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Because most mgmt seems to have no skin in the game. When they make bad decisions, the underlings often pay for it. This is especially true when they write corp

Because most mgmt seems to have no skin in the game. When they make bad decisions, the underlings often pay for it. This is especially true when they write corpo-speak blog posts "taking responsibility," which includes laying off 10% of the workforce. A CEO cutting his own pay seems like a much better first step. It signals accountability.

amf12 4y ago
> Because most mgmt seems to have no skin in the game This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based). > A CEO cutting his own pay seems like a much better first step. It signals accountability. This, I agree with.
- simplotek 4y ago
  > This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based). Tim Cook is still getting paid millions. His pay cut was voluntary. Workers getting fired are getting zero salary and are not leaving because they want to. I'm sure Tim Cook isn't stressing about how to make rent or pay the mortgage, unlike people getting laid off.
- baryphonic 4y ago
  You make a fair point I seem to remember when studying economics that someone analyzed management behavior and found senior executives were typically decent at their jobs and more or less had incentives to make decent decisions. Middle management was completely risk averse, had no skin in the game and made decisions only insofar as they wouldn't be fired. I wish I could find a link, but I read it years ago, though this more informal discussion cites similar work (they use family-owned businesses as a proxy for middle managers who do have skin in the game)[0] I do think that a CEO showing accountability sets a standard for the rest of mgmt and the organization, which is perhaps more accurate; though I'd hope that organizations find ways to hold middle management accountable for failures [0] https://www.wealthmanagement.com/equities/why-management-needs-have-skin-game https://www.wealthmanagement.com/equities/why-management-nee...
- bmitc 4y ago
  So an executive worth billions of dollars and making tens of millions a year with no risk of being laid off has the same skin in the game as the employees making in the lower to mid six figures who get laid off? The skin in the game being referred to is losing their job, not losing some fractional percentage of their net worth.

amf12 4y ago

> Because most mgmt seems to have no skin in the game This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based). > A CEO cutting his own pay seems like a much better first step. It signals accountability. This, I agree with.

simplotek 4y ago
> This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based). Tim Cook is still getting paid millions. His pay cut was voluntary. Workers getting fired are getting zero salary and are not leaving because they want to. I'm sure Tim Cook isn't stressing about how to make rent or pay the mortgage, unlike people getting laid off.
baryphonic 4y ago
You make a fair point I seem to remember when studying economics that someone analyzed management behavior and found senior executives were typically decent at their jobs and more or less had incentives to make decent decisions. Middle management was completely risk averse, had no skin in the game and made decisions only insofar as they wouldn't be fired. I wish I could find a link, but I read it years ago, though this more informal discussion cites similar work (they use family-owned businesses as a proxy for middle managers who do have skin in the game)[0] I do think that a CEO showing accountability sets a standard for the rest of mgmt and the organization, which is perhaps more accurate; though I'd hope that organizations find ways to hold middle management accountable for failures [0] https://www.wealthmanagement.com/equities/why-management-needs-have-skin-game https://www.wealthmanagement.com/equities/why-management-nee...
bmitc 4y ago
So an executive worth billions of dollars and making tens of millions a year with no risk of being laid off has the same skin in the game as the employees making in the lower to mid six figures who get laid off? The skin in the game being referred to is losing their job, not losing some fractional percentage of their net worth.