7 ms·

Andy Jassy's $214M salary is 'excessive' and should be vetoed – advisory firms

50 points by hubraumhugo 4y ago

jpgvm 4y ago
Its 21M, 210M is over 10 years with substantial part of that not vesting until year 8. That said it's still pretty rich given its not tied to shareholder value or business performance.
- manuelabeledo 4y ago
  > That said it's still pretty rich given its not tied to shareholder value or business performance. The sad truth is that, in recent years, performance doesn't seem to be pegged to compensation anymore. Not only that, but certain large corporation CEOs do have provisions in their contracts so they get paid handsomely if they are fired, which goes against the very idea of firing people for performance reasons.
  - jayski 4y ago
    I agree that its not a great deal for shareholders, but I can see how we got here. It works similar in sports, if there is a 33 year old free agent superstar, every team is willing to give them a 2 year 80million dollar deal (40 per year). So the competition becomes who is willing to guarantee 40 for a 3rd, 4th year. It may not be a great long term decision for the team, but if they dont agree to those unfavorable terms they're simply not getting the player. I wonder if there were other companies willing to offer similar payment packages to this CEO and the competition become who would guarantee the money without asking for performance goals.
    - manuelabeledo 4y ago
      > It works similar in sports... Main difference here is that the average career span of a pro athlete very rarely reaches 20 years, and deal numbers tend to decrease with age. Executives don't have that problem, in fact it's quite the opposite.
      - kungito 4y ago
        Is that actually true? Do these rockstar CEOs get the same compensations when they reach 60? They also start getting those paychecks later in their 30s compared to sport players
        manuelabeledo 4y ago
        > Do these rockstar CEOs get the same compensations when they reach 60? The average age of a CEO in 2018 is 54 years old [1], so I would say yes, they do. The average salary for a CEO in a top 350 company was $13.9M [2]. > They also start getting those paychecks later in their 30s compared to sport players Compared to the average NFL player ($860,000) [3], and the average retirement age is 27 years old [4], which essentially means that an average NFL player makes perhaps 5 to 6 million dollars in their whole career. Other more forgiving sports, like NBA, puts players on an average of $8 million [5], and an average retirement age of 28 [6], so around 6-7 seasons. It's worth remembering that these are highly paid professional athletes who most likely come from college teams, meaning that they weren't paid at all. A CEO, on the other hand, doesn't spend their previous years as an unpaid intern. They are usually top executives already. In short, CEOs do get paid better on average than professional athletes, all things considered. [1] https://www.statista.com/statistics/1097551/average-age-at-hire-of-ceos-and-cfos-in-the-united-states/ https://www.statista.com/statistics/1097551/average-age-at-h... [2] https://www.epi.org/publication/ceo-pay-in-2020/#:~:text=This%2018.9%25%20increase%20from%202019,below%20its%20level%20in%202019 https://www.epi.org/publication/ceo-pay-in-2020/#:~:text=Thi.... [3] https://work.chron.com/much-money-nfl-player-make-year-2377.html https://work.chron.com/much-money-nfl-player-make-year-2377.... [4] https://investingfuse.com/retirement/average-retirement-age-for-nfl-football-players-by-position/#:~:text=The%20average%20retirement%20age%20of,health%20concerns%2C%20and%20skill%20level https://investingfuse.com/retirement/average-retirement-age-.... [5] https://www.statista.com/statistics/1120257/annual-salaries-nba/#:~:text=Over%20the%20past%20years%2C%20NBA,to%203.67%20billion%20U.S.%20dollars https://www.statista.com/statistics/1120257/annual-salaries-.... [6] https://www.rbcwealthmanagement.com/en-us/insights/professional-athletes-need-a-retirement-game-plan https://www.rbcwealthmanagement.com/en-us/insights/professio...
  - missedthecue 4y ago
    It's really hard to come up with good performance metrics. Ideally, you want execs to make good long term decisions for developing sustainable growth and competitive advantage. To do this, they need some room to maneuver and freedom to operate to make these decisions. Imagine trying to tie dev comp to performance metrics like number of commits or bugs squashed. If you tie comp to share price or EPS, they'll try to juice it with buybacks. If you tie it to revenue, they'll try to grow too quickly and become unsustainable. They'll start doing anti-consumer things like denying refunds. If you tie it to profits, they'll cut the business down to barebones and whittle away at resiliency and R&D in order to squeeze a bit more margin out each quarter. Like Warren Buffett's co-ceo Charlie Munger once quipped, "show me the incentives and I'll show you the outcome".
    - milkytron 4y ago
      > Imagine trying to tie dev comp to performance metrics like number of commits or bugs squashed. I worked at a company that wanted to do this, and may or may not have behind the scenes. When I explained that these could easily be gamed, their response was, "Why would someone do that?" This was at one of the largest banks in the entire world while they were also trying to claim that they were a technology company that happens to do banking. Yeah, okay.
      - antisthenes 4y ago
