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I think the most surprising thing about trends in modern executive class pay is just how steep it is compared to the median employee. It makes me wonder why sha

by xmprt 2y ago

I think the most surprising thing about trends in modern executive class pay is just how steep it is compared to the median employee. It makes me wonder why shareholders outside the company are happy with it. For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024.

infotainment 2y ago
It's so bizarre, considering that the modern CEO's only job is to issue meaningless positive statements to shareholders. If you look at many top CEOs resumes, they are almost always devoid of any real experience. People talk about replacing various jobs by AI, but I'm pretty sure an LLM could replace most CEOs and no one would notice.
- cess11 2y ago
  It's someone who can take blame to protect branding and is easily replaced.
  - infotainment 2y ago
    Exactly; is someone who is essentially a replaceable scapegoat really worth millions per year in salary?
    - cess11 2y ago
      Sure, if it allows owners to stay in control and keep profiting from the people that perform the labour in the organisation. It's someone you can pin board and shareholder decisions on, as well as changes in market and accidents, that just goes away and lets some other people keep their power and profits instead of being accountable for their mistakes or lack of strategic performance.
      - klipt 2y ago
        But if it were just that, plenty of people would be willing to take the blame for less money. I think the problem is you have to hire someone highly qualified and with relevant experience to at least show you're doing due diligence, and those people aren't cheap.
        cess11 2y ago
        It has to be someone who looks somehow impressive, it can't just be a random homeless person doing it for a meal, that would look like the enterprise is doing something criminal. Pay plays a part in that, it signals that the person is extraordinarily competent and all around great and important. In large corporations CEO:s aren't very important, it's just one person who mainly collects and structures information from people closer to the work and makes public appearances on behalf of the corporation and does paper shuffling required by the state and so on. It's not rocket surgery. Using this person to protect the reputation and image of shareholders and the board as well is a 'no-brainer' decision to make if your interests are well served by it.
      - dash2 2y ago
        I very much dislike these threads where two people act like sockpuppets of a single not-very-advanced llm, agreeing with each other's views which are invariably exaggerated, uninformed and cynical. I've been seeing more of them recently; if you see one, downvote it. American capitalism has lots of problems. The idea that CEOs "almost always" have no real-world experience is hardly worth arguing against: "almost always" is meaningless rhetoric and "real-world" likewise (what counts as real-world experience for Google? WPP? Northrop Grumman?). Jensen Huang is mentioned literally at the top of this thread and is an obvious counterexample.
        cess11 2y ago
        Sorry, I don't mean for my views to hurt your feelings. I find it obvious from the context that they were referring to celebrity CEO:s in global corporations and not Mom or Pop in some small mom-and-pop corner store. When I look at en.wikipedia on Huang it seems he graduated into a managing role and then founded Nvidia. By "real-world experience" I'd mean experience as a worker, but I can't answer for the person you're actually quoting. However, it's an interesting example. Clearly Huang has managed to promote an image to you that is very different from mine. As I see it, Nvidia is a main supplier of hardware for globally fashionable grifts and scams, like large portions of so called 'crypto' and 'AI'. I also expect Nvidia to be an important supplier in the war industry, and I'm sure it is in surveillance tyranny.
    - SkiFire13 2y ago
      To be fair if I were to be a scapegoat for Boeing there's no way I would do that for cheap.
    - cootsnuck 2y ago
      When company valuations are fundamentally based on "faith to perform well", yes. It's a product of touting a speculative economy as one of "rational actors". CEOs function as mythological heroes more than anything. So there's no number too high to pay since even their defeat can be incorporated into the ongoing myth of the brand. It's very strange to me.
  - deleted 2y ago
    [deleted]
- bpodgursky 2y ago
  I don't want to be rude but you have no idea what you are talking about and clearly have 0 insight into the day-to-day of an actual CEO. It's fine to argue that a particular CEO is underperforming, it's often true, but very few of them are "underworking" by any reasonable definition.
  - gardenhedge 2y ago
    Empty rebuttal. Consider adding more substance to your comment. As a reader I have no idea which of you is correct.
    - bpodgursky 2y ago
      I hear you, but this isn't my day job.
