11 ms·

US millionaire CEOs saw 29% pay raise while workers’ pay fell

72 points by babycake 5y ago

29athrowaway 5y ago
Now take a look at the market capitalization of the companies mentioned in the article: Hilton ($33.8 billions), Yum Brands ($36.08 billions), etc. It makes sense to have a well paid CEO in those cases, they have a huge responsibility.
- soco 5y ago
  Hilton earnings are crashing, is this a responsibility of the CEO? Did the CEO responsibility increase lately? Don't the workers have any responsibility there as well? Or do they have declining responsibilities?
  - 29athrowaway 5y ago
    I would say Hilton is weathering the pandemic quite well. The share price right now is almost at its highest point ever.
    - soco 5y ago
      Shares price shows that they are weathering the public impression quite well. Sales on the other hand...
- danaris 5y ago
  "Well paid CEO" and "CEO making hundreds of times more than their employees, and increasing their compensation at a time when workers are being laid off, seeing pay freezes and drops, and just straight-up dying of COVID" are....not, shall we say, quite equivalent.
  - 29athrowaway 5y ago
    Another interpretation is that they managed to keep their companies afloat despite all the adversities affecting their sectors. It could have been much worse.
    - Daishiman 5y ago
      And the evidence for that is?
    - danaris 5y ago
      And I am not (at least, not here) attempting to argue that a) they do not do a worthwhile job, or b) they should not be well-paid. Merely that the relationship between their pay and the pay of their employees should not be so drastically out of balance.
    - aaron-santos 5y ago
      The thing is, this applies to all of the non-CEO staff as well. Without them, the company would not stay afloat. If anything, they risked their capital (ie the labor-producing bodies) more than any CEO. And all of this in an economic system where capital risk is ostensibly rewarded.
      - 29athrowaway 5y ago
        CEOs make important decisions... acquisions, mergers, layoffs, expanding, shrinking, key partnerships, etc... or entirely changing the direction of the company.
        aaron-santos 5y ago
        Laborers do important work. Without them the company produces nothing. We could go back and forth with this. And for one reason: it doesn't matter what the CEO does or doesn't do. There is something else that matters much more than any of that.
        5y ago
- happytoexplain 5y ago
  Where "well paid" is synonymous with being "commensurately paid", yes, of course. Clearly many people do not believe they are being commensurately paid. The only defense I ever see is pointing at these many people and claiming they simply do not understand how hard being a CEO is, or how much value rests on their decisions. In the face of the overwhelmingly enormous incomes, which continue to become more overwhelmingly enormous, while worker pay growth continues to trickle, halt, or even reverse, the finger-pointing argument seems weak, to put it lightly.
  - fairity 5y ago
    Yes, the primary argument is that without such high CEO pay, companies would perform materially worse due to the consequences of poorer CEO decision making. You seem to be pointing out that the gap between CEO and average employee pay is increasing, which while true, doesn't seem to address the primary argument. In fact, it may be true that, on average, employee pay will decrease by lowering CEO pay (if, in fact, it's true that overall company performance suffers as a result). It's hard to find supporting evidence for or against the primary argument because you can't split test a CEO, but there are definitely examples of almost identical businesses, where one succeeded and the other failed purely due to execution. And, one can make an argument that the difference in execution is largely due to the CEO. One such example is Blue Apron vs Hello Fresh.
deleted 5y ago
[deleted]
lbotos 5y ago
Lyn Alden's latest post on Inflation talks about the idea of the cyclic effect of Capital vs. Labor and has a great chart: https://www.lynalden.com/inflation/#benefit https://www.lynalden.com/inflation/#benefit (which is based on Ray Dalio's Changing World Order): https://www.principles.com/the-changing-world-order/ https://www.principles.com/the-changing-world-order/ I personally expect in the next 5-10 years to see more pressure from Labor on Capital on the backs of news like this (whether true or spin) and the monetary env we are in.
- Tarsul 5y ago
  I read an article in the Guardian today that had a little stat in it that said that the richest 1% in the US own 43% whilst the richest 1% of Greeks only own 9%.[1] I wouldn't have thought that the contrast is SO big between countries. I agree however that the real stats are not as important as how they are spun and represented regarding the influence on public opinion. I also agree that something's (and with that I mean the rich) gotta give sooner rather than later unless growth alone will help everyone up sufficiently (which I don't think it will, especially with climate crisis looming). [1]https://www.theguardian.com/business/2021/may/11/oecd-higher-inheritance-tax-covid-pandemic https://www.theguardian.com/business/2021/may/11/oecd-higher...
mouzogu 5y ago
I wonder how big of a difference in revenue these companies would have if they operated without any CEO, just an empty chair.
- ajmadesc 5y ago
  "We find evidence that industry and size adjusted CEO pay is negatively related to future shareholder wealth changes for periods up to five years after sorting on pay. For example, firms that pay their CEOs in the top ten percent of pay earn negative abnormal returns over the next five years of approximately -13%. The effect is stronger for CEOs who receive higher incentive pay relative to their peers. Our results are consistent with high-pay induced CEO overconfidence and investor overreaction towards firms with high paid CEOs." https://online.wsj.com/public/resources/documents/CEOperformance122509.pdf https://online.wsj.com/public/resources/documents/CEOperform...
- idrios 5y ago
  I'd speculate that without a CEO at all, it would become Lord of the Flies for any of the other executives and the effects of this would ripple into the rest of the company culture, making the company an incredibly toxic place to work. Not saying that's worse than a CEO who takes enormous profits for his or herself, AND is toxic. Just that there's value in good leadership
  - xtiansimon 5y ago
    I agree with you about the leadership role of CEOs in a firm. I’m curious about this, “.. CEO who takes enormous profits..” Are you implying CEOs are orchestrating their own compensation? Or, are you casually referring to CEO compensation packages?
beej71 5y ago
Show a little sympathy; those $500 million yachts aren't going to buy themselves. ;)
loceng 5y ago
I believe CEO pay is the wrong tree to bark up, instead providing a UBI to everyone so they don't need to work, and if people do decide to work then companies will have to compensate everyone competitively vs. other company compensation - and some CEOs may emerge where instead of taking $100million a year, redistribute more of that back into the workforce; this metric can be gamed of course in that compensation can instead be gained in stock.
mrlonglong 5y ago
This is exactly what annoys me the most. Every person is entitled to good healthcare, good education and should be paid a good wage to live well. Happy people don't riot. Happy people don't commit crimes. Happy people don't start wars.
- gher-shyu3i 5y ago
  You're assuming good wages and good education make people always happy.
  - hamstergene 5y ago
    Let’s remove the word “happy” for being too vague, and say directly: * People with good wages and education commit crimes less * People with good wages and education riot less * People with good wages and education less likely to approve war Are those assumptions wrong too?

