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Keep in mind Google executive compensation appears to be biannual (his compensation in 2021 was 6M). Overall, his compensation for the past 2 years is less than

by Aunche 3y ago

Keep in mind Google executive compensation appears to be biannual (his compensation in 2021 was 6M). Overall, his compensation for the past 2 years is less than .05% of Google's revenue during the same period. If the performance of a Google CEO even slightly better or worse Pichai going to have a much larger impact on Google than 225M. I'm sure plenty of the top 100 leaders at Google would be better than Pichai, but others would be worse and shareholders can't distinguish who until after the fact, so they saw Pichai as the best option.

empyrrhicist 3y ago
You've inadvertently highlighted the actual problem - our economic system allows for megaliths like Google to exist and dominate, and we can't help but measure everything against them. Like, run the clock forward and imagine Google monopolizes half of GDP. Should the CEO be compensated as a percentage of that? It's a fallacious view - how many super hard working and ultra educated people could be recruited to that post for, oh, say a cool 1M per year with a good retirement plan and no stock nonsense. Tons - a huge list of people who don't have the right connections to sit atop the money pyramid.
- ztrww 3y ago
  > how many super hard working and ultra educated people Both attributes seem to be somewhat tangentially related to being a highly successful CEO. There are plenty of examples of “super hard working” and educated CEOs running their companies to the ground and costing much, much more than just $200 million..
  - empyrrhicist 3y ago
    Pick your desired adjectives then. Or is the skillset somehow a magic property that only emerges when total compensation surpasses 100m?
    - ztrww 3y ago
      I don’t think “skillset” is the right word either. It’s the financial outcome of the decisions the CEO makes which is the only thing that really matters. Which is notoriously hard to measure and impossible to do in advance. So companies tend to use various proxies when hiring like past experience and less useful ones like skills, education, character, personal connections, work ethic etc. Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid. So if the board of 100 billion company believes that a CEO they can hire for 100 million will increase growth/profits by more than 10 million CEO would it seems perfectly rational to pay him as much (they might be awful at picking the ’best’ person but that does not invalidate the core principle)
      - empyrrhicist 3y ago
        > Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid. There's nothing obvious about this to me - how would you distinguish that from survivorship bias? Why then do shareholders and boards often come into conflict on this issue? Claiming that someone is worth paying 100m per year is an outrageous claim that requires commensurate evidence, not a wishy-washy statement about boards thinking its worthwhile. Boards are made of people in a very small oligarchic circle - their behavior is more easily explained by remembering that they're social animals in a hierarchical context than pretending this is all perfect economic rationality.
        ztrww 3y ago
        > There's nothing obvious about this to me - how would you distinguish that from survivorship bias? So success of companies is entirely random? That seems statistically unlikely… I mean are you really saying that there are no decisions that CEOs regularly take due to which a company might lose/gains up to millions to billions of dollars? Why wouldn’t you pay a CEO whose actions can bring the company billions a 100m or so? Seems like a good deal.. e.g. if you put a random highly competent, educated and very hardworking person in charge of Apple back in 1997 is it more or less likely that he would have done better than Jobs? I mean, yeah I agree with you in part. In most cases it’s hard to distinguish real impact (even after a few years) from survivorship bias which is why this whole process is so inefficient. I’m sure that quite a few companies are just as likely (if not more likely) to hire a 100+ mil CEO who’ll be a net negative on as one who’s action will bring 10x+ in additional revenue compared to what most other candidates would have.

by Aunche 3y ago

empyrrhicist 3y ago

You've inadvertently highlighted the actual problem - our economic system allows for megaliths like Google to exist and dominate, and we can't help but measure everything against them. Like, run the clock forward and imagine Google monopolizes half of GDP. Should the CEO be compensated as a percentage of that? It's a fallacious view - how many super hard working and ultra educated people could be recruited to that post for, oh, say a cool 1M per year with a good retirement plan and no stock nonsense. Tons - a huge list of people who don't have the right connections to sit atop the money pyramid.

ztrww 3y ago
> how many super hard working and ultra educated people Both attributes seem to be somewhat tangentially related to being a highly successful CEO. There are plenty of examples of “super hard working” and educated CEOs running their companies to the ground and costing much, much more than just $200 million..
- empyrrhicist 3y ago
  Pick your desired adjectives then. Or is the skillset somehow a magic property that only emerges when total compensation surpasses 100m?
  - ztrww 3y ago
    I don’t think “skillset” is the right word either. It’s the financial outcome of the decisions the CEO makes which is the only thing that really matters. Which is notoriously hard to measure and impossible to do in advance. So companies tend to use various proxies when hiring like past experience and less useful ones like skills, education, character, personal connections, work ethic etc. Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid. So if the board of 100 billion company believes that a CEO they can hire for 100 million will increase growth/profits by more than 10 million CEO would it seems perfectly rational to pay him as much (they might be awful at picking the ’best’ person but that does not invalidate the core principle)
    - empyrrhicist 3y ago
      > Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid. There's nothing obvious about this to me - how would you distinguish that from survivorship bias? Why then do shareholders and boards often come into conflict on this issue? Claiming that someone is worth paying 100m per year is an outrageous claim that requires commensurate evidence, not a wishy-washy statement about boards thinking its worthwhile. Boards are made of people in a very small oligarchic circle - their behavior is more easily explained by remembering that they're social animals in a hierarchical context than pretending this is all perfect economic rationality.
      - ztrww 3y ago
        > There's nothing obvious about this to me - how would you distinguish that from survivorship bias? So success of companies is entirely random? That seems statistically unlikely… I mean are you really saying that there are no decisions that CEOs regularly take due to which a company might lose/gains up to millions to billions of dollars? Why wouldn’t you pay a CEO whose actions can bring the company billions a 100m or so? Seems like a good deal.. e.g. if you put a random highly competent, educated and very hardworking person in charge of Apple back in 1997 is it more or less likely that he would have done better than Jobs? I mean, yeah I agree with you in part. In most cases it’s hard to distinguish real impact (even after a few years) from survivorship bias which is why this whole process is so inefficient. I’m sure that quite a few companies are just as likely (if not more likely) to hire a 100+ mil CEO who’ll be a net negative on as one who’s action will bring 10x+ in additional revenue compared to what most other candidates would have.