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Of course CEO pay should scale with the size of the company. We expect the CEO of McDonalds to make more money than the CEO of a local diner. The market value o

Of course CEO pay should scale with the size of the company. We expect the CEO of McDonalds to make more money than the CEO of a local diner. The market value of the CEO's talent relates to the scale and success of the business they have been leading. It would be easy for Sarandos to get an executive role at any other tech company, which is not the case for the CEO of a local business. You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. This is just how markets work.

sidewndr46 3y ago
sounds like a great way to save $40 million to me.
- borski 3y ago
  Sounds like a great case of penny wise and pound foolish to me.
  - anigbrowl 3y ago
    Now apply that argument to the pay of the writers who provide the backbone of in-house content.
  - badpun 3y ago
    CEOs of similar (market cap wise) companies in Europe don't even take in 10 millions a year. I'm betting some would be happy to relocate for the 10 mil.
pydry 3y ago
>We expect the CEO of McDonalds to make more money than the CEO of a local diner We expect the CEO of McDonalds to earn hundreds of millions even if he destroys McDonalds as a functioning entity. It's a kind of Stockholm syndrome. We should really think about performance based incentives - e.g. average pay + shares that start to vest 7-9 years later.
kennywinker 3y ago
I'm sure there are thousands of people already working at netflix who'd take the job for $500k/year, and hundreds of thousands more outside the company. They won't have the current ceo's "proven track-record" but I'm quite certain a few of them would do a better job than the current ceo has.
anigbrowl 3y ago
Nonsense. Executive pay should be based on the logarithm of the market cap, not scale linearly.
spicyusername 3y ago
No other employees compensation is modeled this way. Why should they be any different? CEO is a job like any other. Maybe we should index all employees comp to company performance with a base comp floor...
soulbadguy 3y ago
> Of course CEO pay should scale with the size of the company. Not trying to be pedantic, but genuinely curious.The size of a company is not directly correlated to how hard is it to managed. MacDonalds for exemple is a well oiled machine whith a well defined market, well defined business model. I am gonna assume that the role of the CEO is more about "dont't ** stuff up" as opposed to improve/innovate. Compare that with say openai... which is in a crazy competive market operating at the apex of human knowledge. > We expect the CEO of McDonalds to make more money than the CEO of a local diner. We should compare the CEO of McDonalds to something more realistic than a CEO of a local diner. > It would be easy for Sarandos to get an executive role at any other tech company, which is not the case for the CEO of a local business. Then let him... > You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. This is just how markets work. The is a large difference between 40 millions dollars and 500K. Nobody is trying to pay CEO 500K, the fundamental question is why not 20 millions or 10 millions. I think the general sentiment is that the usual market forces do not apply to CEO and the way their salary is computed, and that's an issue.
- thegrimmest 3y ago
  > assume that the role of the CEO is more about "dont't * stuff up" as opposed to improve/innovate This is exactly wrong though, and demonstrates why laypeople undervalue executive leadership. Staying still in an evolving market is a doomed strategy. McDonalds has transformed its image to stay relevant many times in the last few decades. McCafe is a great example of this. Also, the size of a company is a huge factor in the complexity of managing it. The more people you need to have pulling in the same direction the harder it's going to be. Leading tens of thousands of people without creating an obstructive bureaucracy that stifles innovation is very very hard.
  - soulbadguy 3y ago
    > Staying still in an evolving market is a doomed strategy. And yet that's exactly what a lot of CEO have done in the passed and still have had great compensation packages. Like intel before Patt for example. > Staying still in an evolving market is a doomed strategy. McDonalds has transformed its image to stay relevant many times in the last few decades Sure, the "specific CEO" doing this evolving strategizing should/could be compensated "out of bound".The main point i am making is the life of a company is usually cyclical : Some crisis, some coasting... But CEO pays never reflect that. > The size of a company is a huge factor in the complexity of managing it. This is the logic that creates "empire building" inside company. I am not sure there is any evidence that this is correct. Again, i am skeptical that the size in term of number of employee is a "huge factor". Again we talking about companies which already have precesse, departement etc...etc... well defined
peoplearepeople 3y ago
I would happily be the CEO of Netflix for $500k. It's near enough to current TC, and seems like a nice position to have.
someweirdperson 3y ago
> You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. Let's go one step further and replace that one CEO with 3 employees in some part of the world with lower wages, for 50k/year each.

