The insanes go to the political meeting on Capitol Hill, hire and fire subordinates, identify the direction of the company, and then execute on those decisions. The skill set for the underpaid workers is easy to develop and put together. The dynamic life of a CEO is an item that is difficult as it operates in a dynamic environment that constantly changes and requires time and money investments that mean the employees who report to you may not have Christmas presents for their kids.

csallen 8y ago

As an investor, you'll want a business' value to improve in the future. Thus, you'll want to take actions in the present that maximize the chances and magnitude of success. It is generally not the case that simply rewarding everyone in perfect proportion to their contribution (an impossible goal to begin with) is the best way to improve future outcomes. One of the biggest confounding factors is the external market. The price of something/someone isn't determine solely by their value, but also by their rarity in the market. Water is essential to life, but you won't pay $infinity for it, because someone else will offer it for cheaper. Whereas a golden nugget may be close to useless in your eyes, but you still can't get one for cheap, because someone else who values it is willing to pay more. That's the market at work. Analogously, many rank-and-file employees (us programmers included) are easily replaceable. We've developed a well-defined set of skills that slot perfectly into some box that was defined by business owners, so of course many others have squished themselves to fit into the same shape. They're our competition. So yeah, perhaps we contribute meaningful value to our companies, great. But why should they pay us $X if someone else will come along and do the exact same job providing the exact same value for $X-1? Whereas many stellar CEO candidates highly sought after and will have many competing offers and opportunities, driving up their price. If you were easily willing to hire your perfect CEO candidate for $Y, will you also hire her for $Y + $1? What about $Y + $100K? What about $Y + $10MM? Obviously there's a cutoff, yes, but obviously it's significantly higher than $Y if you really value this person and can't easily find an equivalent replacement. Okay, what about rewarding employees en masse? If you pay _all_ of your developers a higher salary, won't that attract a higher tier of developers than your competition is hiring? Probably. A lot of companies do exactly that. But it's not universally true. It depends on your industry, your competition, the role, etc. For example, due to diminishing returns, your business might not _need_ the highest tier employees at certain roles to have a significant impact. Or there might be such a massive surplus of people to fill that role that it doesn't matter what you pay, you'll still get good people. Etc. My personal takeaway from all of this is that, as an employee, you should think of yourself as a business. That means you have to consider your competition (other ppl who have your skillset) as well as your customers (the businesses that pay you for your services). More specifically, you need to figure out how to differentiate yourself from the competition so your price isn't easily driven down. At the same time, you should work to maximize the value you provide to your employer's bottom line, so they have a stronger reason to pay you more. And of course you'll need to be able to do so in a measurable way if you want them to believe you. This last part is why salespeople can easily charge commission, but programmer #5532 working on Tiny Part of Major System cannot. On a broader scale, I personally believe that it's society's responsibility to create a safety net that prevents people from going hungry or living on the streets. If you're not particularly skilled at, interested in, or capable of playing the capitalism game, it shouldn't mean that you aren't guaranteed basic human rights and dignity. Let the people who want to run fast do so, and let everyone else live happy lives regardless.