72 points by babycake 5y ago

Now take a look at the market capitalization of the companies mentioned in the article: Hilton ($33.8 billions), Yum Brands ($36.08 billions), etc. It makes sense to have a well paid CEO in those cases, they have a huge responsibility.

soco 5y ago
Hilton earnings are crashing, is this a responsibility of the CEO? Did the CEO responsibility increase lately? Don't the workers have any responsibility there as well? Or do they have declining responsibilities?
- 29athrowaway 5y ago
  I would say Hilton is weathering the pandemic quite well. The share price right now is almost at its highest point ever.
  - soco 5y ago
    Shares price shows that they are weathering the public impression quite well. Sales on the other hand...
danaris 5y ago
"Well paid CEO" and "CEO making hundreds of times more than their employees, and increasing their compensation at a time when workers are being laid off, seeing pay freezes and drops, and just straight-up dying of COVID" are....not, shall we say, quite equivalent.
- 29athrowaway 5y ago
  Another interpretation is that they managed to keep their companies afloat despite all the adversities affecting their sectors. It could have been much worse.
  - Daishiman 5y ago
    And the evidence for that is?
  - danaris 5y ago
    And I am not (at least, not here) attempting to argue that a) they do not do a worthwhile job, or b) they should not be well-paid. Merely that the relationship between their pay and the pay of their employees should not be so drastically out of balance.
  - aaron-santos 5y ago
    The thing is, this applies to all of the non-CEO staff as well. Without them, the company would not stay afloat. If anything, they risked their capital (ie the labor-producing bodies) more than any CEO. And all of this in an economic system where capital risk is ostensibly rewarded.
    - 29athrowaway 5y ago
      CEOs make important decisions... acquisions, mergers, layoffs, expanding, shrinking, key partnerships, etc... or entirely changing the direction of the company.
      - aaron-santos 5y ago
        Laborers do important work. Without them the company produces nothing. We could go back and forth with this. And for one reason: it doesn't matter what the CEO does or doesn't do. There is something else that matters much more than any of that.
        5y ago
happytoexplain 5y ago
Where "well paid" is synonymous with being "commensurately paid", yes, of course. Clearly many people do not believe they are being commensurately paid. The only defense I ever see is pointing at these many people and claiming they simply do not understand how hard being a CEO is, or how much value rests on their decisions. In the face of the overwhelmingly enormous incomes, which continue to become more overwhelmingly enormous, while worker pay growth continues to trickle, halt, or even reverse, the finger-pointing argument seems weak, to put it lightly.
- fairity 5y ago
  Yes, the primary argument is that without such high CEO pay, companies would perform materially worse due to the consequences of poorer CEO decision making. You seem to be pointing out that the gap between CEO and average employee pay is increasing, which while true, doesn't seem to address the primary argument. In fact, it may be true that, on average, employee pay will decrease by lowering CEO pay (if, in fact, it's true that overall company performance suffers as a result). It's hard to find supporting evidence for or against the primary argument because you can't split test a CEO, but there are definitely examples of almost identical businesses, where one succeeded and the other failed purely due to execution. And, one can make an argument that the difference in execution is largely due to the CEO. One such example is Blue Apron vs Hello Fresh.

