7 ms·

When CEOs say they take full responsibility, I think they should take a material cut in equity and compensation. Otherwise it is just empty words for them to fe

by tibbon 4y ago

When CEOs say they take full responsibility, I think they should take a material cut in equity and compensation. Otherwise it is just empty words for them to feel no consequences except a better balance sheet. Or better yet, step down and let someone else run the show

coredog64 4y ago
This came up in the Patreon discussion yesterday. Twilio is giving decent severance packages (12 weeks plus week per year of service) and is accelerating vesting. Both of those impact the bottom line and should have a material impact on C-suite compensation.
- bosie 4y ago
  That is a very proxy-ish 'taking responsibility' that might never materialise though
- jjulius 4y ago
  >Both of those impact the bottom line and should have a material impact on C-suite compensation. Italicized emphasis mine. Time and again we've seen that this isn't the case, to the point where I won't bother holding my breathe to see if the CEO is impacted financially down the line. I'd rather start seeing CEOs highlight the fallout they themselves will receive in these layoff announcements themselves.
  - ergocoder 4y ago
    Then, this should be agreed before taking the CEO role. If a company decides to reduce my compensation mid way, I will be freaking flipped. In this case, they could reduce the CEO's salary, but then it would go into the situation whether twilio would be better with a new CEO given the current CEO's performance in the past 10y. The answer would be a huge no.
  - nerpderp82 4y ago
    To the board and VC, "taking responsibility" means they should get a bonus for reducing headcount. Bulk up, gain marketshare, during glide phase reduce operating expenses and "spend" the gains earned during growth phase. Money is in charge. There is no moral element to how humans currently run business.
- vineyardmike 4y ago
  If a company is giving 12+ weeks of severance, you’d think they could just say “12 weeks from now is your last day. If you find new work before then you’re free to leave. We’ll pay you to keep working on your projects for the next 12 weeks” Why pay someone expensive a salary to not work if the company is facing issues with money already? Like i get the idea of severance, and would want it as an individual, but it seems like it just bleeds extra resources.
  - taftster 4y ago
    If someone were to tell me, you've got 12 weeks left on your job. And then adds, and you can leave early when you find work. I'm probably not going to be the most motivated/productive employee. In fact, I might cause more harm than good. It's better to just rip that bandaid off and let people move on with their lives. 12 weeks severance is (hopefully) enough time that the former employee can find new work, and also that the company can start adjusting to the down sizing. A non-productive worker is probably worse than no worker at all.
    - bad416f1f5a2 4y ago
      > A non-productive worker is probably worse than no worker at all. There's no "probably" to it. Offering a fired employee the right to stay around until their time is up is a mindbogglingly stupid idea. It's a recipe for massive negativity from them & for your existing teams. Having participated in a RIF before, the two most common questions are 1) "why me?" and 2) "why my friend and not someone else?" Keeping someone who you've clearly said has no future around & asking them to contribute to the future of a company is ... what?
      - mvc 4y ago
        And yet here in the UK, it's quite normal for senior engineers to be faced with 3 months (I've even heard of 6!) working for a company after deciding to quit and hand in their notice. Completely bonkers if you ask me.
      - taftster 4y ago
andsoitis 4y ago
Shareholders pay attention to how well a CEO steers a company over time and their outlook on whether it is the right person to lead the company. At least, that’s the theory, and they (shareholders) have that incentive given it is their investment at stake.
ProAm 4y ago
What does it matter? It's their job to run the business. If they decide they want 50% less staff, its their right and responsibility to make that change. If they realized they hired too many people, or hired too many incompetent people they can let them go. It has nothing to do with their salary or comp if their workforce isn't getting the job done or meeting the bottom line of the business. You as an employee can also leave at anytime. If the company is public (or even private with a strong board) if there is no faith in the CxO team they will be changed out.
- wpietri 4y ago
  It matters because words like "take responsibility" should have meaning.
  - JacobThreeThree 4y ago
    It does have meaning. The board of directors will definitely factor in this type of thing when making decisions about hiring executives.
  - DiggyJohnson 4y ago
    Just because you don’t see the value in someone taking responsibility in the absence of material consequences doesn’t mean it’s not meaningful to most people. You seem to have a very litigious perspective on this. To me, this is him being clear that the decisions that led to this situation are on him, and not the employees. That’s a very clear statement, one that I would consider quite meaningful.
    - wpietri 4y ago
      Yes, I understand what the words mean, thanks. The question for me is how empty the words are. Compare that with, say, CEOs who take pay cuts during downturns: https://www.google.com/search?q=ceo+takes+a+pay+cut+-price+-gravity https://www.google.com/search?q=ceo+takes+a+pay+cut+-price+-... Between the two sorts of CEO, it seems pretty clear that one is more serious about taking responsibility for their mistakes.
mc32 4y ago
The better balance sheet allows the rest of the remaining force going concern viability. Else they could all be out of a job. Or something on between. Yes sometimes someone new would be beneficial, other times not. You don’t need someone new coming in and further disrupting a fragile situation. the alternative hiring model is the reluctant hiring model, such as in some of Europe, where they hire out of last resort and would rather not give someone a leg up on experience while the going's good because firing people is fraught. Both options have pros and cons, but I prefer the more flexible model.
daniel-cussen 4y ago
Counterfactual. They in fact set up their posse up to never let the ones taking full responsibility meaning the fall from ever reaching their office. And more bodyguards.
- daniel-cussen 4y ago
  Really it's the executives taking any pay cut. Just never. Gotta keep the ratchet going. Anything else. Pay cuts are for the little people, basically. All the gains in wages since like 1980 has gone to people with subordinates. All. Leaf node employees have gotten nothing, cuts in fact. Because then there wouldn't be inflation rate rises depression ever. Executives couldn't pass the raises to leaf node employees on directly to the leaf node employees, they'd have to look at their own shit and say, OK I can travel a bit less. Alpha primate thing. Never get less. Ratchet. Same goes for doctors.
josho 4y ago
The incentives here are wrong. During the early phase of a company the goal is growth. Hire. Scale. Build. Win the land grab at all costs. Years later when growth has slowed it becomes important to transition to operational efficiency. For many startups that means lowering headcount some just from attrition, but right now it seems layoffs is in style to accelerate the transition. Regardless, investors pushed the CEO to grow fast. Under the current model it isn't fair to punish the CEO for executing on their mandate. I acknowledge it isn't fair to the employees either. Just offering a different perspective.
- mc32 4y ago
  There are pluses and minuses for the affected employee. On the one hand you get hired and get experience which can help you land your next job. A more conservative approach would leave the potential employee unemployed and inexperienced.
Aeolun 4y ago
When I say I take full responsibility for the production issue I don’t take a pay cut either. I learn from it and do better next time.
tpmoney 4y ago
If I’m part of a layoff, the fact that the CEO might take $10 million less in stock compensation over the next 5 years is pretty meaningless to me. I mean if we believe googles top line result, the ceo got $14 million in total comp, of which ~150k was salary, and 7 million was direct stock. So let’s say they cut it all completely. 11% of their workforce is ~865 people. Estimating 130k for an average developer salary, so call it 160k fully loaded. Stop paying the CEO direct cash or cash equivalent completely and use it to pay salaries of people being laid off and you can save 44 jobs assuming your CEO will only work for stock options from now on. That turns this from an 11% cut to a 10.5% cut. That might matter quite a bit to those 44 people, but the rest are still in the same place they are today, except maybe they feel a little better because the CEO doesn’t get paid for a little while, or at least until he moves on and the company hires a new ceo with real money again. More important than symbolic flogging of the C-suite would be what the severance package looks like.
shane_b 4y ago
CEOs have feelings…

