3 ms·

Exactly, pensions were considerably more common in the 1960s also, but at the end of the day, I don't really care if my retirement is actually funded by a pensi

Exactly, pensions were considerably more common in the 1960s also, but at the end of the day, I don't really care if my retirement is actually funded by a pension or a 401k or by stuffing dollar bills under my mattress, I want to know when I can retire and how comfortably I can live when I retire. Yes, getting into the weeds is valuable, but here we're talking about the money in your bank at the end of the day, and that CEO salaries haven't changed much doesn't say anything. Yes, a CEO should be making more money than the average employee. The debate is over how much -- why do CEOs get absolutely massive bonuses and golden parachutes and stock options and for employees it's expected that you put in the work in the hope of future recompense in terms of bonuses, promotions, etc.

WalterBright 5y ago
> why Because their decisions can drive a company into bankruptcy or transform it into a trillion dollar company. Your average line employee has no such leverage from their actions.
- FireBeyond 5y ago
  And when they drive it into bankruptcy, the company will still go to court to argue that these bonuses, compensation, parachutes should be paid, regardless. Win-win game. Except for the employees and shareholders.
  - WalterBright 5y ago
    Stock based compensation goes to zero in bankruptcy.
    - lanstin 5y ago
      Usually somehow the execs have sold out just before the bad news, while the regular employees haven't liquidated their 401s/stock plans.
      - WinstonSmith84 5y ago
        Usually? Please ... That's called insider trading and those who do that ends up in jail or at best have to hide in the sun for the rest of their life.
        ivan888 5y ago
        Is "hide in the sun" an idiom I'm unfamiliar with? Genuinely curious about what this means
        throwaway22211 5y ago
        Non-extradition countries are often tropical. "in the sun". https://worldpopulationreview.com/country-rankings/countries-without-extradition https://worldpopulationreview.com/country-rankings/countries... Latin countries, while not technically non-extradition, are still easy to hide in ... and also "in the sun"
        centixel 5y ago
        Not OP, but I take it to mean that they flee to a tropical country with limited extradition laws.
        paulmd 5y ago
        A recent example would be Intel's CEO Brian Krzanich dumping as much stock as he could after learning about Meltdown and before the news went public. https://arstechnica.com/information-technology/2018/01/intel-ceos-sale-of-stock-just-before-security-bug-reveal-raises-questions/ https://arstechnica.com/information-technology/2018/01/intel... The article also cites Equifax's CEO selling before the news of their data breach went public. And that's just the ones that are prominent enough that everybody knows about it.
        lanstin 5y ago
        Even just the routine sell off ten percent a year or whatever a financial planner would advise is something one can't do with your 401k.
- refenestrator 5y ago
  That would make sense as a post-exceptional-transformation windfall. Not as standard comp for keeping the seat warm while saying "yeah do more of that thing that prints money".
  - WalterBright 5y ago
    Why would any company hire a CEO and pay him millions to warm a seat? Why would the stockholders put up with that?
    - bobthepanda 5y ago
      Stockholders are increasingly not putting up with it. Votes against are still kind of rare, but they do happen: https://www.restaurantbusinessonline.com/financing/starbucks-shareholders-deliver-rare-rebuke-compensation https://www.restaurantbusinessonline.com/financing/starbucks... But also, the board makes CEO decisions, and it's not totally uncommon for board members to also be CEOs of other companies, so they buy the kool-aid because they also benefit from it. Plus, CEOs and boards don't exist in a vacuum. You've got to keep up with the Joneses if you think you're letting a good candidate get away.
      - WalterBright 5y ago
        The stockholders can revolt. If they don't, and it's their money being handed to the CEO, is it reasonable for non-stockholders to gripe about it?
        refenestrator 5y ago
        We're all stockholders, and anyone with a 401k is, by way of Vanguard and Blackrock.
        WalterBright 5y ago
        So don't invest in corporations who you believe overpay their CEO.
- deleted 5y ago
  [deleted]
lanstin 5y ago
Didn't you just say the stock owners were being diluted by the CEO compensations? Doesn't that include the 401k and pension funds? Isn't this is a massive transfer of wealth the the managerial class, justified simply because they can do it, and leave the consequences to others to clean up.
- idiotsecant 5y ago
  Bingo. The massive growth in the stock market in the past 40 years is directly a result of the massive inflow of capital from middle class 401k purchases. Overinflated CEO compensation packages are a way to siphon some of this into the pockets of the ruling class.
  - refurb 5y ago
    No it’s not due to that. How do I know? Look at PE ratios. Stock prices are backed by earnings.
    - bumby 5y ago
      I think the Cyclically Adjusted PE ratio is more useful in this regard. It does seem to point to overinflated prices compared to earnings. The current PE ratios are only surpassed by those during the dot-com boom when people found it difficult to create valuations grounded in reality. One theory is this is due to access to cheap capital in the last decade + https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe

WalterBright 5y ago

> why Because their decisions can drive a company into bankruptcy or transform it into a trillion dollar company. Your average line employee has no such leverage from their actions.

