4 ms·

I'm trying to understand your point of view. Are you saying executive compensation should be orthogonal to company performance? Overpaid executives failed, so

by bsuvc 4y ago

I'm trying to understand your point of view. Are you saying executive compensation should be orthogonal to company performance? Overpaid executives failed, so workers lost their jobs, but the executives get to keep theirs all the while saying things like "I take responsibility for this" when it is objectively false that they are taking responsibility. Does that seem right to you? Is that a good way to run a business, to keep failed leadership?

chii 4y ago
> Overpaid executives failed Their failure has already dropped a huge amount of their stock-based compensation. Their base salary shouldn't be determined by the company's failure (only their _future_ salary). What if you applied this to a worker instead of a CxO? Would you yourself take a pay-cut, after the fact, if the company fails to perform?
- bsuvc 4y ago
  > What if you applied this to a worker instead of a CxO? Would you yourself take a pay-cut, after the fact, if the company fails to perform? Yes. Yes I would take the CEO's total compensation package. I am skeptical that the CEO is worse off than any employee.
  - chii 4y ago
    > Yes. Yes I would take the CEO's total compensation package. As in you would accept, without knowing ahead of time, a cut to your salary when the company's performance drops? I'm not talking about performance based bonuses or commission based pay. I'm talking about a salary that was pre-negotiated at the time of your employment, but upon the company performing badly, your salary is dropped. This is what the OP is saying - that high CxO pay is the problem, and that they should have been paid less (after the company's performance dropped).
- chillfox 4y ago
  Employees are already paying for the failure by getting laid off. That's a 100% pay cut, the Executives who caused the fuck up still get paid.
- LeafItAlone 4y ago
  Plenty of ordinary sales people are 100% commission based. Plenty of CEOs already do (or did during their tenure) take no material base salary and their compensation is tied entirely to the performance of the company. Is that not reasonable for large, profitable businesses. It has its own issues, but what compensation plan doesn’t?
  - chii 4y ago
    > Plenty of ordinary sales people are 100% commission based. that's not what i meant. The question is whether you would take a pay cut _after_ the company performed poorly, but you didn't know ahead of time that it would cut your pay. Performance based bonuses or commission is obviously pre-negotiated and thus, not subject to post-fact alteration.
ceeplusplus 4y ago
Executives also have to hold lots of stock that tanks when the company does poorly. Should workers also be forced to hold 100% of their RSUs as long as they work there and be paid 80% in RSUs? Even senior SWEs make 50% tops in RSUs and can sell their stock as soon as it vests with no restrictions. They get top ups to make up for poor stock performance. Their personal exposure to the company (risk!) is way lower than any executive. The CEO has effectively made negative salary due to their stock tanking. Should companies be forced to keep unproductive or no longer useful workers? Clearly there is not enough customer demand for Robinhood to continue employing their ops/content/etc. workers. What are those workers going to do then, if they keep working?
- cudgy 4y ago
  If it’s so risky, why do CEO’s end up making 350x the typical employee? Those poor CEO’s taking all that risk to be compensated at a rate equivalent to 351 employees. https://www.epi.org/publication/ceo-pay-in-2020/ https://www.epi.org/publication/ceo-pay-in-2020/
  - ceeplusplus 4y ago
    > taking all that risk to be compensated at a rate equivalent to 351 employees Do you understand how risk works? If you take on more risk, you should be compensated for that risk, else it doesn't make sense for you to take so much risk if you can get the same reward by taking less risk. Executives as a whole (CEOs, VPs, even directors!) take a lot more risk - career and financial risk - than your typical line engineers. Their success depends on the success of the initiatives they lead, which can be subject to macro or competitive factors entirely outside their control. Those initiatives are generally longer timeline, meaning they have less chances at bat (and thus higher variance in outcome) than an IC. And a shitty IC can always be rehired pretty much trivially. If your company fails with you at the helm, you're not getting another CEO job. For example, Carly Fiorina has never held another management role in a large multinational corporation after her failure at HP. On top of that, executives have to hold a large portion of their compensation as stock which they are barred from selling as long as they work at the company. If the company tanks, they take a retroactive paycut, often times upwards of 50%. They don't get refreshers to boost their comp back to original levels like ICs either. Yeah CEOs nowadays have quite excessive compensation. But they will never have compensation at a single digit multiple of the average employee. The risk they take is too big for that to sufficiently compensate them.

