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There is no academic training to be a good CEO. They are not easily replaceable. If they were, board members wouldn’t bother offering such high pay. Shareholder

There is no academic training to be a good CEO. They are not easily replaceable. If they were, board members wouldn’t bother offering such high pay. Shareholders don’t appreciate wasting money.

hinkley 3y ago
But if we offer more money, surely we will attract the attention of a better CEO!
- secabeen 3y ago
  No one wants to hire a below average CEO! Our CEO needs to be Above Average, so we better pay above the median! And so the salaries spiral up and up......
thechao 3y ago
They've become 14.6x more efficient at ... what? Increasing their pay? C'mon.
- version_five 3y ago
  Like it or not, they've become more efficient at maximizing shareholder returns. 1978 to present included all sorts of financial shenanigans designed to turn a company from the old school "return on assets" model to a financial vehicle that profits on the spread between it's revenue stream and financing costs. I think it's shit too, but the job turned from running a company go making money appear, and the pay went with it. Don't hate the player, hate the game (seriously, the system is screwed up horribly)
  - brutusborn 3y ago
    Any idea why this change occurred? I know it’s probably multifaceted, but my first thought was that increasing inflation since the 70s has meant that there is an incentive to have as much debt as possible, the hope being that it will be inflated away
    - kelseyfrog 3y ago
      The Friedman doctrine[1] + hyperstition[2]. 1. Friedman, Milton. "The Social Responsibility of Business Is to Increase Its Profits." The New York Times, 13 September 1970, https://web.archive.org/web/20230913104415/https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html https://web.archive.org/web/20230913104415/https://www.nytim... 2. Carstens, Delphi. "HYPERSTITION." Xenopraxis, n.d., http://xenopraxis.net/readings/carstens_hyperstition.pdf http://xenopraxis.net/readings/carstens_hyperstition.pdf.
    - logicchains 3y ago
      With the complete end of the gold standard in the 1970s, the government/fed's been free to create as much USD as it wants. The benefit of newly created money goes to those who spend it first (it's essentially a wealth transfer from those who get it last to those who get it first), and it's the banking/financial system that generally gets first dibs on this newly created money. This means there's a continuous, persistent transfer of wealth from the real economy to the financial system. In theory this wouldn't happen if the fed instead created money by e.g. dropping it out of helicopters equally to everybody (or direct transfers to their bank accounts), but the whole financial industry has a vested interested in keeping the current approach.
      - lifeisstillgood 3y ago
        This is such a simple and clear explanation of the financialisation of society I just wanted to keep a reference
  - kelseyfrog 3y ago
    Genuine question, have you tried hating the game and observed the response? I'm curious if your experience has been the same as mine?
    - mistrial9 3y ago
      yes actually - I spoke with a contractor at giant banks, at a high level of security, and with it compensation. The casual stories he told were related to beyond-belief daily animosity, racist language, whoring references and other verbal attacks and harsh emotional content. The whole thing was told in the same breath as I get this much per hour (a lot), I travelled to this place and got this hotel, I got this bonus.. in the same breath. There is more going on with people and work and money than most people seem to acknowledge when speaking in general.
  - davorak 3y ago
    > Don't hate the player, hate the game (seriously, the system is screwed up horribly) I say it is fair to hare the player unless they are working to change/improve the "screwed up" game they are playing.
- kube-system 3y ago
  The person you're replying to is suggesting that their pay rates are inelastic due to scarcity.
- kortilla 3y ago
  Price is based on how difficult it is to find someone that won’t drive a massive company awry, not based on them becoming better.
  - thechao 3y ago
    Like Carly Fiorina? The pay for CEOs is set by the board, and the board of most large companies is made up of CEO's from other large companies. It's the private equivalent of plutocracy.
    - kortilla 3y ago
      The board is not made of other CEOs
throw0101b 3y ago
> There is no training to be a good CEO. They are not easily replaceable. If Steve Jobs—who first created and then basically rescued Apple and started it on the path to where it is today—can be 'replaced' then any other leader can be replaced. Similarly there are plenty of CEOs that are paid oodles of money that were or are absolute garbage: see Boeing for the last 15+ years as Exhibit A.
- kortilla 3y ago
  He was replaced, but not with someone as good. Apple has done well under Tim Cook, but there is an obvious lack of innovative vision since Steve’s passing.
  - beej71 3y ago
    Perhaps if they offered a pay increase they could attract someone better, but maybe they can't afford it.
  - jedberg 3y ago
    The Apple Watch launched 4 years after he died. He probably wasn't involved in that at all, or just barely. Which means that was all Cook's doing. It's now a multi-billion dollar business on its own. AirPods launched 5 years after he died. It's highly unlikely he was involved at all. That's now also a multi-billion dollar business. Apple Vision is about to come out. I wouldn't be surprised if that turns into a mult-billion dollar business after a few years. Yes, Tim Cook does not have the charisma of Steve Jobs, and probably doesn't have the design sense either. But he's awfully good at putting the right people in the right places to steer the ship with him and have quite a strong vision of the future.
- turnsout 3y ago
  Steve was replaced with one of the greatest minds in Operations that history has ever known, and much of Apple's success under Steve was thanks to Tim. So Apple is not the best example if you're trying to show "CEOs don't matter."
  - 3y ago
dymk 3y ago
Of course there is training to be a CEO. Do you think all the good CEOs were born with the knowledge to be a CEO?
- l33t7332273 3y ago
  [flagged]
nerdponx 3y ago
The argument is not that CEOs are not valuable. The argument is that there's no obvious increase in their value since the 70s that might justify their relative pay increase.
pydry 3y ago
Since there's no pay penalty for being a bad CEO (pay correlates almost exclusively with company size) I guess we can assume that being good at the job is not the quality most important to those who do the selection.

