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This is what the job is worth, if you want someone competent and responsible for thousands of employees and billions in revenue. Nobody is doing that for $1m/ye

This is what the job is worth, if you want someone competent and responsible for thousands of employees and billions in revenue. Nobody is doing that for $1m/year when one wrong decision could end up costing 1000x more than their salary and hurting livelihoods of the workers. Focusing on a single number is irrelevant, you must account for everything in the organization and the results. Also nobody is stopping anyone from creating corporations with different compensation, but clearly there's a certain price required when you get to these levels.

nkrisc 7y ago
> Nobody is doing that for $1m/year when one wrong decision could end up costing 1000x more than their salary and hurting livelihoods of the workers. You make it sound like they'll somehow lose out personally by losing the company 1000x their salary and hurting the livelihoods of workers, like they're somehow being compensated for personal risk. What you cited represents no personal risk to the CEO. They already made their millions. Now maybe if CEOs were actually liable for the damage they could do to the company and economy, would it be more justified.
- manigandham 7y ago
  There is personal risk. If the CEO does a poor job they might not be hired again or have other career impacts. There are numerous Fortune 500 CEOs that have a negative reputation that impacts their future earnings. Also corporations partly exist to shield liability so CEOs are not going to be personally held responsible outside of gross negligence or criminal acts, the same way you wouldn't be held responsible if you caused a major outage in your company that lost customers. There is an general move towards more performance-based compensation though, which I think you would agree is a good thing.
  - reroute1 7y ago
    > There is personal risk. If the CEO does a poor job they might not be hired again or have other career impacts. There are numerous Fortune 500 CEOs that have a negative reputation that impacts their future earnings. This is true for all jobs...
    - manigandham 7y ago
      Your work performance is not likely publicly listed with constant reviews from employees and shareholders, is it?
      - reroute1 7y ago
        Your work performance is absolutely reviewed by managers and peers. Of course not to the extent of a CEO, but you're not getting paid what a CEO is and don't have the same impact so that's not surprising either. The point is all jobs have risks for performing badly, as they should. Not to mention sometimes CEO's performing badly results in a golden parachute... quite a far cry from your grunt worker getting laid off with no pension or benefits.
        manigandham 7y ago
        If you go to a new job, who is telling them how bad you were at the last one? At most you might get a recommendation if you're good but it's rare to have anything follow you around unless it's major public news. Golden parachutes are not about performance, it's about change of control like a company takeover or merger. It's very common and happens to many startup founders that get acquired. It's also not much different than severance which is offered to employees at large corporations.
        reroute1 7y ago
        If you get a new job is key. Serious jobs will contact past employers and look at gaps in your resume. If you are being laid off and have bad references it will absolutely negatively affect you. Sure you could get some job, but so could an EX CEO... Golden parachutes are extra insulation for CEOs and their performance can definitely cause them to exit a company with a parachute that otherwise would keep them. It is like severance except wildly higher and more often than not there is no severance for average workwrs, especially nowadays. Either way, originally you made a statement about a CEO having negative impacts from their performance, but the exact same thing is true of everyone. A public story of a CEO performing badly is just as ethereal as a recommendation from a past job. Neither is a death sentence or a golden ticket, it's just a job and if you do it poorly you will have negative consequences. Publicity could serve an exiting CEO regardless of performance, that is not hard to conceive. It's just a different level of job people aren't blind to that. But to say they take greater personal risk by being a CEO, I don't buy that, they take the same risk as everyone else. If you do well you get rewarded, if you do poorly you're future is negatively affected. There's really nothing to support it's so different for a CEO.
  - nkrisc 7y ago
    > There is personal risk. If the CEO does a poor job they might not be hired again or have other career impacts. There are numerous Fortune 500 CEOs that have a negative reputation that impacts their future earnings. And if I do a shit job I might have trouble getting hired too, but I'm not paid millions for it.
    - manigandham 7y ago
      Perhaps, but extremely unlikely. Who would know? I'm sure you can see there's a massive difference from a major CEO who is known publicly vs you switching jobs and not getting a reference callback at worst.
  - Supermancho 7y ago
    > If the CEO does a poor job they might not be hired again or have other career impacts For some reason, I hear that they do fine all the time. Like https://en.wikipedia.org/wiki/Marissa_Mayer https://en.wikipedia.org/wiki/Marissa_Mayer ?
