7 ms·

This doesn't seem useless, but it hardly seems worth 1000x the wage of a regular worker either.

akozak 7y ago
I don't disagree with 1000x, but it also strikes me that - at that level - you're more like a pro athlete than a regular salaried employee. Your career and job is on shakier ground as responsibility grows, with less direct control over what actually happens. So greater pay makes some sense to compensate for unpredictability, if you amortize the economic risk of stepping out into leadership across a lifetime. Also the predominant theory of exec comp is that because it's tied to equity, your incentives as a manager are exactly aligned with what's best for the company.
- WilliamEdward 7y ago
  I'm confused, do you agree with them earning 1000x more or not? Frankly if there was a legislative way to tone it down so it more accurately reflects their value at the company, i'd like that. Risk, equity, company status, all play an important role but they don't play 1000x the role of any other job.
  - akozak 7y ago
    I don't know how much executives should be paid, but it does seem pretty high right now. (But it's generally equity so ¯\_(ツ)_/¯ )
  - greggman2 7y ago
    I don't know how to feel about it. Some Japanese aquaintances have liked to point out that that the difference in salary between top execs and low-level employees is much smaller in Japan. I usually counter that IMO personal experience USA companies pay salaries 2x to 3x more than Japan so I don't really care the boss makes 1000x more given they're paying me more as well. I have no idea if that translates over the entire workforce though. As a software engineer, starting software engineers in Japan start at ~$25k a year. Same ballpark as fast food jobs.
- deleted 7y ago
  [deleted]
- fjp 7y ago
  > Your career and job is on shakier ground as responsibility grows, with less direct control over what actually happens Contrarily, it seems that many execs "fail upwards" or at least fail into the exact same level, bouncing around C-suites and board positions regardless of the success of their companies. Additionally - the term "golden parachute" exists for a reason. Many comp packages are structured so the execs are exiting with multi millions regardless of how the company does.
- ncmncm 7y ago
  Nonsense. Exec comp is tied to backscratching with the Board, to the detriment of shareholders, who cannot generally exercise effective control under the rules cooked up by the Board and the execs for their own benefit. Companies that earn profits for shareholders commensurate with market success are companies that the execs have not got their hooks securely into.
czbond 7y ago
When you have the responsibility of 1000's of people's livelihood, their paychecks rest on your hands - you don't think that's worth a heck of a lot more than an average worker? And before anyone downvotes this - think about the responsibility for a bit. Companies don't just plod along - they actively manage into greatness, or actively manage into death.
- frequentnapper 7y ago
  But when an executive fucks up, he gets a golden parachute. Where is this "responsibility" you speak of?
  - czbond 7y ago
    Not in all cases, and at top levels, of top companies. While I agree some golden parachutes are extensive, one person cannot be expected to see and perfectly manage every severe situation; executive pay can help focus on strategies, but one operates in a fluid market, fluid economics, and fluid landscape.
    - csb6 7y ago
      It is hard to be perfect at one’s job, and no one expects anyone to be flawless executives. But I think we underestimate how much more high-level executives are compensated in relation to their actual duties, and that even a severance package that seems small to an executive is probably pretty large compared to the salaries of most workers, who also do a lot of important work beyond sitting in on meetings and enforcing a set of abstract values.
      - czbond 7y ago
        I disagree. Normal workers are managed via Gantt charts, tasks lists, and projects completed. High level executives are managed in stock price share increase, or business value increase each of which have multiplier effects.
rdlecler1 7y ago
There is a competitive market for talent. The board is going to try to hire the best person they can. That person typically has lots of options.
- ska 7y ago
  While there is truth in the existence of that competition, it is also a fundamental mistake to believe this market is basically a meritocracy. C-suite execs have something common with politicians that way. To wit, some of them get to the top by being very good at the things they do and having generally respected talent... but another path is to be good at campaigning.
  - perl4ever 7y ago
    Leaders are leaders. You can't trust anyone with power if they want power, but you have to give someone power. The contradictory demands make people make weird decisions, because trustworthy people seem infinitely scarce. Money is a diversion from destructive uses of power, besides being a response to apparent lack of supply.
    - vincent-toups 7y ago
      You don't have to give someone power - you can have cooperatives or other forms of democratic management.
  - freyr 7y ago
    It's a meritocracy in the sense that boards want to hire executives with prior experience running large companies or large divisions. How many such people are available for hire and didn't run their last company into the ground? It's a tiny number. On the other hand, I worked for a president who was brought in to run a brand new division, ran it into the ground within a few years, was forced out of the company under rumors of financial improprieties, and was recently announced as CEO of another company. So, who knows? Maybe boards are just stupid.
nostrademons 7y ago
Compensation is usually defined more by risk/reward tradeoffs than by the amount of effort you put in. Executive pay is high because of the risk that your values will not line up with the board's values at some point in the near future and hence you'll be summarily fired over something you had little control over, with your career being effectively over. It's not out-of-line with other careers that have similar risk/reward tradeoffs, like being a startup founder, pop star, hedge fund manager, venture capitalist, bestselling author, or lottery winner. I was thinking about the Gervais Principle [1] while reading this, in particular this formulation: "Sociopaths, in their own best interests, knowingly promote over-performing losers into middle-management, groom under-performing losers into sociopaths, and leave the average bare-minimum-effort losers to fend for themselves." This rather absurd strategy actually makes a lot of sense given the risk/reward tradeoffs of being an executive. Doing nothing under conditions of extreme risk & uncertainty, but doing it in a way that looks good to your superiors, is exactly the skillset that one needs to be a successful executive. And people who can do this without getting fired have passed the first test already. So this selection process is effectively an extended job interview. [1] https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-the-office-according-to-the-office/ https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...
- perl4ever 7y ago
  Don't underestimate the value of doing nothing. People who can be bribed with money not to use power to wreck things are perhaps scarcer than the average person realizes.
- Nursie 7y ago
  > Executive pay is high because of the risk that your values will not line up with the board's values at some point in the near future and hence you'll be summarily fired Lots of people live with that risk every day and get paid peanuts.
ClumsyPilot 7y ago
I dont mind executives earning millions, but perhaps their salary should be capped at 100x of average employee. The do not run the ship alone, and if the ship does well, the rest of the crew should be at least paid lip service. I would like to see some framework for doing that, whether that is profit sharing or relative salary caps. Also I believe all salaries in the country should be public. How is free market suppose to work if no-one knows the price?
- ryandrake 7y ago
  Instead of capping (which people for whatever reason don't seem to like) why not propose a lower bound for regular employees of 1/100th of the CEO's total compensation? CEO wants to make $20M? Nobody in the company can make less than $200k. Seems fair to me.
  - ClumsyPilot 7y ago
    I agree, except I would prefer we use median or mode compensation. It would probably paint a fairer picture. But debatable.
  - natalyarostova 7y ago
    Why do you think the operation of a complex decentralized economic system would be improved for workers if it operated according to some rules that you think are fair?
  - JoshuaDavid 7y ago
    > CEO wants to make $20M? Nobody in the company can make less than $200k. Seems fair to me. This seems likely to result in a situation where any work that can be is performed by external contractors not "in the company". Unfortunately, it's very hard (or maybe impossible) to legislate what things should cost.
- aeternum 7y ago
  Salary transparency at all levels would help quite a bit. The SEC rules around required pay package disclosure for execs is a major reason that CEO pay spiked in the 90s. You gain a good amount of negotiation leverage when you know exactly how much each or your peers are making.