  - earnesti 2y ago
    CEO's definitely are underworking. Maybe not CEO's of publicly traded companies, though.
  - cess11 2y ago
    Arguably CEO:s are administrators, not workers.
  - roughly 2y ago
    How’s this for a definition: the average CEO gets paid 350x what the average worker gets paid, so unless they’re generating 350x the value of the average employee, they’re underworking.
    - deleted 2y ago
      [deleted]
    - EnigmaFlare 2y ago
      If they have 350 employees, then they double the company's profit, I suppose they just generated 350x times the value of an average employee. If they have more employees, they only need to increase it a smaller proportion to be generating 350x as much value.
- pie_flavor 2y ago
  If it's so easy, why aren't you doing it? Presumably it requires some amount of investment to break into, but with such a high upside it's still massively +EV.
  - Planktonne 2y ago
    Some people want to do work they find meaningful.
    - paxys 2y ago
      Then why complain about how much someone else is getting paid?
      - Planktonne 2y ago
        The parent comment isn't complaining about the amount CEOs are paid, but the amount they are paid relative to the value provided.
  - pydry 2y ago
    I dont know why on earth youd assume that the executive/board/CEO club is meritocratic or that it would be open to talented outsiders.
  - maximus-decimus 2y ago
    The job being easy to do and the job being easy to get are two completely different things.
    - pie_flavor 2y ago
      So how are new ones minted?
      - consteval 2y ago
        By luck and status. Right place right time. They have some experience, and they just so happen to know X, Y, Z (probably because their dad knew X-1, Y-1, Z-1 and so on) so they get in. Maybe they went to harvard or something.
dheera 2y ago
> Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024. 26.6M of that was stock. In percentage terms it's just equity that he effectively handed out before as a founder and is getting back in return for growing the company even more. I don't see a problem with it, considering that the median employee takes almost zero risks and can leave whenever they want.
- TechDebtDevin 2y ago
  Investing your talent and time in a company is a potential risk.
  - chii 2y ago
    an employee is not taking risk "investing in time" in a company, because they are paid wages for it. If it were the case that employees need to put in capital into the business before being employees, then it would be a different story. In fact, those schemes exist - they're called MLM, or multi-level-marketing schemes, where you pay the company upfront to buy the product, and try to sell it at a profit (like herbalife), and try to recruit on behalf of the company!
- RicoElectrico 2y ago
  No, the risk for regular employee is higher due to downside vs upside. Once you cross some wealth threshold, it's not possible to lose everything (e.g. become homeless) unless you do something deliberately stupid like gambling or drugs. There's always plan B if you're rich. Like, rent out property or something.
  - dheera 2y ago
    The risk for a software engineer at any of the big tech companies is extremely low if you have some common sense level of financial literacy. If you're an engineer at Nvidia you'd have to do some braindead stupid things with your money to end up homeless. Also, if you have technical skills at a level that Nvidia would hire you, you can easily get a job at probably a thousand other companies. Layoffs are a non-issue. Recruiters will be scrambling to hire ex-Nvidia folks in the event of a mass layoff, barring a major global financial collapse (in which case you're still better off than 95% of the population).
_thisdot 2y ago
Counter point. Most of salary is decided based on how much of a loss it would be if you left. A CEO leaving a company can immediately lead to serious consequences whereas an individual employee can leave and no one might bat an eye
- anigbrowl 2y ago
  True, but that's partly because power is excessively concentrated in executive officers and as a group of people they are (imho) excessively invested in leadership rhetoric that leads them to develop misconceptions about their contribution to the firm's success. Not wholly unlike ships' captains, when they're doing their job job well they're mostly just keeping an eye on things and while the execution is delegated across the organization. When they mess up it's catastrophic. This is not to say I don't think CEOs do any work. They may make major contributions in terms of developing strategic plans, communicating them to staff and inspiring them to carry them out well, negotiating with allies, outmaneuvering competitors, and balancing the conflicting imperatives of operations, finance, security, legal and so on. But they're not compensated for labor so much as given (via negotiation) a commission on profits, revenue, stock price movement or suchlike. Inevitably there are conflicts of interest with shareholders, staff, and customers, and as a class CEOs and other high level executives seem to have tilted the tables more and more in their favor over recent decades.
