13 ms·

I wonder if a lot of these issues would just go away if CEO compensation of a straight salary that was a reasonable amount.

godzillabrennus 6y ago
Who determines what is a reasonable amount?
- lkrubner 6y ago
  As with all things, reasonable people determine what is reasonable. There is a strong element of peer review in this, with reasonable recognizing each other as peers and showing at least some deference to some kind of agreed upon norms, if not about facts, at least about methods of gathering and evaluating facts. A refusal to respect those methods will generally cause reasonable people to view you as unreasonable. This might sounds elitist, but any process involving any kind of peer review necessarily involves people respecting certain approaches to information, while disrespecting other approaches.
  - jerf 6y ago
    Who are the "peers" to a CEO of a company the size of Carnival that will be making the "peer review"? Will anyone be willing to take the job at the price this peer review will be setting? There's a wide range of possible answers to those interrelated questions. I don't have one particular answer in mind. Just pointing out that as nice as your post may sound at a conceptual level, fleshing it out in detail is decidedly non-trivial.
    - toolz 6y ago
      Further, if you price cap a CEO companies will just make a new position. If you price cap all employees, companies will just make multiple companies and have the leader work multiple jobs. People love to complain about loopholes, but it's feel good legislation ideas like this that empower the people willing to manipulate the system in the first place. If your legislation allows the manipulators to make the most money, you're effectively saying that's what you value the most in society.
      - Spooky23 6y ago
        A 4 star general in the US Army makes something like $300k a year in total compensation. From a value of labor perspective, it’s hard to fathom that the Carnival Cruise Lines CEO is worth $12M annually on the basis of ability. Clearly a premium is being paid for something. Since society worships at the altar of shareholder value, public companies should be required to release data justifying how compensation maximizes shareholder value. For a cruise line, it obvious how paying some filipino able seaman poverty wages advances shareholder interest. And obviously the CFO likes the idea of having line workers from third world countries with limited rights whenever possible. But it’s unclear what the value of the $12M CEO is. What is the expected performance of a $1M CEO?
        arethuza 6y ago
        The Royal Navy used to have adverts that said that as a the Captain of a UK Trident sub you could make £100K a year (mind you this was a few years ago) - my genuine reaction was "I don't think that's enough". NB UK nuclear weapons don't have permissive-action locks - they don't need any code from HQ to be able to launch or for the warheads to work. They are completely under the control of their crews so being the captain of one of these subs is quite a responsibility.
    - Retric 6y ago
      The heads of giant charity’s or government agencies have in similar jobs with vastly less compensation. The idea you can only find people at 50m/year because nobody would do it at 10m/year is ridiculous.
      - philwelch 6y ago
        If someone is offering 50m/year then surely the most qualified candidates would compete for that job and treat the 10m/year offer as a backup plan. Meaning you wouldn’t get the best people. As for governments and non-profits: they don’t get the best people, either, unless those people are personally motivated by the mission in a way that is unlikely in a commercial setting.
        ModernMech 6y ago
        You don't necessarily get the most qualified people; you get the people most motivated by power and money. It's part of the reason 1 in 5 CEOs are psychopaths: https://www.psychology.org.au/news/media_releases/13September2016/Brooks/ https://www.psychology.org.au/news/media_releases/13Septembe...
        philwelch 6y ago
        So by that reasoning, LeBron James (who earns a salary of $37 million) isn't a better basketball player than Maurice Harkless ($11 million); he's just "motivated by power and money". I wonder how you would take it if someone offered you a small fraction of your current salary and suggested you were "motivated by money" if you didn't accept it? Are you also arguing that it's fundamentally impossible for any business executive to be as valuable to a business as LeBron James is to the Lakers?
        ModernMech 6y ago
        If I were paid a tiny fraction of what I make now I wouldn't be able to feed myself. Someone making 50 mil vs 10 mil is able to take care of all their human needs either way. I'm motivated to make the money I do by my desire to stay alive. But this 50 mil vs 10 mil argument isn't in a vacuum. It's 50mil vs 10mil for them versus $7 an hour for those at the bottom. People motivated to take those salaries when that kind of inequality exists aren't exactly looking out for the greater good. I'm arguing that the people who actually make the things and provide the services that make companies valuable are the workers at the bottom. The CEOs at the top are really good at squeezing every last drop of productivity out of them for minuscule pay and benefits, and trashing the environment whenever possible. That's the skillset of a psycho/sociopath. These people tend to do things like, I don't know, keep knowledge about the possibility of a deadly virus outbreak on a cruise ship from passengers.
