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> Shaming organizations into lowering exec comp probably won’t work: there’s a strong economic incentive to pay competitively. Well I think you're right on the
by lesuorac 3y ago
> Shaming organizations into lowering exec comp probably won’t work: there’s a strong economic incentive to pay competitively.
Well I think you're right on the first half but I don't think you're correct on the second half.
Paying a CEO 5M vs 17M is a rounding error to a double-digit billion dollar company. Its like getting something on Amazon instead of Alibaba, sure Amazon is 3x the price but you obviously find the item cheap enough otherwise you'd be on Alibaba. Or perhaps you want the item now and don't want to spend months searching for a new CEO.
- csharpminor 3y agoI’m not sure I understand you, I believe we’re making the same point? I mean that there’s a strong incentive to offer competitive pay (as in pay more e.g. to poach from a competing company).
- lesuorac 3y agoYeah, I guess you're right. The CEO has the retention/switching costs amortized in their salary unlike probably the entire rest of the company. A company might take a 30k hit letting a 50k/yr employee walk away but they won't raise their salary to 56k to keep them from walking. But w.r.t. a CEO they will raise their salary from of 5M to 17M so that investor confidence won't tumble by them quitting.