4 ms·

Many CEOs who aren't famous because they failed still got paid at that 200x rate.

fastball 6y ago
Yes, but the solution is not "nobody should get paid at that rate", it's "pay people in accordance with their actual performance". If you are the CEO and your company does terribly, you should probably get paid 0 that year.
- tchaffee 6y ago
  > you should probably get paid 0 that year. Most CEOs in the USA can demand contracts that give them a massive golden umbrella, fail or not. Why would any CEO accept less than that? But to answer the harder question, I don't think anyone should get paid at that rate. No one is worth that much once you take into account negative externalities. As an extreme example, Exxon executives might be worth a negative number to society at this point. Getting more nuanced, huge wage gaps are highly correlated with lots of costly things like increased crimes rates, and less costly but important things like happiness. I think the world is increasingly becoming aware that the USA is nowhere near #1 in many measures, and that a handful of other countries have managed to make a measurably better society. And in all those countries you see far smaller wage gaps. Could be correlation, but I think with enough time we will see that it is causation. Humans instinctively know that kings are not God-like and CEOs are not worth 200x more than the thousands of employees who work just as hard. Leaders with benefits are fine. Leaders with excessive benefits have never ended well in all of human history. The fact that it is happening now due to "market forces" instead of royal lineage. perhaps makes it a bit more tolerable temporarily. But I think those huge wage gaps are increasingly becoming less tolerable even to Americans. Other countries have already arrived.
  - WalterBright 6y ago
    > No one is worth that much The shareholders disagree and the CEO compensation comes out of the shareholders' pockets. > who work just as hard It's not about working hard. It's about making the right decisions. > Other countries have already arrived. On the other hand, US companies are the most prosperous in the world, and contribute enormously to the US economy. All the FAANG companies are in the US, for example.
    - tchaffee 6y ago
      The shareholders do not all agree. Some of us want to see wage gaps narrowed. Some of us have been looking at how companies impact all stakeholders, including the local community. Sustainability is no longer a strange word. The average employee makes decisions all the time. And yes, the companies are prosperous. A few benefit. Society at large not so much. The US is behind by many measures.
      - WalterBright 6y ago
        > The shareholders do not all agree. They can sell their shares if they don't accept it. Presumably whoever buys it accepts it. > Society at large not so much Nobody has been able to connect high CEO pay with detriments to society at large.
        tchaffee 6y ago
        Shareholders do not expect companies to be perfect. One of the reasons to be part owner is to push for improvements and to have influence. You are wrong about detriments to society, and a simple search would have saved you. Just as one example, large income gaps are highly correlated with higher crime rates [1]. This has been shown in many studies, and across cultures. There are other negative effects as well, including both the rich and the poor being less happy. I suggest you do the work of trying to prove yourself wrong and you'll find even more. [1] https://www.economist.com/graphic-detail/2018/06/07/the-stark-relationship-between-income-inequality-and-crime https://www.economist.com/graphic-detail/2018/06/07/the-star...
        WalterBright 6y ago
        There aren't enough CEOs to make any sort of difference.
        tchaffee 6y ago
        Source? Because each CEO affects many people. So it sounds like you just made that up. Meanwhile, I provided a source that shows higher crime rates when there are higher wage gaps. Where are those wage gaps coming from? Please provide sources, not your own reasoning.
- tluyben2 6y ago
  Agreed. They can still end up 'getting' more than 200x that year by selling shares, but that's not really related imho.
- yodon 6y ago
  > If you are the CEO and your company does terribly, you should probably get paid 0 that year. Imagine you are an amazing developer, and a company with a terrible codebase and a high risk of technical problems wants to hire you, precisely because it is aware it has problems and needs you. Then the company says "oh, and if we have any technical problems your pay will be zero." You would be extremely unlikely to take that role, regardless of the salary they were promising in the event of technical success. Every hire, including CEO's who work for the board of directors, is subject to that same calculus. If a company is at risk of doing terribly, it will often seek to bring in a new CEO or retain an existing CEO. If that CEO knows they will receive no compensation in the not-unlikely to expected scenario of the company doing poorly, they will walk away from the offer, even if they are the best candidate to potentially solve the company's woes, precisely because anyone who is the best candidate to solve the company's woes is good enough to obtain another better offer that doesn't contain a punitive no salary for you clause.
WalterBright 6y ago
Do you think they're going to get another CEO position at that rate?