    - lkrubner 6y ago
      A reasonable person is the peer of a reasonable person just like a researcher who is careful in their methods is the peer of another researcher who is careful in their methods. But how do you know who is careful in their methods? The only researchers who really know who are the researchers who are careful in their methods are the researchers who are careful in their methods. They recognize each other, but they cannot necessarily communicate what they know to the larger public. This is peer review. To protect peer review as it applies, in a practical sense, to specific professions, we normally follow a complex social process whereby institutions are established with the express goal of transferring knowledge from the older generation to the younger generation. The institutions themselves are subject to a separate process of gaining or losing the social capital necessary to be seen as legitimate in the task of transferring the knowledge. The institutions are entrusted with the task of gatekeeping the professions, weeding out a large number of people who might want to join the profession. However, the institutions themselves are not seen as able to force someone to recognize someone else as a peer, except in a superficial and prima facie sense. Actual peering is done between peers, and no institution can control it. In that sense, peering is the absolute opposite of democracy. It is a social process of a particular elite, who may not be seen as an elite by anyone but themselves. (Albert Einstein may or may not feel that Werner Heisenberg is a great physicist, and vice versa, Michael Jordan may or may not regard Kobe Bryant as a great basketball player, and vice versa, Isaac Abendana may or may not regard Jacob Abendana as a great Sephardic scholar, and vice versa.) The gatekeeping performed by the institutions is a first step towards establishing a peer group, but the gatekeeping does not itself establish the peer group. Only the peers themselves do that, in their own private thoughts, which no one else might agree with. Likewise, with reasonable people, though there is no institution gatekeeping the overall group of reasonable people, so the process is even more intensely personal than it is among the recognized professions. Yet people outside the peer groups do understand actual achievement, so occasionally members of each peer group develop public recognition, and then they go public with their own private ideas of who is a peer. This can influence who non-peers think of as peers. If Michael Jordan said that Kobe Bryant was his peer then few people would be surprised, but if Jordan insisted that Karl Malone was his peer, a few non-peer people who had previously disrespected Karl Malone would then re-evaluate the career of Karl Malone.
- criddell 6y ago
  I'm somewhat fond of the idea of a maximum ratio between the highest and lowest earners in a company, maybe 10:1. So if new employees are started at $50k, the max remuneration for any individual would be $500k. This provides an incentive to raise salaries at the bottom. I would apply this to all forms of payment. So if the CEO gets stock, they would be eligible to receive 10x whatever they give to their lowest level employee.
  - SketchySeaBeast 6y ago
    That's how you end up with a lot of super cheap "contractors" and very few actual employees, all of whom will be highly paid upper management.
    - coldtea 6y ago
      Well, then have courts enforce the intent of the law with great punishments that forbid such "creative" bypasses of the spirit of the law...
      - seanmcdirmid 6y ago
        Should Microsoft include janitors and good service workers who have long been outsourced, if they were ever employees at all? Security guards? Delivery people? The barista at the Starbucks nearby? This sounds like a law that would the courts would have a hard time enforcing, because companies and their employees depend on a wide variety of resources these days.
        coldtea 6y ago
        >Should Microsoft include janitors and good service workers who have long been outsourced, if they were ever employees at all? Security guards? Absolutely. >Delivery people? The barista at the Starbucks nearby? No.
        seanmcdirmid 6y ago
- mdszy 6y ago
  At a certain point, a mob with the guillotine will.
  - LyndsySimon 6y ago
    Will it though? Even if we set aside the question of whether or not this is a desirable outcome, I can think of exactly one instance where it has happened. Based upon your reference to the guillotine, I assume you're thinking of the same one. I would also note that even the French Revolution didn't exactly turn out as the instigators had wished. Instead of egalitarianism, they got "la Terreur" and decades of violence.
Mountain_Skies 6y ago
Another direction could be a mid six figure baseline salary and the rest of their compensation in the form of stock that vests 2% each year. Now they'll really be interested in the long term health of the company, even needing to make sure it ends up in good hands after they leave. The biggest problem with these kinds of schemes is that there's always going to be some other company that will still use large quarterly bonuses for their compensation package, which most CEOs will take instead.