I don't disagree with 1000x, but it also strikes me that - at that level - you're more like a pro athlete than a regular salaried employee. Your career and job is on shakier ground as responsibility grows, with less direct control over what actually happens. So greater pay makes some sense to compensate for unpredictability, if you amortize the economic risk of stepping out into leadership across a lifetime. Also the predominant theory of exec comp is that because it's tied to equity, your incentives as a manager are exactly aligned with what's best for the company.

WilliamEdward 7y ago
I'm confused, do you agree with them earning 1000x more or not? Frankly if there was a legislative way to tone it down so it more accurately reflects their value at the company, i'd like that. Risk, equity, company status, all play an important role but they don't play 1000x the role of any other job.
- akozak 7y ago
  I don't know how much executives should be paid, but it does seem pretty high right now. (But it's generally equity so ¯\_(ツ)_/¯ )
- greggman2 7y ago
  I don't know how to feel about it. Some Japanese aquaintances have liked to point out that that the difference in salary between top execs and low-level employees is much smaller in Japan. I usually counter that IMO personal experience USA companies pay salaries 2x to 3x more than Japan so I don't really care the boss makes 1000x more given they're paying me more as well. I have no idea if that translates over the entire workforce though. As a software engineer, starting software engineers in Japan start at ~$25k a year. Same ballpark as fast food jobs.
deleted 7y ago
[deleted]
fjp 7y ago
> Your career and job is on shakier ground as responsibility grows, with less direct control over what actually happens Contrarily, it seems that many execs "fail upwards" or at least fail into the exact same level, bouncing around C-suites and board positions regardless of the success of their companies. Additionally - the term "golden parachute" exists for a reason. Many comp packages are structured so the execs are exiting with multi millions regardless of how the company does.
ncmncm 7y ago
Nonsense. Exec comp is tied to backscratching with the Board, to the detriment of shareholders, who cannot generally exercise effective control under the rules cooked up by the Board and the execs for their own benefit. Companies that earn profits for shareholders commensurate with market success are companies that the execs have not got their hooks securely into.

czbond 7y ago

When you have the responsibility of 1000's of people's livelihood, their paychecks rest on your hands - you don't think that's worth a heck of a lot more than an average worker? And before anyone downvotes this - think about the responsibility for a bit. Companies don't just plod along - they actively manage into greatness, or actively manage into death.