  - piva00 7y ago
    Can you share an example of a CEO who was fired for incompetence (not criminal behaviour) that has had their career completely impacted by it? I'm asking because Google isn't giving me answers.
- vorpalhex 7y ago
  What Elon Musk tweets out in his personal time absolutely affects Tesla. If Elon decides to drive a Toyota Prius tomorrow.. well, guess what that does? Being a CEO is not a 9-5. Everything and anything a CEO does is monitored by a cadre of people.
- nilkn 7y ago
  You'll never find a qualified candidate for running a huge multinational corporation for only $1M/year. You simply won't be able to hire for the role and the company will have to go without a leader. If you try to promote someone internally whom you think would do a good job and then underpay them, they'll simply leave shortly after because someone else will snatch them up and pay them more than you. If you do find someone who stays for that amount, it'll be a bottom-of-the-barrel candidate that everyone else passed on already. This is like wanting to find a top-tier senior staff engineer for $30k/year in San Francisco. At the end of the day, the people who can do the job can also perform other roles, and those other roles already pay more than $1M/year. You have to convince them to take on an unprecedented amount of stress and responsibility and effectively act as a public figure with all the baggage that comes along with that. You also have to retain them and prevent competitors from hiring them and deploying them against you. That means you have to pay them more -- sometimes a lot more.
turbinerneiter 7y ago
> Nobody is doing that for $1m/year when one wrong decision could end up costing 1000x more than their salary and hurting livelihoods of the workers. Exactly. The wrong decision costs _the company_ a billion, it hurts the livelihoods of _the workers_. Incompetent, even criminal, managers more often than not pay for their mistakes with early retirement and severance packages. Winterkorn got a 10+m bonus when he stepped back and receives over one million in additional pension payments each year. That's the guy who is at fault for the Emssions Fraud Scandal. John Cryan, who oversaw the further demise of Deutsche Bank, was kicked with a 10m severance package. During his time as CEO, the Deutsche Bank share went from 30€ to 15€.
- amw 7y ago
  So that brings us to the next question: Why on earth are we putting the entirety of those (business) life and death decisionsinto the hands of essentially a single person? Why is the effort not spread out over a broad swath of management-capable people at all levels of the company, when we're against monarchy in so many other aspects of life?
  - ameister14 7y ago
    we're not against monarchy because it's inefficient, or because kings are always bad. We're against it because when a king is bad, they're really really bad for their subjects. That doesn't have a lot to do with a public company.
pytester 7y ago
>This is what the job is worth, if you want someone competent and responsible for thousands of employees and billions in revenue. Nobody is doing that for $1m/year when one wrong decision could end up costing 1000x more than their salary I'll do it. It's not like that one wrong decision ends up affecting them. Even if they get fired (which they often don't), they can exercise golden parachutes that will pay out many multiples of how much an average earner gets in a lifetime. It's a job that gets paid a lot of money because the people who do it come from a fairly tight knit community that looks out for each other, not because of merit (CEO pay actually correlates slightly negatively with performance). Being an alumnus of McKinsey is actually one of the ways to enter that community.
- VvR-Ox 7y ago
  I'll do it for half $1m/year! ;-P You are totally right about the "golden parachute". The nice thing about being in upper management is that none of your decisions has any negative consequences for yourself and in the end you will just have more money and some more enemies who will probably not even attack you. It is always about "vitamin b" because that is how certain networks like (financial) elites work. I always wonder how average people try to defend the rich and argue that it is totally justified that they earn something like one year of salary in a month or even more. Think about all the big issues we have and how we could tackle them with all the money that now is inherited and shoved around to make more money out of nothing just to be even wealthier. It is just absurd to me and that people are actually kind of ok with this takes away most of the hope I have for our global future because if these people prevail it might as well look like the "hunger games" here some day.
  - chrisweekly 7y ago
    "vitamin b"?
    - kyazawa 7y ago
      It's a German expression referring to getting a job through connections (Beziehung = relationship.) https://www.dw.com/en/vitamin-b/a-6616528 https://www.dw.com/en/vitamin-b/a-6616528
davinic 7y ago
The data[0] show that there is an inverse correlation between performance and CEO compensation, so I'm not sure how you come to "that is what the job is worth". Let's not pretend that the CEO market is some idealistic pure marketplace. In reality it's a good ole boys club between boards and top execs. I would wager that limiting CEO pay would have no negative effect on the supply of candidates.