FireBeyond 5y ago
And when they drive it into bankruptcy, the company will still go to court to argue that these bonuses, compensation, parachutes should be paid, regardless. Win-win game. Except for the employees and shareholders.
- WalterBright 5y ago
  Stock based compensation goes to zero in bankruptcy.
  - lanstin 5y ago
    Usually somehow the execs have sold out just before the bad news, while the regular employees haven't liquidated their 401s/stock plans.
    - WinstonSmith84 5y ago
      Usually? Please ... That's called insider trading and those who do that ends up in jail or at best have to hide in the sun for the rest of their life.
      - ivan888 5y ago
        Is "hide in the sun" an idiom I'm unfamiliar with? Genuinely curious about what this means
        throwaway22211 5y ago
        Non-extradition countries are often tropical. "in the sun". https://worldpopulationreview.com/country-rankings/countries-without-extradition https://worldpopulationreview.com/country-rankings/countries... Latin countries, while not technically non-extradition, are still easy to hide in ... and also "in the sun"
        centixel 5y ago
        Not OP, but I take it to mean that they flee to a tropical country with limited extradition laws.
      - paulmd 5y ago
        A recent example would be Intel's CEO Brian Krzanich dumping as much stock as he could after learning about Meltdown and before the news went public. https://arstechnica.com/information-technology/2018/01/intel-ceos-sale-of-stock-just-before-security-bug-reveal-raises-questions/ https://arstechnica.com/information-technology/2018/01/intel... The article also cites Equifax's CEO selling before the news of their data breach went public. And that's just the ones that are prominent enough that everybody knows about it.
        lanstin 5y ago
        Even just the routine sell off ten percent a year or whatever a financial planner would advise is something one can't do with your 401k.
refenestrator 5y ago
That would make sense as a post-exceptional-transformation windfall. Not as standard comp for keeping the seat warm while saying "yeah do more of that thing that prints money".
- WalterBright 5y ago
  Why would any company hire a CEO and pay him millions to warm a seat? Why would the stockholders put up with that?
  - bobthepanda 5y ago
    Stockholders are increasingly not putting up with it. Votes against are still kind of rare, but they do happen: https://www.restaurantbusinessonline.com/financing/starbucks-shareholders-deliver-rare-rebuke-compensation https://www.restaurantbusinessonline.com/financing/starbucks... But also, the board makes CEO decisions, and it's not totally uncommon for board members to also be CEOs of other companies, so they buy the kool-aid because they also benefit from it. Plus, CEOs and boards don't exist in a vacuum. You've got to keep up with the Joneses if you think you're letting a good candidate get away.
    - WalterBright 5y ago
      The stockholders can revolt. If they don't, and it's their money being handed to the CEO, is it reasonable for non-stockholders to gripe about it?
      - refenestrator 5y ago
        We're all stockholders, and anyone with a 401k is, by way of Vanguard and Blackrock.
        WalterBright 5y ago
        So don't invest in corporations who you believe overpay their CEO.
deleted 5y ago
[deleted]

lanstin 5y ago

Didn't you just say the stock owners were being diluted by the CEO compensations? Doesn't that include the 401k and pension funds? Isn't this is a massive transfer of wealth the the managerial class, justified simply because they can do it, and leave the consequences to others to clean up.

idiotsecant 5y ago
Bingo. The massive growth in the stock market in the past 40 years is directly a result of the massive inflow of capital from middle class 401k purchases. Overinflated CEO compensation packages are a way to siphon some of this into the pockets of the ruling class.
- refurb 5y ago
  No it’s not due to that. How do I know? Look at PE ratios. Stock prices are backed by earnings.
  - bumby 5y ago
    I think the Cyclically Adjusted PE ratio is more useful in this regard. It does seem to point to overinflated prices compared to earnings. The current PE ratios are only surpassed by those during the dot-com boom when people found it difficult to create valuations grounded in reality. One theory is this is due to access to cheap capital in the last decade + https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe