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The difference is not as great in these other fields, but that's because the pyramid isn't as large. There's one person at the top of Alphabet, and tens of thou
by gnicholas 4y ago
The difference is not as great in these other fields, but that's because the pyramid isn't as large. There's one person at the top of Alphabet, and tens of thousands of people below him. No law firm has as many people, by a long shot. And the medical analogy isn't right either. You have to look at the CEO of a pharma company, who probably does make a similar multiple to Sundar.
But the person at the top also has a much greater risk because pay is tied to stock performance. The top lawyer in a firm gets paid well, and probably some of that is tied to firm performance. But the base salary is a much greater percent of total comp in that case.
- Sebguer 4y agoThe bottom of their risk is having to become labor again, that's not a risk, that's the default for every one of their employees.
- lordnacho 4y agoI know this is beside the point you're making, but that guy at the top does not have greater risk. The right measure of risk isn't money, it's freedom. Work as CEO of Google or Roche for a month and you don't have to work any more. You don't risk shit, you can only win or win bigger. This is what I don't understand. There are plenty of people who can run a business, so why is it that we pay so much for them? There's a massive queue of candidates who will all do a decent job (you won't know), so why are they paid astronomical sums? There's no way you can be sure a guy is not going to mess things up, and paying him a lot of money won't motivate him more, he's only got a 24h day. He can't go and be CEO elsewhere because he doesn't know other businesses that well, only a few places could logically use him. On top of that a huge proportion of the stock price is not in his hands.
- gnicholas 4y agoOne creative theory I heard is that a rational benefit of seemingly-irrational executive pay is to incentivize harder work among the people who desire to be executives. Not sure if it makes sense or not, but it's an interesting possibility.
- lordnacho 4y agoOnly works if the would-be CEOs are themselves irrational. You can't seriously be expecting to outcompete thousands of other prospective CEOs.
- gnicholas 4y agoIt would only really apply to companies that promote from within. That could motivate a few dozen people who have a shot at becoming an executive in their career at the company.
- gridspy 4y agoYou might feel that only a few people are qualified to be your CEO. And they all want to retire - you're competing with the "retire instead" option.
- pwpw 4y ago> that guy at the top does not have greater risk. The CEO and CFO of publicly traded companies get paid pretty handsomely in exchange for taking on a significant amount of risk by signing off on the financial statements.
- pavlov 4y agoAnd when does that risk ever materialize apart from the Enron/Wirecard/FTX cases where the CEO and CFO truly were pulling a massive scam?
- ethbr0 4y agoKenneth Lay died after being convicted but before being sentenced, so afaik his family still has the money.
- Sebguer 4y agoThey get paid well to not do crimes? That's nonsensical.
- kortilla 4y agoThey get paid to take responsibility for crimes that happen underneath them. That’s a lot different and why you got confused.
- VirusNewbie 4y agoI think the problem here is it is incredibly difficult to evaluate the kind of value CEOs bring. Certainly I could have done a slightly better job than many ousted CEOs of large tech companies. It’s also possible that simply by listening to your executives/board, an intelligent engineer could do about as well as Sataya or Ballmer or Sundar.