Yes, but the solution is not "nobody should get paid at that rate", it's "pay people in accordance with their actual performance". If you are the CEO and your company does terribly, you should probably get paid 0 that year.

tchaffee 6y ago
> you should probably get paid 0 that year. Most CEOs in the USA can demand contracts that give them a massive golden umbrella, fail or not. Why would any CEO accept less than that? But to answer the harder question, I don't think anyone should get paid at that rate. No one is worth that much once you take into account negative externalities. As an extreme example, Exxon executives might be worth a negative number to society at this point. Getting more nuanced, huge wage gaps are highly correlated with lots of costly things like increased crimes rates, and less costly but important things like happiness. I think the world is increasingly becoming aware that the USA is nowhere near #1 in many measures, and that a handful of other countries have managed to make a measurably better society. And in all those countries you see far smaller wage gaps. Could be correlation, but I think with enough time we will see that it is causation. Humans instinctively know that kings are not God-like and CEOs are not worth 200x more than the thousands of employees who work just as hard. Leaders with benefits are fine. Leaders with excessive benefits have never ended well in all of human history. The fact that it is happening now due to "market forces" instead of royal lineage. perhaps makes it a bit more tolerable temporarily. But I think those huge wage gaps are increasingly becoming less tolerable even to Americans. Other countries have already arrived.
- WalterBright 6y ago
  > No one is worth that much The shareholders disagree and the CEO compensation comes out of the shareholders' pockets. > who work just as hard It's not about working hard. It's about making the right decisions. > Other countries have already arrived. On the other hand, US companies are the most prosperous in the world, and contribute enormously to the US economy. All the FAANG companies are in the US, for example.
  - tchaffee 6y ago
    The shareholders do not all agree. Some of us want to see wage gaps narrowed. Some of us have been looking at how companies impact all stakeholders, including the local community. Sustainability is no longer a strange word. The average employee makes decisions all the time. And yes, the companies are prosperous. A few benefit. Society at large not so much. The US is behind by many measures.
    - WalterBright 6y ago
      > The shareholders do not all agree. They can sell their shares if they don't accept it. Presumably whoever buys it accepts it. > Society at large not so much Nobody has been able to connect high CEO pay with detriments to society at large.
      - tchaffee 6y ago
        Shareholders do not expect companies to be perfect. One of the reasons to be part owner is to push for improvements and to have influence. You are wrong about detriments to society, and a simple search would have saved you. Just as one example, large income gaps are highly correlated with higher crime rates [1]. This has been shown in many studies, and across cultures. There are other negative effects as well, including both the rich and the poor being less happy. I suggest you do the work of trying to prove yourself wrong and you'll find even more. [1] https://www.economist.com/graphic-detail/2018/06/07/the-stark-relationship-between-income-inequality-and-crime https://www.economist.com/graphic-detail/2018/06/07/the-star...
        WalterBright 6y ago
        There aren't enough CEOs to make any sort of difference.
        tchaffee 6y ago
        Source? Because each CEO affects many people. So it sounds like you just made that up. Meanwhile, I provided a source that shows higher crime rates when there are higher wage gaps. Where are those wage gaps coming from? Please provide sources, not your own reasoning.
tluyben2 6y ago
Agreed. They can still end up 'getting' more than 200x that year by selling shares, but that's not really related imho.
yodon 6y ago
> If you are the CEO and your company does terribly, you should probably get paid 0 that year. Imagine you are an amazing developer, and a company with a terrible codebase and a high risk of technical problems wants to hire you, precisely because it is aware it has problems and needs you. Then the company says "oh, and if we have any technical problems your pay will be zero." You would be extremely unlikely to take that role, regardless of the salary they were promising in the event of technical success. Every hire, including CEO's who work for the board of directors, is subject to that same calculus. If a company is at risk of doing terribly, it will often seek to bring in a new CEO or retain an existing CEO. If that CEO knows they will receive no compensation in the not-unlikely to expected scenario of the company doing poorly, they will walk away from the offer, even if they are the best candidate to potentially solve the company's woes, precisely because anyone who is the best candidate to solve the company's woes is good enough to obtain another better offer that doesn't contain a punitive no salary for you clause.

WalterBright 6y ago

Do you think they're going to get another CEO position at that rate?