There is no academic training to be a good CEO. They are not easily replaceable. If they were, board members wouldn’t bother offering such high pay. Shareholders don’t appreciate wasting money.

hinkley 3y ago

But if we offer more money, surely we will attract the attention of a better CEO!

secabeen 3y ago
No one wants to hire a below average CEO! Our CEO needs to be Above Average, so we better pay above the median! And so the salaries spiral up and up......

thechao 3y ago

They've become 14.6x more efficient at ... what? Increasing their pay? C'mon.

version_five 3y ago
Like it or not, they've become more efficient at maximizing shareholder returns. 1978 to present included all sorts of financial shenanigans designed to turn a company from the old school "return on assets" model to a financial vehicle that profits on the spread between it's revenue stream and financing costs. I think it's shit too, but the job turned from running a company go making money appear, and the pay went with it. Don't hate the player, hate the game (seriously, the system is screwed up horribly)
- brutusborn 3y ago
  Any idea why this change occurred? I know it’s probably multifaceted, but my first thought was that increasing inflation since the 70s has meant that there is an incentive to have as much debt as possible, the hope being that it will be inflated away
  - kelseyfrog 3y ago
    The Friedman doctrine[1] + hyperstition[2]. 1. Friedman, Milton. "The Social Responsibility of Business Is to Increase Its Profits." The New York Times, 13 September 1970, https://web.archive.org/web/20230913104415/https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html https://web.archive.org/web/20230913104415/https://www.nytim... 2. Carstens, Delphi. "HYPERSTITION." Xenopraxis, n.d., http://xenopraxis.net/readings/carstens_hyperstition.pdf http://xenopraxis.net/readings/carstens_hyperstition.pdf.
  - logicchains 3y ago
    With the complete end of the gold standard in the 1970s, the government/fed's been free to create as much USD as it wants. The benefit of newly created money goes to those who spend it first (it's essentially a wealth transfer from those who get it last to those who get it first), and it's the banking/financial system that generally gets first dibs on this newly created money. This means there's a continuous, persistent transfer of wealth from the real economy to the financial system. In theory this wouldn't happen if the fed instead created money by e.g. dropping it out of helicopters equally to everybody (or direct transfers to their bank accounts), but the whole financial industry has a vested interested in keeping the current approach.
    - lifeisstillgood 3y ago
      This is such a simple and clear explanation of the financialisation of society I just wanted to keep a reference
- kelseyfrog 3y ago
  Genuine question, have you tried hating the game and observed the response? I'm curious if your experience has been the same as mine?
  - mistrial9 3y ago
    yes actually - I spoke with a contractor at giant banks, at a high level of security, and with it compensation. The casual stories he told were related to beyond-belief daily animosity, racist language, whoring references and other verbal attacks and harsh emotional content. The whole thing was told in the same breath as I get this much per hour (a lot), I travelled to this place and got this hotel, I got this bonus.. in the same breath. There is more going on with people and work and money than most people seem to acknowledge when speaking in general.
- davorak 3y ago
  > Don't hate the player, hate the game (seriously, the system is screwed up horribly) I say it is fair to hare the player unless they are working to change/improve the "screwed up" game they are playing.
kube-system 3y ago
The person you're replying to is suggesting that their pay rates are inelastic due to scarcity.
kortilla 3y ago
Price is based on how difficult it is to find someone that won’t drive a massive company awry, not based on them becoming better.
- thechao 3y ago
  Like Carly Fiorina? The pay for CEOs is set by the board, and the board of most large companies is made up of CEO's from other large companies. It's the private equivalent of plutocracy.
  - kortilla 3y ago
    The board is not made of other CEOs

throw0101b 3y ago

> There is no training to be a good CEO. They are not easily replaceable. If Steve Jobs—who first created and then basically rescued Apple and started it on the path to where it is today—can be 'replaced' then any other leader can be replaced. Similarly there are plenty of CEOs that are paid oodles of money that were or are absolute garbage: see Boeing for the last 15+ years as Exhibit A.

kortilla 3y ago
He was replaced, but not with someone as good. Apple has done well under Tim Cook, but there is an obvious lack of innovative vision since Steve’s passing.
- beej71 3y ago
  Perhaps if they offered a pay increase they could attract someone better, but maybe they can't afford it.
- jedberg 3y ago
  The Apple Watch launched 4 years after he died. He probably wasn't involved in that at all, or just barely. Which means that was all Cook's doing. It's now a multi-billion dollar business on its own. AirPods launched 5 years after he died. It's highly unlikely he was involved at all. That's now also a multi-billion dollar business. Apple Vision is about to come out. I wouldn't be surprised if that turns into a mult-billion dollar business after a few years. Yes, Tim Cook does not have the charisma of Steve Jobs, and probably doesn't have the design sense either. But he's awfully good at putting the right people in the right places to steer the ship with him and have quite a strong vision of the future.
turnsout 3y ago
Steve was replaced with one of the greatest minds in Operations that history has ever known, and much of Apple's success under Steve was thanks to Tim. So Apple is not the best example if you're trying to show "CEOs don't matter."
- 3y ago

dymk 3y ago

Of course there is training to be a CEO. Do you think all the good CEOs were born with the knowledge to be a CEO?

l33t7332273 3y ago
[flagged]

nerdponx 3y ago

The argument is not that CEOs are not valuable. The argument is that there's no obvious increase in their value since the 70s that might justify their relative pay increase.

pydry 3y ago

Since there's no pay penalty for being a bad CEO (pay correlates almost exclusively with company size) I guess we can assume that being good at the job is not the quality most important to those who do the selection.