sidewndr46 3y ago

sounds like a great way to save $40 million to me.

borski 3y ago
Sounds like a great case of penny wise and pound foolish to me.
- anigbrowl 3y ago
  Now apply that argument to the pay of the writers who provide the backbone of in-house content.
- badpun 3y ago
  CEOs of similar (market cap wise) companies in Europe don't even take in 10 millions a year. I'm betting some would be happy to relocate for the 10 mil.

pydry 3y ago

>We expect the CEO of McDonalds to make more money than the CEO of a local diner We expect the CEO of McDonalds to earn hundreds of millions even if he destroys McDonalds as a functioning entity. It's a kind of Stockholm syndrome. We should really think about performance based incentives - e.g. average pay + shares that start to vest 7-9 years later.

kennywinker 3y ago

I'm sure there are thousands of people already working at netflix who'd take the job for $500k/year, and hundreds of thousands more outside the company. They won't have the current ceo's "proven track-record" but I'm quite certain a few of them would do a better job than the current ceo has.

anigbrowl 3y ago

Nonsense. Executive pay should be based on the logarithm of the market cap, not scale linearly.

spicyusername 3y ago

No other employees compensation is modeled this way. Why should they be any different? CEO is a job like any other. Maybe we should index all employees comp to company performance with a base comp floor...

soulbadguy 3y ago

> Of course CEO pay should scale with the size of the company. Not trying to be pedantic, but genuinely curious.The size of a company is not directly correlated to how hard is it to managed. MacDonalds for exemple is a well oiled machine whith a well defined market, well defined business model. I am gonna assume that the role of the CEO is more about "dont't ** stuff up" as opposed to improve/innovate. Compare that with say openai... which is in a crazy competive market operating at the apex of human knowledge. > We expect the CEO of McDonalds to make more money than the CEO of a local diner. We should compare the CEO of McDonalds to something more realistic than a CEO of a local diner. > It would be easy for Sarandos to get an executive role at any other tech company, which is not the case for the CEO of a local business. Then let him... > You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. This is just how markets work. The is a large difference between 40 millions dollars and 500K. Nobody is trying to pay CEO 500K, the fundamental question is why not 20 millions or 10 millions. I think the general sentiment is that the usual market forces do not apply to CEO and the way their salary is computed, and that's an issue.

thegrimmest 3y ago
> assume that the role of the CEO is more about "dont't * stuff up" as opposed to improve/innovate This is exactly wrong though, and demonstrates why laypeople undervalue executive leadership. Staying still in an evolving market is a doomed strategy. McDonalds has transformed its image to stay relevant many times in the last few decades. McCafe is a great example of this. Also, the size of a company is a huge factor in the complexity of managing it. The more people you need to have pulling in the same direction the harder it's going to be. Leading tens of thousands of people without creating an obstructive bureaucracy that stifles innovation is very very hard.
- soulbadguy 3y ago
  > Staying still in an evolving market is a doomed strategy. And yet that's exactly what a lot of CEO have done in the passed and still have had great compensation packages. Like intel before Patt for example. > Staying still in an evolving market is a doomed strategy. McDonalds has transformed its image to stay relevant many times in the last few decades Sure, the "specific CEO" doing this evolving strategizing should/could be compensated "out of bound".The main point i am making is the life of a company is usually cyclical : Some crisis, some coasting... But CEO pays never reflect that. > The size of a company is a huge factor in the complexity of managing it. This is the logic that creates "empire building" inside company. I am not sure there is any evidence that this is correct. Again, i am skeptical that the size in term of number of employee is a "huge factor". Again we talking about companies which already have precesse, departement etc...etc... well defined

peoplearepeople 3y ago

I would happily be the CEO of Netflix for $500k. It's near enough to current TC, and seems like a nice position to have.

someweirdperson 3y ago

> You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. Let's go one step further and replace that one CEO with 3 employees in some part of the world with lower wages, for 50k/year each.