by tibbon 4y ago

coredog64 4y ago

This came up in the Patreon discussion yesterday. Twilio is giving decent severance packages (12 weeks plus week per year of service) and is accelerating vesting. Both of those impact the bottom line and should have a material impact on C-suite compensation.

bosie 4y ago
That is a very proxy-ish 'taking responsibility' that might never materialise though
jjulius 4y ago
>Both of those impact the bottom line and should have a material impact on C-suite compensation. Italicized emphasis mine. Time and again we've seen that this isn't the case, to the point where I won't bother holding my breathe to see if the CEO is impacted financially down the line. I'd rather start seeing CEOs highlight the fallout they themselves will receive in these layoff announcements themselves.
- ergocoder 4y ago
  Then, this should be agreed before taking the CEO role. If a company decides to reduce my compensation mid way, I will be freaking flipped. In this case, they could reduce the CEO's salary, but then it would go into the situation whether twilio would be better with a new CEO given the current CEO's performance in the past 10y. The answer would be a huge no.
- nerpderp82 4y ago
  To the board and VC, "taking responsibility" means they should get a bonus for reducing headcount. Bulk up, gain marketshare, during glide phase reduce operating expenses and "spend" the gains earned during growth phase. Money is in charge. There is no moral element to how humans currently run business.
vineyardmike 4y ago
If a company is giving 12+ weeks of severance, you’d think they could just say “12 weeks from now is your last day. If you find new work before then you’re free to leave. We’ll pay you to keep working on your projects for the next 12 weeks” Why pay someone expensive a salary to not work if the company is facing issues with money already? Like i get the idea of severance, and would want it as an individual, but it seems like it just bleeds extra resources.
- taftster 4y ago
  If someone were to tell me, you've got 12 weeks left on your job. And then adds, and you can leave early when you find work. I'm probably not going to be the most motivated/productive employee. In fact, I might cause more harm than good. It's better to just rip that bandaid off and let people move on with their lives. 12 weeks severance is (hopefully) enough time that the former employee can find new work, and also that the company can start adjusting to the down sizing. A non-productive worker is probably worse than no worker at all.
  - bad416f1f5a2 4y ago
    > A non-productive worker is probably worse than no worker at all. There's no "probably" to it. Offering a fired employee the right to stay around until their time is up is a mindbogglingly stupid idea. It's a recipe for massive negativity from them & for your existing teams. Having participated in a RIF before, the two most common questions are 1) "why me?" and 2) "why my friend and not someone else?" Keeping someone who you've clearly said has no future around & asking them to contribute to the future of a company is ... what?
    - mvc 4y ago
      And yet here in the UK, it's quite normal for senior engineers to be faced with 3 months (I've even heard of 6!) working for a company after deciding to quit and hand in their notice. Completely bonkers if you ask me.
    - taftster 4y ago

andsoitis 4y ago

Shareholders pay attention to how well a CEO steers a company over time and their outlook on whether it is the right person to lead the company. At least, that’s the theory, and they (shareholders) have that incentive given it is their investment at stake.

