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Executive compensation is a drop in the bucket compared to the total salaries for all the rank-and-file employees. According to your article the average hourly

Executive compensation is a drop in the bucket compared to the total salaries for all the rank-and-file employees. According to your article the average hourly labor cost at GM is $60. Assuming 2,000 hours per year, that is $120,000 per employee. For 92,000 U.S. employees [0], the total is about $11,000,000,000. Another way to look at it: If you distributed the CEO's compensation ($30,000,000) among GM's U.S. employees (92,000 [0]), you'd give each of them about $326. [0] https://www.gm.com/company/usa-operations https://www.gm.com/company/usa-operations

pfannkuchen 3y ago
This is so often completely ignored and IMO it’s the real reason why executive pay is so high. Companies are willing to bid up executive pay but not worker pay because worker pay comes with a huge multiplier and executive pay doesn’t.
lordnacho 3y ago
An executive can also completely tank your business in a way that a line worker cannot. So it's still a bit of a paradox why you would pay anyone so much over the odds. How confident can you really be that this one guy you found is going to increase profits by 10%? And if you do find this guy, why isn't there another guy with similar experience offering the same tradeoff?
- Ferret7446 3y ago
  That's exactly why they are paid so much. It's more important that they don't fuck things up than "demonstrate productivity".
  - lordnacho 3y ago
    That's what I'm saying doesn't make any sense. How do you know they won't? Plenty of people have messed up a business, who's to say your guy with pedigree won't?
  - Ekaros 3y ago
    Why isn't their compensation two directional then? Why not give them both options and have them sell puts that company can exercise. So if company loses 10% of valuation they will pay company some money...
sharts 3y ago
Executive compensation is a function of profit/capital allocation for shareholders away from labor. This doesn’t show the full picture. It’s not about redistributing their salaries. Have a look at the excess returns procured BY labor and where that went.

pfannkuchen 3y ago

This is so often completely ignored and IMO it’s the real reason why executive pay is so high. Companies are willing to bid up executive pay but not worker pay because worker pay comes with a huge multiplier and executive pay doesn’t.

lordnacho 3y ago

An executive can also completely tank your business in a way that a line worker cannot. So it's still a bit of a paradox why you would pay anyone so much over the odds. How confident can you really be that this one guy you found is going to increase profits by 10%? And if you do find this guy, why isn't there another guy with similar experience offering the same tradeoff?

Ferret7446 3y ago
That's exactly why they are paid so much. It's more important that they don't fuck things up than "demonstrate productivity".
- lordnacho 3y ago
  That's what I'm saying doesn't make any sense. How do you know they won't? Plenty of people have messed up a business, who's to say your guy with pedigree won't?
- Ekaros 3y ago
  Why isn't their compensation two directional then? Why not give them both options and have them sell puts that company can exercise. So if company loses 10% of valuation they will pay company some money...

sharts 3y ago

Executive compensation is a function of profit/capital allocation for shareholders away from labor. This doesn’t show the full picture. It’s not about redistributing their salaries. Have a look at the excess returns procured BY labor and where that went.