godzillabrennus 6y ago

Who determines what is a reasonable amount?

lkrubner 6y ago
As with all things, reasonable people determine what is reasonable. There is a strong element of peer review in this, with reasonable recognizing each other as peers and showing at least some deference to some kind of agreed upon norms, if not about facts, at least about methods of gathering and evaluating facts. A refusal to respect those methods will generally cause reasonable people to view you as unreasonable. This might sounds elitist, but any process involving any kind of peer review necessarily involves people respecting certain approaches to information, while disrespecting other approaches.
- jerf 6y ago
  Who are the "peers" to a CEO of a company the size of Carnival that will be making the "peer review"? Will anyone be willing to take the job at the price this peer review will be setting? There's a wide range of possible answers to those interrelated questions. I don't have one particular answer in mind. Just pointing out that as nice as your post may sound at a conceptual level, fleshing it out in detail is decidedly non-trivial.
  - toolz 6y ago
    Further, if you price cap a CEO companies will just make a new position. If you price cap all employees, companies will just make multiple companies and have the leader work multiple jobs. People love to complain about loopholes, but it's feel good legislation ideas like this that empower the people willing to manipulate the system in the first place. If your legislation allows the manipulators to make the most money, you're effectively saying that's what you value the most in society.
    - Spooky23 6y ago
      A 4 star general in the US Army makes something like $300k a year in total compensation. From a value of labor perspective, it’s hard to fathom that the Carnival Cruise Lines CEO is worth $12M annually on the basis of ability. Clearly a premium is being paid for something. Since society worships at the altar of shareholder value, public companies should be required to release data justifying how compensation maximizes shareholder value. For a cruise line, it obvious how paying some filipino able seaman poverty wages advances shareholder interest. And obviously the CFO likes the idea of having line workers from third world countries with limited rights whenever possible. But it’s unclear what the value of the $12M CEO is. What is the expected performance of a $1M CEO?
      - arethuza 6y ago
        The Royal Navy used to have adverts that said that as a the Captain of a UK Trident sub you could make £100K a year (mind you this was a few years ago) - my genuine reaction was "I don't think that's enough". NB UK nuclear weapons don't have permissive-action locks - they don't need any code from HQ to be able to launch or for the warheads to work. They are completely under the control of their crews so being the captain of one of these subs is quite a responsibility.
  - Retric 6y ago
    The heads of giant charity’s or government agencies have in similar jobs with vastly less compensation. The idea you can only find people at 50m/year because nobody would do it at 10m/year is ridiculous.
    - philwelch 6y ago
      If someone is offering 50m/year then surely the most qualified candidates would compete for that job and treat the 10m/year offer as a backup plan. Meaning you wouldn’t get the best people. As for governments and non-profits: they don’t get the best people, either, unless those people are personally motivated by the mission in a way that is unlikely in a commercial setting.
      - ModernMech 6y ago
        You don't necessarily get the most qualified people; you get the people most motivated by power and money. It's part of the reason 1 in 5 CEOs are psychopaths: https://www.psychology.org.au/news/media_releases/13September2016/Brooks/ https://www.psychology.org.au/news/media_releases/13Septembe...
        philwelch 6y ago
        So by that reasoning, LeBron James (who earns a salary of $37 million) isn't a better basketball player than Maurice Harkless ($11 million); he's just "motivated by power and money". I wonder how you would take it if someone offered you a small fraction of your current salary and suggested you were "motivated by money" if you didn't accept it? Are you also arguing that it's fundamentally impossible for any business executive to be as valuable to a business as LeBron James is to the Lakers?
        ModernMech 6y ago
        If I were paid a tiny fraction of what I make now I wouldn't be able to feed myself. Someone making 50 mil vs 10 mil is able to take care of all their human needs either way. I'm motivated to make the money I do by my desire to stay alive. But this 50 mil vs 10 mil argument isn't in a vacuum. It's 50mil vs 10mil for them versus $7 an hour for those at the bottom. People motivated to take those salaries when that kind of inequality exists aren't exactly looking out for the greater good. I'm arguing that the people who actually make the things and provide the services that make companies valuable are the workers at the bottom. The CEOs at the top are really good at squeezing every last drop of productivity out of them for minuscule pay and benefits, and trashing the environment whenever possible. That's the skillset of a psycho/sociopath. These people tend to do things like, I don't know, keep knowledge about the possibility of a deadly virus outbreak on a cruise ship from passengers.
