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Does a CEO provide 10x, 100x, 200x, 500x, or 1000x the value of ordinary employees? Doubtful, especially for the higher multiples (although they can certainly

by toss1 4y ago

Does a CEO provide 10x, 100x, 200x, 500x, or 1000x the value of ordinary employees? Doubtful, especially for the higher multiples (although they can certainly cause orders of magnitude more financial damage than ordinary employees). In 1977, the late Peter F. Drucker, arguably the most famous management thinker, suggested the pay ratio between CEOs and employees be a maximum of 25-to-1. Yet the CEO-to-employee pay ratio has increased from 20-to-1 in 1996 to 202-to-1 in 2018. [0] "The average S&P 500 company’s CEO-to-worker pay ratio was 324-to-1 in 2021." For NuSkin Enterprises, the ratio is 22,092:1, for Amazon, it is 6,474:1 ... pretty amazing chart. [1] And this is why the tax system should recognize and tax excessive pay ratios. These are nothing but the financial result of abusive relationships between the executives and the workers, and the other taxpayers who pay more than their share of the burden. It is also easily measured to tax fairly (which of course corporations will hate, since it is hard to game). But of course, all the tech bros will cry that we need no govt so why should we be taxed? (Not incidentally, the same tech elites and wannabes as the article properly exposed as abusers.) [0] https://www.corporate-rebels.com/blog/ideal-ceo-to-employee-pay-ratio https://www.corporate-rebels.com/blog/ideal-ceo-to-employee-... [1] https://aflcio.org/paywatch/company-pay-ratios https://aflcio.org/paywatch/company-pay-ratios

novok 4y ago
Pay is determined by supply and demand, not just how difficult it is to provide the supply. And what determines the good pay of tech workers & CEOs is their BATNAs. To hire a CEO of a top tech company, you essentially have to be a better offer than the EV of them starting their own firm with copious amounts of venture capital out there and them out competing you with the efficiencies that come from startups. That is what big-corp tech CEO pay has essentially stabilized on.
stuaxo 4y ago
It's even more doubtful when we see historically the multiplier was more like 20x than the numbers now. Have they got that much better, while everyone else hasn't ? The extra value we all add is being skimmed off the top, and worse we are being treated with contempt.
yamtaddle 4y ago
> Does a CEO provide 10x, 100x, 200x, 500x, or 1000x the value of ordinary employees? Moreover, we're not even "supposed" to look at value-created, aside from setting a maximum feasible pay level. At least, that's what we're always told when looking at employees farther down the org chart—"deserve has nothing to do with it". I, for one, am deeply skeptical that the set of people who could run companies well is anywhere near as small as the comp suggests. I just think those at the top aren't interested in seeing that comp reduced. Sure, there's the board—but so-and-so on this board is a top officer with another company and wants to see top management pay rates stay high and need sky-high examples to compare themselves to when negotiating pay, and besides, they want their kids and nephews and so on to be able to pull those fat paychecks, too. And anyway, you want the CEO to appreciate you so that they use company resources (Other People's Money) to "appreciate" the other companies you have stakes in....
lordnacho 4y ago
The way I think of it is who do you want to be off sick for a day? The CEO, or 324 staff?

by toss1 4y ago

novok 4y ago

Pay is determined by supply and demand, not just how difficult it is to provide the supply. And what determines the good pay of tech workers & CEOs is their BATNAs. To hire a CEO of a top tech company, you essentially have to be a better offer than the EV of them starting their own firm with copious amounts of venture capital out there and them out competing you with the efficiencies that come from startups. That is what big-corp tech CEO pay has essentially stabilized on.

stuaxo 4y ago

It's even more doubtful when we see historically the multiplier was more like 20x than the numbers now. Have they got that much better, while everyone else hasn't ? The extra value we all add is being skimmed off the top, and worse we are being treated with contempt.

yamtaddle 4y ago

> Does a CEO provide 10x, 100x, 200x, 500x, or 1000x the value of ordinary employees? Moreover, we're not even "supposed" to look at value-created, aside from setting a maximum feasible pay level. At least, that's what we're always told when looking at employees farther down the org chart—"deserve has nothing to do with it". I, for one, am deeply skeptical that the set of people who could run companies well is anywhere near as small as the comp suggests. I just think those at the top aren't interested in seeing that comp reduced. Sure, there's the board—but so-and-so on this board is a top officer with another company and wants to see top management pay rates stay high and need sky-high examples to compare themselves to when negotiating pay, and besides, they want their kids and nephews and so on to be able to pull those fat paychecks, too. And anyway, you want the CEO to appreciate you so that they use company resources (Other People's Money) to "appreciate" the other companies you have stakes in....

lordnacho 4y ago

The way I think of it is who do you want to be off sick for a day? The CEO, or 324 staff?