        Is that the same bank that "invested" 2bn dollars into WeWork?
    - manuelabeledo 4y ago
      This all sounds like there is an inherent problem in the system itself, as it incentivises bad behaviours.
      - missedthecue 4y ago
        Incentives resulting in unintended consequences isn't specific to any type of system.
- plater 4y ago
  It's 210M for one year. He just has to wait 10 years to get it fully paid out.
  - onphonenow 4y ago
    Are these kind of comments for real? Are you claiming he will get this award every year? He doesn't "just have to wait". He has to WORK for 10 years or meet other requirements for vesting. If this was a european style 10 year option package, sure, he could retire and just wait to excercise, that's not what these are.
- fnordpiglet 4y ago
  It’s 61000 shares, the value of which will float on amazons performance. I worked a lot with Andy jassy, he’s worth the investment.
- choko 4y ago
  It is indirectly though, since the vast majority of the compensation is in the form of stocks.
asadawadia 4y ago
Apart from the fact that business insider is basically buzzfeed - of course now they think salaries are too high since growth has slowed down
asadhaider 4y ago
Such a misleading headline, the article even mentions his salary is $175k/year. > Jassy took over as the CEO of Amazon from Jeff Bezos in July. In 2021, Jassy received $212,701,169 in total compensation, Insider reported in April, citing a proxy filing the company submitted. Only $175,000 of that came from his salary. The rest came from shares: He was awarded 61,000 shares that would vest over 10 years, worth $211,933,520, when he became CEO. > "The way the SEC rules work we are required to report that grant as total compensation for 2021, when in reality it will vest over the next 10 years," an Amazon spokesperson told Insider in an emailed statement on Friday. > "What this equates to from an annual compensation perspective is competitive with that of CEOs at other large companies and was approved by the Amazon Board of Directors," the spokesperson added.
- troon-lover 4y ago
giantg2 4y ago
Honestly, it's hard to believe that one person who isn't actually producing/outputting anything can create that much value, and that you can't fund someone to do the same work for half the cost.
- yowlingcat 4y ago
  If you could find someone to do the same work for half the cost, you'd be able to make a pretty penny as a retained executive recruiter. Knowing a couple of friends who run such firms, let me tell you -- it would be hard to find someone of 25% of that caliber for even 75% of that price. Value is what the market is willing to pay. There is only 1 Andy Jassy in the world in the same way there is only 1 Jeff Bezos.
  - jka 4y ago
    I'd be curious to see the results of (crowds of?) normal people paid to say what their responses would be in the type of situations that leaders on these pay packages have to deal with, when given similar levels of context. No doubt that's not the entire job: there's also networking, communication and thought leadership involved. But similar approaches could apply. Liability could be a trickier one.
    - yowlingcat 4y ago
      Of those three, "networking" and "thought leadership" are more hobbies rather than concrete responsibilities of the job. There are actual concrete responsibilities that a CEO at that level needs to accomplish, a sample of which include: - fundraising - organizational structuring - hiring - strategic planning + competitive positioning - go to market motions - R&D - investor relations There's nothing fungible about any of these responsibilities, so no matter how many ordinary people you stack together, you'll never arrive at even a fraction of what a competent executive can do. Companies have executives for the same reasons countries do. Executives rotate in and out of power subject to the ongoing favor of their stakeholders, but the hierarchical structure of retaining an executive to represent the will of those stakeholders remains in place because there's no efficient way to operate otherwise.
tomp 4y ago
Fake news title > Only $175,000 of that came from his salary. The rest came from shares: He was awarded 61,000 shares that would vest over 10 years, worth $211,933,520, when he became CEO. tl;dr: his actual salary is some $20m / year. Still high but probably not news-worthy.
onphonenow 4y ago
Quick notes. The comp is actually more like $20M/year if stock price doesn't tank. Jassy started AWS (cloud compute side of AWS) with 60 folks or something way back. He grew AWS to a very large size with very large margins (think $25B/year operating income? Maybe 50-60B in revenue? That is good particularly for Amazon which has had low margins elsewhere.) AWS continues to compare well financial performance wise with competitors like google. And folks are freaking out over $20M/year? Amazons overall net sales are going to be in the 400 billion per year range. They can afford it.
- bin_bash 4y ago
  Isn’t Parag Agrawal getting 30M/year? Twitter is no Amazon by a long shot.
- jogu 4y ago
  > The comp is actually more like $20M/year if stock price doesn't tank. I feel like a lot of people are missing the "stock price doesn't tank" part. How much he actually gets is going to pend on the value of the stock at the time. With the way things are going I wouldn't be surprised (even if it's just this year) his take home ends up being significantly less given AMZN is down 30+% since last year.
jimmydeans 4y ago

50 points by hubraumhugo 4y ago

Its 21M, 210M is over 10 years with substantial part of that not vesting until year 8. That said it's still pretty rich given its not tied to shareholder value or business performance.

manuelabeledo 4y ago
> That said it's still pretty rich given its not tied to shareholder value or business performance. The sad truth is that, in recent years, performance doesn't seem to be pegged to compensation anymore. Not only that, but certain large corporation CEOs do have provisions in their contracts so they get paid handsomely if they are fired, which goes against the very idea of firing people for performance reasons.
- jayski 4y ago
  I agree that its not a great deal for shareholders, but I can see how we got here. It works similar in sports, if there is a 33 year old free agent superstar, every team is willing to give them a 2 year 80million dollar deal (40 per year). So the competition becomes who is willing to guarantee 40 for a 3rd, 4th year. It may not be a great long term decision for the team, but if they dont agree to those unfavorable terms they're simply not getting the player. I wonder if there were other companies willing to offer similar payment packages to this CEO and the competition become who would guarantee the money without asking for performance goals.
  - manuelabeledo 4y ago
    > It works similar in sports... Main difference here is that the average career span of a pro athlete very rarely reaches 20 years, and deal numbers tend to decrease with age. Executives don't have that problem, in fact it's quite the opposite.
    - kungito 4y ago
      Is that actually true? Do these rockstar CEOs get the same compensations when they reach 60? They also start getting those paychecks later in their 30s compared to sport players
      - manuelabeledo 4y ago
        > Do these rockstar CEOs get the same compensations when they reach 60? The average age of a CEO in 2018 is 54 years old [1], so I would say yes, they do. The average salary for a CEO in a top 350 company was $13.9M [2]. > They also start getting those paychecks later in their 30s compared to sport players Compared to the average NFL player ($860,000) [3], and the average retirement age is 27 years old [4], which essentially means that an average NFL player makes perhaps 5 to 6 million dollars in their whole career. Other more forgiving sports, like NBA, puts players on an average of $8 million [5], and an average retirement age of 28 [6], so around 6-7 seasons. It's worth remembering that these are highly paid professional athletes who most likely come from college teams, meaning that they weren't paid at all. A CEO, on the other hand, doesn't spend their previous years as an unpaid intern. They are usually top executives already. In short, CEOs do get paid better on average than professional athletes, all things considered. [1] https://www.statista.com/statistics/1097551/average-age-at-hire-of-ceos-and-cfos-in-the-united-states/ https://www.statista.com/statistics/1097551/average-age-at-h... [2] https://www.epi.org/publication/ceo-pay-in-2020/#:~:text=This%2018.9%25%20increase%20from%202019,below%20its%20level%20in%202019 https://www.epi.org/publication/ceo-pay-in-2020/#:~:text=Thi.... [3] https://work.chron.com/much-money-nfl-player-make-year-2377.html https://work.chron.com/much-money-nfl-player-make-year-2377.... [4] https://investingfuse.com/retirement/average-retirement-age-for-nfl-football-players-by-position/#:~:text=The%20average%20retirement%20age%20of,health%20concerns%2C%20and%20skill%20level https://investingfuse.com/retirement/average-retirement-age-.... [5] https://www.statista.com/statistics/1120257/annual-salaries-nba/#:~:text=Over%20the%20past%20years%2C%20NBA,to%203.67%20billion%20U.S.%20dollars https://www.statista.com/statistics/1120257/annual-salaries-.... [6] https://www.rbcwealthmanagement.com/en-us/insights/professional-athletes-need-a-retirement-game-plan https://www.rbcwealthmanagement.com/en-us/insights/professio...
- missedthecue 4y ago
  It's really hard to come up with good performance metrics. Ideally, you want execs to make good long term decisions for developing sustainable growth and competitive advantage. To do this, they need some room to maneuver and freedom to operate to make these decisions. Imagine trying to tie dev comp to performance metrics like number of commits or bugs squashed. If you tie comp to share price or EPS, they'll try to juice it with buybacks. If you tie it to revenue, they'll try to grow too quickly and become unsustainable. They'll start doing anti-consumer things like denying refunds. If you tie it to profits, they'll cut the business down to barebones and whittle away at resiliency and R&D in order to squeeze a bit more margin out each quarter. Like Warren Buffett's co-ceo Charlie Munger once quipped, "show me the incentives and I'll show you the outcome".
  - milkytron 4y ago
    > Imagine trying to tie dev comp to performance metrics like number of commits or bugs squashed. I worked at a company that wanted to do this, and may or may not have behind the scenes. When I explained that these could easily be gamed, their response was, "Why would someone do that?" This was at one of the largest banks in the entire world while they were also trying to claim that they were a technology company that happens to do banking. Yeah, okay.
    - antisthenes 4y ago
      Is that the same bank that "invested" 2bn dollars into WeWork?
  - manuelabeledo 4y ago
    This all sounds like there is an inherent problem in the system itself, as it incentivises bad behaviours.
    - missedthecue 4y ago
      Incentives resulting in unintended consequences isn't specific to any type of system.
plater 4y ago
It's 210M for one year. He just has to wait 10 years to get it fully paid out.
- onphonenow 4y ago
  Are these kind of comments for real? Are you claiming he will get this award every year? He doesn't "just have to wait". He has to WORK for 10 years or meet other requirements for vesting. If this was a european style 10 year option package, sure, he could retire and just wait to excercise, that's not what these are.
fnordpiglet 4y ago
It’s 61000 shares, the value of which will float on amazons performance. I worked a lot with Andy jassy, he’s worth the investment.
choko 4y ago
It is indirectly though, since the vast majority of the compensation is in the form of stocks.

asadawadia 4y ago

Apart from the fact that business insider is basically buzzfeed - of course now they think salaries are too high since growth has slowed down

asadhaider 4y ago

Such a misleading headline, the article even mentions his salary is $175k/year. > Jassy took over as the CEO of Amazon from Jeff Bezos in July. In 2021, Jassy received $212,701,169 in total compensation, Insider reported in April, citing a proxy filing the company submitted. Only $175,000 of that came from his salary. The rest came from shares: He was awarded 61,000 shares that would vest over 10 years, worth $211,933,520, when he became CEO. > "The way the SEC rules work we are required to report that grant as total compensation for 2021, when in reality it will vest over the next 10 years," an Amazon spokesperson told Insider in an emailed statement on Friday. > "What this equates to from an annual compensation perspective is competitive with that of CEOs at other large companies and was approved by the Amazon Board of Directors," the spokesperson added.

troon-lover 4y ago

giantg2 4y ago

Honestly, it's hard to believe that one person who isn't actually producing/outputting anything can create that much value, and that you can't fund someone to do the same work for half the cost.

yowlingcat 4y ago
If you could find someone to do the same work for half the cost, you'd be able to make a pretty penny as a retained executive recruiter. Knowing a couple of friends who run such firms, let me tell you -- it would be hard to find someone of 25% of that caliber for even 75% of that price. Value is what the market is willing to pay. There is only 1 Andy Jassy in the world in the same way there is only 1 Jeff Bezos.
- jka 4y ago
  I'd be curious to see the results of (crowds of?) normal people paid to say what their responses would be in the type of situations that leaders on these pay packages have to deal with, when given similar levels of context. No doubt that's not the entire job: there's also networking, communication and thought leadership involved. But similar approaches could apply. Liability could be a trickier one.
  - yowlingcat 4y ago
    Of those three, "networking" and "thought leadership" are more hobbies rather than concrete responsibilities of the job. There are actual concrete responsibilities that a CEO at that level needs to accomplish, a sample of which include: - fundraising - organizational structuring - hiring - strategic planning + competitive positioning - go to market motions - R&D - investor relations There's nothing fungible about any of these responsibilities, so no matter how many ordinary people you stack together, you'll never arrive at even a fraction of what a competent executive can do. Companies have executives for the same reasons countries do. Executives rotate in and out of power subject to the ongoing favor of their stakeholders, but the hierarchical structure of retaining an executive to represent the will of those stakeholders remains in place because there's no efficient way to operate otherwise.

tomp 4y ago

Fake news title > Only $175,000 of that came from his salary. The rest came from shares: He was awarded 61,000 shares that would vest over 10 years, worth $211,933,520, when he became CEO. tl;dr: his actual salary is some $20m / year. Still high but probably not news-worthy.

onphonenow 4y ago

Quick notes. The comp is actually more like $20M/year if stock price doesn't tank. Jassy started AWS (cloud compute side of AWS) with 60 folks or something way back. He grew AWS to a very large size with very large margins (think $25B/year operating income? Maybe 50-60B in revenue? That is good particularly for Amazon which has had low margins elsewhere.) AWS continues to compare well financial performance wise with competitors like google. And folks are freaking out over $20M/year? Amazons overall net sales are going to be in the 400 billion per year range. They can afford it.

bin_bash 4y ago
Isn’t Parag Agrawal getting 30M/year? Twitter is no Amazon by a long shot.
jogu 4y ago
> The comp is actually more like $20M/year if stock price doesn't tank. I feel like a lot of people are missing the "stock price doesn't tank" part. How much he actually gets is going to pend on the value of the stock at the time. With the way things are going I wouldn't be surprised (even if it's just this year) his take home ends up being significantly less given AMZN is down 30+% since last year.

jimmydeans 4y ago