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I suspect if you cut the typical CEO's pay by 90%, they'd be extremely offended and go find a job somewhere else - regardless of whether they "needed" the money

I suspect if you cut the typical CEO's pay by 90%, they'd be extremely offended and go find a job somewhere else - regardless of whether they "needed" the money. Compensation is still the primary metric that an employer uses to communicate satisfaction with performance to an employee - all other things being equal, cutting someone's pay tells them you think they're doing a poor job, affects the prestige of the role and so on. There are obviously non-free-market forces that affect compensation but none of them work by considering the individual; they all start by considering the position and the market for the position. The number of people looking for the position is also a meaningless metric. Go anywhere on the internet and you can find people who are desperate to get software engineering jobs and yet somehow compensation keeps going up. Only the availability of qualified candidates and the competition for them matters.

kennywinker 5y ago
Like I said, if you cut the job's rate of pay across the board, not just at one company. There is no "elsewhere" to go in that scenario, and yet I'm sure the quality of work would be the same. People want to be CEO for status, and for the money, but the desire for money saturates quickly... you don't need 300x pay rates. You probably don't even need 10x pay rates to keep the position deeply desirable. > There are obviously non-free-market forces that affect compensation but none of them work by considering the individual; they all start by considering the position and the market for the position. Free market does NOT apply when you consider the individual. Considering the individual, there is no free market value to Tim Cook, because Tim Cook has a monopoly on Tim Cook. A monopoly is not a free market. Which is, of course, why he can ask for 100M/year in compensation... but it's not necessarily a good reason for anyone to pay that amount. Anyway, all of this is academic. I'll be voting with my shares to block the pay hike, but that position will almost definitely lose.
- sokoloff 5y ago
  Sure there’s an elsewhere to go: found a company and own it all. Or take a job that isn’t subject to these hypothetical caps. If you cut the max pay of doctors to $50K/yr, in 20 years, you’d have a lot fewer high-achieving students going into medicine and doing something else (law, engineering, etc)
  - kennywinker 5y ago
    There’s no shortage of qualified people wanting to become doctors, and yet they only make 2-5x what the average person makes in the US. This is exactly my point. I’m not saying CEO should be a badly paid job, I’m saying beyond a saturation point, you don’t get more/better people if you pay more. I suspect the saturation point is more like 5-10x not the 30x to 300x we’ve seen in the past 40 years

kennywinker 5y ago

Like I said, if you cut the job's rate of pay across the board, not just at one company. There is no "elsewhere" to go in that scenario, and yet I'm sure the quality of work would be the same. People want to be CEO for status, and for the money, but the desire for money saturates quickly... you don't need 300x pay rates. You probably don't even need 10x pay rates to keep the position deeply desirable. > There are obviously non-free-market forces that affect compensation but none of them work by considering the individual; they all start by considering the position and the market for the position. Free market does NOT apply when you consider the individual. Considering the individual, there is no free market value to Tim Cook, because Tim Cook has a monopoly on Tim Cook. A monopoly is not a free market. Which is, of course, why he can ask for 100M/year in compensation... but it's not necessarily a good reason for anyone to pay that amount. Anyway, all of this is academic. I'll be voting with my shares to block the pay hike, but that position will almost definitely lose.

sokoloff 5y ago
Sure there’s an elsewhere to go: found a company and own it all. Or take a job that isn’t subject to these hypothetical caps. If you cut the max pay of doctors to $50K/yr, in 20 years, you’d have a lot fewer high-achieving students going into medicine and doing something else (law, engineering, etc)
- kennywinker 5y ago
  There’s no shortage of qualified people wanting to become doctors, and yet they only make 2-5x what the average person makes in the US. This is exactly my point. I’m not saying CEO should be a badly paid job, I’m saying beyond a saturation point, you don’t get more/better people if you pay more. I suspect the saturation point is more like 5-10x not the 30x to 300x we’ve seen in the past 40 years