deleted 5y ago

[deleted]

lbotos 5y ago

Lyn Alden's latest post on Inflation talks about the idea of the cyclic effect of Capital vs. Labor and has a great chart: https://www.lynalden.com/inflation/#benefit https://www.lynalden.com/inflation/#benefit (which is based on Ray Dalio's Changing World Order): https://www.principles.com/the-changing-world-order/ https://www.principles.com/the-changing-world-order/ I personally expect in the next 5-10 years to see more pressure from Labor on Capital on the backs of news like this (whether true or spin) and the monetary env we are in.

Tarsul 5y ago
I read an article in the Guardian today that had a little stat in it that said that the richest 1% in the US own 43% whilst the richest 1% of Greeks only own 9%.[1] I wouldn't have thought that the contrast is SO big between countries. I agree however that the real stats are not as important as how they are spun and represented regarding the influence on public opinion. I also agree that something's (and with that I mean the rich) gotta give sooner rather than later unless growth alone will help everyone up sufficiently (which I don't think it will, especially with climate crisis looming). [1]https://www.theguardian.com/business/2021/may/11/oecd-higher-inheritance-tax-covid-pandemic https://www.theguardian.com/business/2021/may/11/oecd-higher...

mouzogu 5y ago

I wonder how big of a difference in revenue these companies would have if they operated without any CEO, just an empty chair.

ajmadesc 5y ago
"We find evidence that industry and size adjusted CEO pay is negatively related to future shareholder wealth changes for periods up to five years after sorting on pay. For example, firms that pay their CEOs in the top ten percent of pay earn negative abnormal returns over the next five years of approximately -13%. The effect is stronger for CEOs who receive higher incentive pay relative to their peers. Our results are consistent with high-pay induced CEO overconfidence and investor overreaction towards firms with high paid CEOs." https://online.wsj.com/public/resources/documents/CEOperformance122509.pdf https://online.wsj.com/public/resources/documents/CEOperform...
idrios 5y ago
I'd speculate that without a CEO at all, it would become Lord of the Flies for any of the other executives and the effects of this would ripple into the rest of the company culture, making the company an incredibly toxic place to work. Not saying that's worse than a CEO who takes enormous profits for his or herself, AND is toxic. Just that there's value in good leadership
- xtiansimon 5y ago
  I agree with you about the leadership role of CEOs in a firm. I’m curious about this, “.. CEO who takes enormous profits..” Are you implying CEOs are orchestrating their own compensation? Or, are you casually referring to CEO compensation packages?

beej71 5y ago

Show a little sympathy; those $500 million yachts aren't going to buy themselves. ;)

loceng 5y ago

I believe CEO pay is the wrong tree to bark up, instead providing a UBI to everyone so they don't need to work, and if people do decide to work then companies will have to compensate everyone competitively vs. other company compensation - and some CEOs may emerge where instead of taking $100million a year, redistribute more of that back into the workforce; this metric can be gamed of course in that compensation can instead be gained in stock.

mrlonglong 5y ago

This is exactly what annoys me the most. Every person is entitled to good healthcare, good education and should be paid a good wage to live well. Happy people don't riot. Happy people don't commit crimes. Happy people don't start wars.

gher-shyu3i 5y ago
You're assuming good wages and good education make people always happy.
- hamstergene 5y ago
  Let’s remove the word “happy” for being too vague, and say directly: * People with good wages and education commit crimes less * People with good wages and education riot less * People with good wages and education less likely to approve war Are those assumptions wrong too?