ProAm 4y ago

What does it matter? It's their job to run the business. If they decide they want 50% less staff, its their right and responsibility to make that change. If they realized they hired too many people, or hired too many incompetent people they can let them go. It has nothing to do with their salary or comp if their workforce isn't getting the job done or meeting the bottom line of the business. You as an employee can also leave at anytime. If the company is public (or even private with a strong board) if there is no faith in the CxO team they will be changed out.

wpietri 4y ago
It matters because words like "take responsibility" should have meaning.
- JacobThreeThree 4y ago
  It does have meaning. The board of directors will definitely factor in this type of thing when making decisions about hiring executives.
- DiggyJohnson 4y ago
  Just because you don’t see the value in someone taking responsibility in the absence of material consequences doesn’t mean it’s not meaningful to most people. You seem to have a very litigious perspective on this. To me, this is him being clear that the decisions that led to this situation are on him, and not the employees. That’s a very clear statement, one that I would consider quite meaningful.
  - wpietri 4y ago
    Yes, I understand what the words mean, thanks. The question for me is how empty the words are. Compare that with, say, CEOs who take pay cuts during downturns: https://www.google.com/search?q=ceo+takes+a+pay+cut+-price+-gravity https://www.google.com/search?q=ceo+takes+a+pay+cut+-price+-... Between the two sorts of CEO, it seems pretty clear that one is more serious about taking responsibility for their mistakes.

mc32 4y ago

The better balance sheet allows the rest of the remaining force going concern viability. Else they could all be out of a job. Or something on between. Yes sometimes someone new would be beneficial, other times not. You don’t need someone new coming in and further disrupting a fragile situation. the alternative hiring model is the reluctant hiring model, such as in some of Europe, where they hire out of last resort and would rather not give someone a leg up on experience while the going's good because firing people is fraught. Both options have pros and cons, but I prefer the more flexible model.

daniel-cussen 4y ago

Counterfactual. They in fact set up their posse up to never let the ones taking full responsibility meaning the fall from ever reaching their office. And more bodyguards.

daniel-cussen 4y ago
Really it's the executives taking any pay cut. Just never. Gotta keep the ratchet going. Anything else. Pay cuts are for the little people, basically. All the gains in wages since like 1980 has gone to people with subordinates. All. Leaf node employees have gotten nothing, cuts in fact. Because then there wouldn't be inflation rate rises depression ever. Executives couldn't pass the raises to leaf node employees on directly to the leaf node employees, they'd have to look at their own shit and say, OK I can travel a bit less. Alpha primate thing. Never get less. Ratchet. Same goes for doctors.

josho 4y ago

The incentives here are wrong. During the early phase of a company the goal is growth. Hire. Scale. Build. Win the land grab at all costs. Years later when growth has slowed it becomes important to transition to operational efficiency. For many startups that means lowering headcount some just from attrition, but right now it seems layoffs is in style to accelerate the transition. Regardless, investors pushed the CEO to grow fast. Under the current model it isn't fair to punish the CEO for executing on their mandate. I acknowledge it isn't fair to the employees either. Just offering a different perspective.

mc32 4y ago
There are pluses and minuses for the affected employee. On the one hand you get hired and get experience which can help you land your next job. A more conservative approach would leave the potential employee unemployed and inexperienced.

Aeolun 4y ago

When I say I take full responsibility for the production issue I don’t take a pay cut either. I learn from it and do better next time.

tpmoney 4y ago

If I’m part of a layoff, the fact that the CEO might take $10 million less in stock compensation over the next 5 years is pretty meaningless to me. I mean if we believe googles top line result, the ceo got $14 million in total comp, of which ~150k was salary, and 7 million was direct stock. So let’s say they cut it all completely. 11% of their workforce is ~865 people. Estimating 130k for an average developer salary, so call it 160k fully loaded. Stop paying the CEO direct cash or cash equivalent completely and use it to pay salaries of people being laid off and you can save 44 jobs assuming your CEO will only work for stock options from now on. That turns this from an 11% cut to a 10.5% cut. That might matter quite a bit to those 44 people, but the rest are still in the same place they are today, except maybe they feel a little better because the CEO doesn’t get paid for a little while, or at least until he moves on and the company hires a new ceo with real money again. More important than symbolic flogging of the C-suite would be what the severance package looks like.

shane_b 4y ago

CEOs have feelings…