nkrisc 7y ago

> Nobody is doing that for $1m/year when one wrong decision could end up costing 1000x more than their salary and hurting livelihoods of the workers. You make it sound like they'll somehow lose out personally by losing the company 1000x their salary and hurting the livelihoods of workers, like they're somehow being compensated for personal risk. What you cited represents no personal risk to the CEO. They already made their millions. Now maybe if CEOs were actually liable for the damage they could do to the company and economy, would it be more justified.

manigandham 7y ago
There is personal risk. If the CEO does a poor job they might not be hired again or have other career impacts. There are numerous Fortune 500 CEOs that have a negative reputation that impacts their future earnings. Also corporations partly exist to shield liability so CEOs are not going to be personally held responsible outside of gross negligence or criminal acts, the same way you wouldn't be held responsible if you caused a major outage in your company that lost customers. There is an general move towards more performance-based compensation though, which I think you would agree is a good thing.
- reroute1 7y ago
  > There is personal risk. If the CEO does a poor job they might not be hired again or have other career impacts. There are numerous Fortune 500 CEOs that have a negative reputation that impacts their future earnings. This is true for all jobs...
  - manigandham 7y ago
    Your work performance is not likely publicly listed with constant reviews from employees and shareholders, is it?
    - reroute1 7y ago
      Your work performance is absolutely reviewed by managers and peers. Of course not to the extent of a CEO, but you're not getting paid what a CEO is and don't have the same impact so that's not surprising either. The point is all jobs have risks for performing badly, as they should. Not to mention sometimes CEO's performing badly results in a golden parachute... quite a far cry from your grunt worker getting laid off with no pension or benefits.
      - manigandham 7y ago
        If you go to a new job, who is telling them how bad you were at the last one? At most you might get a recommendation if you're good but it's rare to have anything follow you around unless it's major public news. Golden parachutes are not about performance, it's about change of control like a company takeover or merger. It's very common and happens to many startup founders that get acquired. It's also not much different than severance which is offered to employees at large corporations.
        reroute1 7y ago
        If you get a new job is key. Serious jobs will contact past employers and look at gaps in your resume. If you are being laid off and have bad references it will absolutely negatively affect you. Sure you could get some job, but so could an EX CEO... Golden parachutes are extra insulation for CEOs and their performance can definitely cause them to exit a company with a parachute that otherwise would keep them. It is like severance except wildly higher and more often than not there is no severance for average workwrs, especially nowadays. Either way, originally you made a statement about a CEO having negative impacts from their performance, but the exact same thing is true of everyone. A public story of a CEO performing badly is just as ethereal as a recommendation from a past job. Neither is a death sentence or a golden ticket, it's just a job and if you do it poorly you will have negative consequences. Publicity could serve an exiting CEO regardless of performance, that is not hard to conceive. It's just a different level of job people aren't blind to that. But to say they take greater personal risk by being a CEO, I don't buy that, they take the same risk as everyone else. If you do well you get rewarded, if you do poorly you're future is negatively affected. There's really nothing to support it's so different for a CEO.
- nkrisc 7y ago
  > There is personal risk. If the CEO does a poor job they might not be hired again or have other career impacts. There are numerous Fortune 500 CEOs that have a negative reputation that impacts their future earnings. And if I do a shit job I might have trouble getting hired too, but I'm not paid millions for it.
  - manigandham 7y ago
    Perhaps, but extremely unlikely. Who would know? I'm sure you can see there's a massive difference from a major CEO who is known publicly vs you switching jobs and not getting a reference callback at worst.
- Supermancho 7y ago
  > If the CEO does a poor job they might not be hired again or have other career impacts For some reason, I hear that they do fine all the time. Like https://en.wikipedia.org/wiki/Marissa_Mayer https://en.wikipedia.org/wiki/Marissa_Mayer ?
- piva00 7y ago
  Can you share an example of a CEO who was fired for incompetence (not criminal behaviour) that has had their career completely impacted by it? I'm asking because Google isn't giving me answers.
vorpalhex 7y ago
What Elon Musk tweets out in his personal time absolutely affects Tesla. If Elon decides to drive a Toyota Prius tomorrow.. well, guess what that does? Being a CEO is not a 9-5. Everything and anything a CEO does is monitored by a cadre of people.
nilkn 7y ago
You'll never find a qualified candidate for running a huge multinational corporation for only $1M/year. You simply won't be able to hire for the role and the company will have to go without a leader. If you try to promote someone internally whom you think would do a good job and then underpay them, they'll simply leave shortly after because someone else will snatch them up and pay them more than you. If you do find someone who stays for that amount, it'll be a bottom-of-the-barrel candidate that everyone else passed on already. This is like wanting to find a top-tier senior staff engineer for $30k/year in San Francisco. At the end of the day, the people who can do the job can also perform other roles, and those other roles already pay more than $1M/year. You have to convince them to take on an unprecedented amount of stress and responsibility and effectively act as a public figure with all the baggage that comes along with that. You also have to retain them and prevent competitors from hiring them and deploying them against you. That means you have to pay them more -- sometimes a lot more.