- aziaziazi 2y ago
  > A CEO leaving a company can immediacy lead to serous consequences Is it something that has been study or observed? Most company are resilient enough to handle the leaving of an individual, being a Chief or not. The opposite would be a flag for an instable company. Far tangent exemple: Belgium without government.
  - _thisdot 2y ago
    I’m looking at this from a casual stock market perspective. If I came to know the CEO of the company is unhappy and planning to leave, surely I expect the stock prices to take a hit. And the recovery will mostly depend on their successor and is altogether an expensive exercise
creato 2y ago
Hiring a Boeing CEO must be pretty hard right now because whoever takes the job is signing up for some miserable work (like testifying to a hostile congress and dealing with criminal liability on behalf of Boeing), and is likely to be blamed for decades of mismanagement coming to the surface now. Said another way: I’d demand a lot more in compensation to be CEO of Boeing than NVIDIA (or any other role for that matter).
- vkou 2y ago
  > because whoever takes the job is signing up for some miserable work I'm ready to do it for a mere 5 mill/year (less than a sixth of the incumbent), and I'll happily take all the blame for all my predecessor's failings, and more. Will I do a worse job than the incumbent? Maybe, maybe not, how the hell will anyone know?
  - eru 2y ago
    Please feel free to make your pitch to whoever is in charge of hiring CEOs at Boeing.
  - robertlagrant 2y ago
    I disagree that everyone is equally suitable for every job. Why should someone pay you £5m? What would you do better than anyone else?
    - consteval 2y ago
      They don't need to be better. In fact they just need to be 1/5th as good, and then it's worth it. That's the whole point here - CEOs aren't paid proportionately like you or me.
      - eru 2y ago
        > They don't need to be better. In fact they just need to be 1/5th as good, and then it's worth it. Usain Bolt can run 100m in around 9.58s, and gets paid a lot for that ability (indirectly via sponsors etc). Assume I can run half as fast, say 100m in 19s; do I 'deserve' half of Bolt's fame and half of his sponsorships? Similarly, you can't hire five 20% generals to put in charge of your army, and expect the same result as hiring one 100% general. Or try hiring five 20% novelists or film makers or artists or actors etc. > That's the whole point here - CEOs aren't paid proportionately like you or me. Yes, and pay _not_ being proportional to ability is common and normal in all kinds of fields. It's nothing specific to CEOs. If anything, pay being (even approximately) proportional to ability is probably the exception.
Stealthisbook 2y ago
It helps that board members are often fellow CEOs or members of multiple other company boards. They have an incentive to negotiate high pay packages and shareholders in general get presented with a yes/no question
dclowd9901 2y ago
They are ok with it because they believe there’s a correlation between how well a company is doing and how much they pay their CEO.
- flanked-evergl 2y ago
  They are OK with it because they are not paying any attention and their voting rights are managed by companies like BlackRock who has a list of priorities from here to the moon that come before profit.
lynx23 2y ago
"Who watches the watchers" is what it comes down to. Politicians, Executives... I once heard politicians need to earn a lot because otherwise they wouldn't be politicians but executives, who earn even more.
- tacocataco 2y ago
  The voters, who elect the representatives who regulate the executives. Unfortunately the voters are handcuffed to the two party system by First Past the Post voting and the spoiler effect that comes with it.
roenxi 2y ago
I doubt they are happy as much as disinterested. The economy has been heavily financialised, interest rates have been at 0% [0] and a big chunk of economic activity is government spending. Shareholders don't appear to be worried about how the company actually runs in the details. What matters is that the CEO is positioning them to tap in to the money printing and borrowing game. IE, the wages suggest workers don't really matter because they don't. Profits will come from things like being in Crypto or AI booms at the right time. It isn't the be all and end all, but I'd rather be a shareholder in, say, a military production company with solid government contacts & contracts than one with capable workers. [0] Thank goodness that has finally changed but there is a bit of a lag while everyone catches up to the new normal.