  - lkrubner 6y ago
    A reasonable person is the peer of a reasonable person just like a researcher who is careful in their methods is the peer of another researcher who is careful in their methods. But how do you know who is careful in their methods? The only researchers who really know who are the researchers who are careful in their methods are the researchers who are careful in their methods. They recognize each other, but they cannot necessarily communicate what they know to the larger public. This is peer review. To protect peer review as it applies, in a practical sense, to specific professions, we normally follow a complex social process whereby institutions are established with the express goal of transferring knowledge from the older generation to the younger generation. The institutions themselves are subject to a separate process of gaining or losing the social capital necessary to be seen as legitimate in the task of transferring the knowledge. The institutions are entrusted with the task of gatekeeping the professions, weeding out a large number of people who might want to join the profession. However, the institutions themselves are not seen as able to force someone to recognize someone else as a peer, except in a superficial and prima facie sense. Actual peering is done between peers, and no institution can control it. In that sense, peering is the absolute opposite of democracy. It is a social process of a particular elite, who may not be seen as an elite by anyone but themselves. (Albert Einstein may or may not feel that Werner Heisenberg is a great physicist, and vice versa, Michael Jordan may or may not regard Kobe Bryant as a great basketball player, and vice versa, Isaac Abendana may or may not regard Jacob Abendana as a great Sephardic scholar, and vice versa.) The gatekeeping performed by the institutions is a first step towards establishing a peer group, but the gatekeeping does not itself establish the peer group. Only the peers themselves do that, in their own private thoughts, which no one else might agree with. Likewise, with reasonable people, though there is no institution gatekeeping the overall group of reasonable people, so the process is even more intensely personal than it is among the recognized professions. Yet people outside the peer groups do understand actual achievement, so occasionally members of each peer group develop public recognition, and then they go public with their own private ideas of who is a peer. This can influence who non-peers think of as peers. If Michael Jordan said that Kobe Bryant was his peer then few people would be surprised, but if Jordan insisted that Karl Malone was his peer, a few non-peer people who had previously disrespected Karl Malone would then re-evaluate the career of Karl Malone.
criddell 6y ago
I'm somewhat fond of the idea of a maximum ratio between the highest and lowest earners in a company, maybe 10:1. So if new employees are started at $50k, the max remuneration for any individual would be $500k. This provides an incentive to raise salaries at the bottom. I would apply this to all forms of payment. So if the CEO gets stock, they would be eligible to receive 10x whatever they give to their lowest level employee.
- SketchySeaBeast 6y ago
  That's how you end up with a lot of super cheap "contractors" and very few actual employees, all of whom will be highly paid upper management.
  - coldtea 6y ago
    Well, then have courts enforce the intent of the law with great punishments that forbid such "creative" bypasses of the spirit of the law...
    - seanmcdirmid 6y ago
      Should Microsoft include janitors and good service workers who have long been outsourced, if they were ever employees at all? Security guards? Delivery people? The barista at the Starbucks nearby? This sounds like a law that would the courts would have a hard time enforcing, because companies and their employees depend on a wide variety of resources these days.
      - coldtea 6y ago
        >Should Microsoft include janitors and good service workers who have long been outsourced, if they were ever employees at all? Security guards? Absolutely. >Delivery people? The barista at the Starbucks nearby? No.
        seanmcdirmid 6y ago
mdszy 6y ago
At a certain point, a mob with the guillotine will.
- LyndsySimon 6y ago
  Will it though? Even if we set aside the question of whether or not this is a desirable outcome, I can think of exactly one instance where it has happened. Based upon your reference to the guillotine, I assume you're thinking of the same one. I would also note that even the French Revolution didn't exactly turn out as the instigators had wished. Instead of egalitarianism, they got "la Terreur" and decades of violence.

Mountain_Skies 6y ago

Another direction could be a mid six figure baseline salary and the rest of their compensation in the form of stock that vests 2% each year. Now they'll really be interested in the long term health of the company, even needing to make sure it ends up in good hands after they leave. The biggest problem with these kinds of schemes is that there's always going to be some other company that will still use large quarterly bonuses for their compensation package, which most CEOs will take instead.