turbinerneiter 7y ago

> Nobody is doing that for $1m/year when one wrong decision could end up costing 1000x more than their salary and hurting livelihoods of the workers. Exactly. The wrong decision costs _the company_ a billion, it hurts the livelihoods of _the workers_. Incompetent, even criminal, managers more often than not pay for their mistakes with early retirement and severance packages. Winterkorn got a 10+m bonus when he stepped back and receives over one million in additional pension payments each year. That's the guy who is at fault for the Emssions Fraud Scandal. John Cryan, who oversaw the further demise of Deutsche Bank, was kicked with a 10m severance package. During his time as CEO, the Deutsche Bank share went from 30€ to 15€.

amw 7y ago
So that brings us to the next question: Why on earth are we putting the entirety of those (business) life and death decisionsinto the hands of essentially a single person? Why is the effort not spread out over a broad swath of management-capable people at all levels of the company, when we're against monarchy in so many other aspects of life?
- ameister14 7y ago
  we're not against monarchy because it's inefficient, or because kings are always bad. We're against it because when a king is bad, they're really really bad for their subjects. That doesn't have a lot to do with a public company.

pytester 7y ago

>This is what the job is worth, if you want someone competent and responsible for thousands of employees and billions in revenue. Nobody is doing that for $1m/year when one wrong decision could end up costing 1000x more than their salary I'll do it. It's not like that one wrong decision ends up affecting them. Even if they get fired (which they often don't), they can exercise golden parachutes that will pay out many multiples of how much an average earner gets in a lifetime. It's a job that gets paid a lot of money because the people who do it come from a fairly tight knit community that looks out for each other, not because of merit (CEO pay actually correlates slightly negatively with performance). Being an alumnus of McKinsey is actually one of the ways to enter that community.

VvR-Ox 7y ago
I'll do it for half $1m/year! ;-P You are totally right about the "golden parachute". The nice thing about being in upper management is that none of your decisions has any negative consequences for yourself and in the end you will just have more money and some more enemies who will probably not even attack you. It is always about "vitamin b" because that is how certain networks like (financial) elites work. I always wonder how average people try to defend the rich and argue that it is totally justified that they earn something like one year of salary in a month or even more. Think about all the big issues we have and how we could tackle them with all the money that now is inherited and shoved around to make more money out of nothing just to be even wealthier. It is just absurd to me and that people are actually kind of ok with this takes away most of the hope I have for our global future because if these people prevail it might as well look like the "hunger games" here some day.
- chrisweekly 7y ago
  "vitamin b"?
  - kyazawa 7y ago
    It's a German expression referring to getting a job through connections (Beziehung = relationship.) https://www.dw.com/en/vitamin-b/a-6616528 https://www.dw.com/en/vitamin-b/a-6616528

davinic 7y ago

The data[0] show that there is an inverse correlation between performance and CEO compensation, so I'm not sure how you come to "that is what the job is worth". Let's not pretend that the CEO market is some idealistic pure marketplace. In reality it's a good ole boys club between boards and top execs. I would wager that limiting CEO pay would have no negative effect on the supply of candidates.