frequentnapper 7y ago
But when an executive fucks up, he gets a golden parachute. Where is this "responsibility" you speak of?
- czbond 7y ago
  Not in all cases, and at top levels, of top companies. While I agree some golden parachutes are extensive, one person cannot be expected to see and perfectly manage every severe situation; executive pay can help focus on strategies, but one operates in a fluid market, fluid economics, and fluid landscape.
  - csb6 7y ago
    It is hard to be perfect at one’s job, and no one expects anyone to be flawless executives. But I think we underestimate how much more high-level executives are compensated in relation to their actual duties, and that even a severance package that seems small to an executive is probably pretty large compared to the salaries of most workers, who also do a lot of important work beyond sitting in on meetings and enforcing a set of abstract values.
    - czbond 7y ago
      I disagree. Normal workers are managed via Gantt charts, tasks lists, and projects completed. High level executives are managed in stock price share increase, or business value increase each of which have multiplier effects.

rdlecler1 7y ago

There is a competitive market for talent. The board is going to try to hire the best person they can. That person typically has lots of options.

ska 7y ago
While there is truth in the existence of that competition, it is also a fundamental mistake to believe this market is basically a meritocracy. C-suite execs have something common with politicians that way. To wit, some of them get to the top by being very good at the things they do and having generally respected talent... but another path is to be good at campaigning.
- perl4ever 7y ago
  Leaders are leaders. You can't trust anyone with power if they want power, but you have to give someone power. The contradictory demands make people make weird decisions, because trustworthy people seem infinitely scarce. Money is a diversion from destructive uses of power, besides being a response to apparent lack of supply.
  - vincent-toups 7y ago
    You don't have to give someone power - you can have cooperatives or other forms of democratic management.
- freyr 7y ago
  It's a meritocracy in the sense that boards want to hire executives with prior experience running large companies or large divisions. How many such people are available for hire and didn't run their last company into the ground? It's a tiny number. On the other hand, I worked for a president who was brought in to run a brand new division, ran it into the ground within a few years, was forced out of the company under rumors of financial improprieties, and was recently announced as CEO of another company. So, who knows? Maybe boards are just stupid.

nostrademons 7y ago

Compensation is usually defined more by risk/reward tradeoffs than by the amount of effort you put in. Executive pay is high because of the risk that your values will not line up with the board's values at some point in the near future and hence you'll be summarily fired over something you had little control over, with your career being effectively over. It's not out-of-line with other careers that have similar risk/reward tradeoffs, like being a startup founder, pop star, hedge fund manager, venture capitalist, bestselling author, or lottery winner. I was thinking about the Gervais Principle [1] while reading this, in particular this formulation: "Sociopaths, in their own best interests, knowingly promote over-performing losers into middle-management, groom under-performing losers into sociopaths, and leave the average bare-minimum-effort losers to fend for themselves." This rather absurd strategy actually makes a lot of sense given the risk/reward tradeoffs of being an executive. Doing nothing under conditions of extreme risk & uncertainty, but doing it in a way that looks good to your superiors, is exactly the skillset that one needs to be a successful executive. And people who can do this without getting fired have passed the first test already. So this selection process is effectively an extended job interview. [1] https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-the-office-according-to-the-office/ https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...

perl4ever 7y ago
Don't underestimate the value of doing nothing. People who can be bribed with money not to use power to wreck things are perhaps scarcer than the average person realizes.
Nursie 7y ago
> Executive pay is high because of the risk that your values will not line up with the board's values at some point in the near future and hence you'll be summarily fired Lots of people live with that risk every day and get paid peanuts.

ClumsyPilot 7y ago

I dont mind executives earning millions, but perhaps their salary should be capped at 100x of average employee. The do not run the ship alone, and if the ship does well, the rest of the crew should be at least paid lip service. I would like to see some framework for doing that, whether that is profit sharing or relative salary caps. Also I believe all salaries in the country should be public. How is free market suppose to work if no-one knows the price?

ryandrake 7y ago
Instead of capping (which people for whatever reason don't seem to like) why not propose a lower bound for regular employees of 1/100th of the CEO's total compensation? CEO wants to make $20M? Nobody in the company can make less than $200k. Seems fair to me.
- ClumsyPilot 7y ago
  I agree, except I would prefer we use median or mode compensation. It would probably paint a fairer picture. But debatable.
- natalyarostova 7y ago
  Why do you think the operation of a complex decentralized economic system would be improved for workers if it operated according to some rules that you think are fair?
- JoshuaDavid 7y ago
  > CEO wants to make $20M? Nobody in the company can make less than $200k. Seems fair to me. This seems likely to result in a situation where any work that can be is performed by external contractors not "in the company". Unfortunately, it's very hard (or maybe impossible) to legislate what things should cost.
aeternum 7y ago
Salary transparency at all levels would help quite a bit. The SEC rules around required pay package disclosure for execs is a major reason that CEO pay spiked in the 90s. You gain a good amount of negotiation leverage when you know exactly how much each or your peers are making.