4 ms·

Do you get what you pay for? Are the executives that get paid $50M/year bringing in >$40M/year more than one who only asks for $10M/year? On average? This seem

Do you get what you pay for? Are the executives that get paid $50M/year bringing in >$40M/year more than one who only asks for $10M/year? On average? This seems like a question that can be answered with data. My gut feeling is no, based on how bankers kept their golden parachutes intact during the Great Recession, but maybe I'm wrong.

berberous 3y ago
On average, I don't know, but I certainly think in some instances, the answer is yes, e.g. if I was Apple's board, I would have been happy to overpay Steve Jobs and Tim Cook relative to an average CEO.
- yowzadave 3y ago
  Considering Tim Cook's total compensation is about half what Pat Gelsinger's is as Intel CEO, perhaps increasing the compensation will not result in improved performance? I.e., if Cook really cared deeply about being more obscenely rich than he already is, he could have quit Apple and taken his pick of some other, higher-paying CEO position. At some level of compensation, the only people motivated to pursue it are sociopaths. Are these the people you want running your company?
kodah 3y ago
> This seems like a question that can be answered with data. Maybe I've worked at all the wrong companies but in my experience any comp that's based on "data" will be gamed until it's meaningless. There is no "data" because reading impact data is often like reading tea leaves. Frankly, what I think is going unsaid here is that corporate executives make a disparately large amount compared to the people who do and plan the work. While executives can make a great difference, so can a great manager or a great engineer. I wish we'd see executives as just another role, taking on different tasks rather than something substantively more valuable when it's not, especially in large orgs.
- IggleSniggle 3y ago
  I think most intelligent recognize that it's just a role. The comp really is just a power dynamic where having a bunch of money/power gives you a bunch of leverage to acquire more of it from anybody with less. Organizational, you don't want to hire somebody that could just be taking orders from someone else with more power to be your head.
johnnyanmac 3y ago
It probably can be answered with data, but explaining how executives get to this point is very much based on non-obective factors. So, not much benefit even if we blow the lid open and show a much better way to make more money. That is important for a publicly traded company, but far from their only consideration.
danbruc 3y ago
2014 CEO compensation vs shareholder return [1] [1] http://si.wsj.net/public/resources/images/OG-AE821_ExecPa_NS_20150612163555.gif http://si.wsj.net/public/resources/images/OG-AE821_ExecPa_NS...
- Taek 3y ago
  That's not necessarily reliable data, sometimes a company that is in a losing position will bring in a well paid CEO to reduce the damage. -5% can be an excellent result if you were expecting -20% as the status quo.
  - danbruc 3y ago
    That is just the first thing a search turned up, I personally find that chart not very informative, everything is bunched together at the bottom and obscured by the large circles. And as you point out there are many complicating factors that one should consider to get a robust answer. I can not see if there is any noteworthy correlation in the chart. My point was just that you can probably tease out some idea about the relation between executive compensation and company performance from available data. Personally I would not even consider shareholder return to be a good metric to begin with, I think companies should be judged by something like customer satisfaction as this is what companies are for, satisfying the needs of customers, not making shareholders rich.

berberous 3y ago

On average, I don't know, but I certainly think in some instances, the answer is yes, e.g. if I was Apple's board, I would have been happy to overpay Steve Jobs and Tim Cook relative to an average CEO.

yowzadave 3y ago
Considering Tim Cook's total compensation is about half what Pat Gelsinger's is as Intel CEO, perhaps increasing the compensation will not result in improved performance? I.e., if Cook really cared deeply about being more obscenely rich than he already is, he could have quit Apple and taken his pick of some other, higher-paying CEO position. At some level of compensation, the only people motivated to pursue it are sociopaths. Are these the people you want running your company?

kodah 3y ago

> This seems like a question that can be answered with data. Maybe I've worked at all the wrong companies but in my experience any comp that's based on "data" will be gamed until it's meaningless. There is no "data" because reading impact data is often like reading tea leaves. Frankly, what I think is going unsaid here is that corporate executives make a disparately large amount compared to the people who do and plan the work. While executives can make a great difference, so can a great manager or a great engineer. I wish we'd see executives as just another role, taking on different tasks rather than something substantively more valuable when it's not, especially in large orgs.

IggleSniggle 3y ago
I think most intelligent recognize that it's just a role. The comp really is just a power dynamic where having a bunch of money/power gives you a bunch of leverage to acquire more of it from anybody with less. Organizational, you don't want to hire somebody that could just be taking orders from someone else with more power to be your head.

johnnyanmac 3y ago

It probably can be answered with data, but explaining how executives get to this point is very much based on non-obective factors. So, not much benefit even if we blow the lid open and show a much better way to make more money. That is important for a publicly traded company, but far from their only consideration.

danbruc 3y ago

2014 CEO compensation vs shareholder return [1] [1] http://si.wsj.net/public/resources/images/OG-AE821_ExecPa_NS_20150612163555.gif http://si.wsj.net/public/resources/images/OG-AE821_ExecPa_NS...

Taek 3y ago
That's not necessarily reliable data, sometimes a company that is in a losing position will bring in a well paid CEO to reduce the damage. -5% can be an excellent result if you were expecting -20% as the status quo.
- danbruc 3y ago
  That is just the first thing a search turned up, I personally find that chart not very informative, everything is bunched together at the bottom and obscured by the large circles. And as you point out there are many complicating factors that one should consider to get a robust answer. I can not see if there is any noteworthy correlation in the chart. My point was just that you can probably tease out some idea about the relation between executive compensation and company performance from available data. Personally I would not even consider shareholder return to be a good metric to begin with, I think companies should be judged by something like customer satisfaction as this is what companies are for, satisfying the needs of customers, not making shareholders rich.