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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 se

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 6y 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 6y ago
  I would say Hilton is weathering the pandemic quite well. The share price right now is almost at its highest point ever.
  - soco 6y ago
    Shares price shows that they are weathering the public impression quite well. Sales on the other hand...
danaris 6y 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 6y 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 6y ago
    And the evidence for that is?
  - danaris 6y 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 6y 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 6y ago
      CEOs make important decisions... acquisions, mergers, layoffs, expanding, shrinking, key partnerships, etc... or entirely changing the direction of the company.
      - aaron-santos 6y 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.
        29athrowaway 6y ago
        What happens if a laborer shows up to work drunk, and sexually harasses a colleague and then starts a fight? What will happen is that they will get fired with no news coverage and no impact to the share price whatsoever. What happens if a CEO does a fraction of that? It will affect the share price. Share holders will be pissed off. People will protest about it, people will stop buying the products, there will be news coverage and social media coverage about it... It will be a mess that will affect not only the CEO but everyone under them either directly or indirectly. Once the CEO is replaced, the new CEO will bring a new team and that will trigger a reorg... All the stuff above comes with risks and it's possible the new CEO is unsuccessful and has to be replaced again. And the losses generated by the outing of the crazy CEO will likely affect the laborers too somehow. As you can see, even if the laborer works hard and contributes to the company, but they do not have the same responsibility as the CEO.
- LatteLazy 6y ago
  If you're a ceo and have 10k employees, and you get them to accept 1k a year less each in wages, you made the shareholders 10m. So it makes sense you get 1m extra. (1k a year for a full time employee is 50c/h roughly, less if you factor in pay linked benefits and other costs). Hilton has 173k employees. So a ceo who can get minimal amounts more out of them or cut the cost of them even slightly is worth a fortune. I think this is the real driving force behind the ceo pay numbers we've seen: more big companies where a single ceo or a small top-team have huge leverage. I'm not making a moral arguement. Just a practical/Economic one. I think "leverage" is a better concept here than "responsibility" (which carries moral implications...)
  - danaris 6y ago
    I'm definitely making a moral argument, because I am a moral person, but for those for whom such arguments hold no sway, I am also making also a practical, economic one: We have ample evidence, from the way things have gone over the past few decades, that increasing inequality in an economic system is bad for the system as a whole.
    - loceng 6y ago
      Indeed, you need to properly fund/fuel/lubricate the largest segment/cog in the capitalist system - the consumer; UBI tied to inflation.
    - LatteLazy 6y ago
      I agree, but that's not something any one ceo can control. All he can do is maximise his own pay.
      - aaron-santos 6y ago
        Yep, and probably preaching to the choir here. That's usually why these conversations tend toward criticizing the systems that encourage these incentives.
  - alephu5 6y ago
    The important questions remains: Why is it possible to reduce salaries without losing your workforce? If it's because the economy is shrinking and job supply is dropping, CEO salaries should be less competitive too and share prices should be dropping but we see the contrary. There's something more than basic market dynamics at play here, inequality is being systematically nurtured which I think is the premise of the article.
happytoexplain 6y 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 6y 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.

soco 6y 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 6y ago
I would say Hilton is weathering the pandemic quite well. The share price right now is almost at its highest point ever.
- soco 6y ago
  Shares price shows that they are weathering the public impression quite well. Sales on the other hand...

danaris 6y 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 6y 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 6y ago
  And the evidence for that is?
- danaris 6y 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 6y 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 6y ago
    CEOs make important decisions... acquisions, mergers, layoffs, expanding, shrinking, key partnerships, etc... or entirely changing the direction of the company.
    - aaron-santos 6y 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.
      - 29athrowaway 6y ago
        What happens if a laborer shows up to work drunk, and sexually harasses a colleague and then starts a fight? What will happen is that they will get fired with no news coverage and no impact to the share price whatsoever. What happens if a CEO does a fraction of that? It will affect the share price. Share holders will be pissed off. People will protest about it, people will stop buying the products, there will be news coverage and social media coverage about it... It will be a mess that will affect not only the CEO but everyone under them either directly or indirectly. Once the CEO is replaced, the new CEO will bring a new team and that will trigger a reorg... All the stuff above comes with risks and it's possible the new CEO is unsuccessful and has to be replaced again. And the losses generated by the outing of the crazy CEO will likely affect the laborers too somehow. As you can see, even if the laborer works hard and contributes to the company, but they do not have the same responsibility as the CEO.
LatteLazy 6y ago
If you're a ceo and have 10k employees, and you get them to accept 1k a year less each in wages, you made the shareholders 10m. So it makes sense you get 1m extra. (1k a year for a full time employee is 50c/h roughly, less if you factor in pay linked benefits and other costs). Hilton has 173k employees. So a ceo who can get minimal amounts more out of them or cut the cost of them even slightly is worth a fortune. I think this is the real driving force behind the ceo pay numbers we've seen: more big companies where a single ceo or a small top-team have huge leverage. I'm not making a moral arguement. Just a practical/Economic one. I think "leverage" is a better concept here than "responsibility" (which carries moral implications...)
- danaris 6y ago
  I'm definitely making a moral argument, because I am a moral person, but for those for whom such arguments hold no sway, I am also making also a practical, economic one: We have ample evidence, from the way things have gone over the past few decades, that increasing inequality in an economic system is bad for the system as a whole.
  - loceng 6y ago
    Indeed, you need to properly fund/fuel/lubricate the largest segment/cog in the capitalist system - the consumer; UBI tied to inflation.
  - LatteLazy 6y ago
    I agree, but that's not something any one ceo can control. All he can do is maximise his own pay.
    - aaron-santos 6y ago
      Yep, and probably preaching to the choir here. That's usually why these conversations tend toward criticizing the systems that encourage these incentives.
- alephu5 6y ago
  The important questions remains: Why is it possible to reduce salaries without losing your workforce? If it's because the economy is shrinking and job supply is dropping, CEO salaries should be less competitive too and share prices should be dropping but we see the contrary. There's something more than basic market dynamics at play here, inequality is being systematically nurtured which I think is the premise of the article.

happytoexplain 6y 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 6y 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.