by bsuvc 4y ago

chii 4y ago

> Overpaid executives failed Their failure has already dropped a huge amount of their stock-based compensation. Their base salary shouldn't be determined by the company's failure (only their _future_ salary). What if you applied this to a worker instead of a CxO? Would you yourself take a pay-cut, after the fact, if the company fails to perform?

bsuvc 4y ago
> What if you applied this to a worker instead of a CxO? Would you yourself take a pay-cut, after the fact, if the company fails to perform? Yes. Yes I would take the CEO's total compensation package. I am skeptical that the CEO is worse off than any employee.
- chii 4y ago
  > Yes. Yes I would take the CEO's total compensation package. As in you would accept, without knowing ahead of time, a cut to your salary when the company's performance drops? I'm not talking about performance based bonuses or commission based pay. I'm talking about a salary that was pre-negotiated at the time of your employment, but upon the company performing badly, your salary is dropped. This is what the OP is saying - that high CxO pay is the problem, and that they should have been paid less (after the company's performance dropped).
chillfox 4y ago
Employees are already paying for the failure by getting laid off. That's a 100% pay cut, the Executives who caused the fuck up still get paid.
LeafItAlone 4y ago
Plenty of ordinary sales people are 100% commission based. Plenty of CEOs already do (or did during their tenure) take no material base salary and their compensation is tied entirely to the performance of the company. Is that not reasonable for large, profitable businesses. It has its own issues, but what compensation plan doesn’t?
- chii 4y ago
  > Plenty of ordinary sales people are 100% commission based. that's not what i meant. The question is whether you would take a pay cut _after_ the company performed poorly, but you didn't know ahead of time that it would cut your pay. Performance based bonuses or commission is obviously pre-negotiated and thus, not subject to post-fact alteration.

ceeplusplus 4y ago

Executives also have to hold lots of stock that tanks when the company does poorly. Should workers also be forced to hold 100% of their RSUs as long as they work there and be paid 80% in RSUs? Even senior SWEs make 50% tops in RSUs and can sell their stock as soon as it vests with no restrictions. They get top ups to make up for poor stock performance. Their personal exposure to the company (risk!) is way lower than any executive. The CEO has effectively made negative salary due to their stock tanking. Should companies be forced to keep unproductive or no longer useful workers? Clearly there is not enough customer demand for Robinhood to continue employing their ops/content/etc. workers. What are those workers going to do then, if they keep working?

cudgy 4y ago
If it’s so risky, why do CEO’s end up making 350x the typical employee? Those poor CEO’s taking all that risk to be compensated at a rate equivalent to 351 employees. https://www.epi.org/publication/ceo-pay-in-2020/ https://www.epi.org/publication/ceo-pay-in-2020/
- ceeplusplus 4y ago
  > taking all that risk to be compensated at a rate equivalent to 351 employees Do you understand how risk works? If you take on more risk, you should be compensated for that risk, else it doesn't make sense for you to take so much risk if you can get the same reward by taking less risk. Executives as a whole (CEOs, VPs, even directors!) take a lot more risk - career and financial risk - than your typical line engineers. Their success depends on the success of the initiatives they lead, which can be subject to macro or competitive factors entirely outside their control. Those initiatives are generally longer timeline, meaning they have less chances at bat (and thus higher variance in outcome) than an IC. And a shitty IC can always be rehired pretty much trivially. If your company fails with you at the helm, you're not getting another CEO job. For example, Carly Fiorina has never held another management role in a large multinational corporation after her failure at HP. On top of that, executives have to hold a large portion of their compensation as stock which they are barred from selling as long as they work at the company. If the company tanks, they take a retroactive paycut, often times upwards of 50%. They don't get refreshers to boost their comp back to original levels like ICs either. Yeah CEOs nowadays have quite excessive compensation. But they will never have compensation at a single digit multiple of the average employee. The risk they take is too big for that to sufficiently compensate them.