- graemep 2y ago
  I was going to say this. In addition to what you say a lot of shareholders are in i for the short term. They are interested in what the share price will do in the short term. Directors remuneration mostly decided by other directors (and just approved by shareholders who are not bothered), who tend to take the view that it is worth paying directors very highly. Its something that has got worse, but its not new. As GK Galbraith said "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself."
  - robertlagrant 2y ago
    > "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself." The board decides the CEO's salary, no?
    - adrian_b 2y ago
      The board members are frequently CEOs of other companies, where the CEO whose salary is decided may be a board member.
bell-cot 2y ago
But Jensen Huang is both (1) extremely technically competent, and (2) a founder of Nvidia. My sense is that both (1), and the (1) && (2) combination, correlate fairly strongly with accepting a more-modest pay package. Such people seem to actually care about the organization. Or appreciate that others are doing 99.9% of the work. Or lack "the usual" pretend-to-be-emperor-while-looting-Rome sociopathy. Or something.
pjc50 2y ago
The limit case is of course https://www.forbes.com/sites/antoniopequenoiv/2024/06/13/tesla-shareholders-greenlight-elon-musks-50-billion-pay-package/ https://www.forbes.com/sites/antoniopequenoiv/2024/06/13/tes... It's difficult to understand pay of that size on a rational level. That represents individual shareholders voting for a significant dilution just to retain an extremely controversial celebrity CEO at a time when sales are falling. https://www.theguardian.com/technology/article/2024/jul/02/tesla-second-quarter-sales https://www.theguardian.com/technology/article/2024/jul/02/t... I see this kind of thing more as "how much the CEO is allowing himself to steal from the till because there's nobody above him" most of the time. Except in this case the shareholders really did make an expensive choice.
- renewiltord 2y ago
  Worked out for me. I bought a bunch on the last time everyone claimed Tesla was dead and then voted to keep Elon. Up 28%. Everyone’s got theories. I prefer money. What use are your theories if they don’t predict the outcome.
  - Shawnj2 2y ago
    Tesla stock is basically Monopoly money and has no real relationship with how Tesla as a car company as actually doing
strikelaserclaw 2y ago
This phenomenon is a function of attributing all the positive developments within a company to the C-suite executives. Just as shareholders profit from the productive work of many employees, the C-suite executives often receive credit for the achievements of a large number of people. I think it is related to a fundamental characteristic of humans, that being we can't understand information unless it is calculated into simpler versions ( concepts like medians, averages, variance, "who is the best", "who is the worst", "who is the most evil", "who is the least evil" all come out of the same human need to get simplified answers). When credit and information moves up up the funnel from employees to c - suite, it gets - credit gets assigned at higher and higher levels. It is not team xyz that did it, it is their manager, or their manager's managers until it gets to the ceo who only knows that "svp x was responsible for this successful product launch" - since the people at the top determine pay scales, if theres 10-20 million to pay out in terms of increments, the board rewards the ceo with 10 million because he is apparently responsible for ALL the successful product launches, the ceo decides to reward svp with 2 million increment etc... It truly does pay to sit at the table with the decision makers.
- joker99 2y ago
  I don’t consider this being a bug. The big issue is: while they get the praise, they reject or pass on the blame to the employees.
  - strikelaserclaw 2y ago
    It is not the same thing but probably related to whatever mechanism in the brain causes https://en.wikipedia.org/wiki/Out-group_homogeneity https://en.wikipedia.org/wiki/Out-group_homogeneity - The people in a position of power regularly interact with the ceo, so they can see all the nuances that go with that but to most people at the top, "employees" is a homogenous bunch of replaceable cogs.
Workaccount2 2y ago
CEO pay, like in the case of Boeing, is borne by shareholders, not the company itself. It's chronically repeated as if companies are robbing salary coffers to pay exorbitant CEO compensation. But that is not true. It's Boeing shareholders forking over $34M, not Boeing inc.
- AndrewKemendo 2y ago
  Which is precisely the point the article is making If the CEO works for the shareholders because they are part of the investor class, they aren’t prioritizing workers or customers - and we all know at this point that improving service isn’t part of increasing profit
Nifty3929 2y ago
Higher corporate taxes create a discount on worker pay, including executive pay. Basically if I pay a worker $100, that reduces my taxable income by $100, which saves me $35 in taxes, so my net profit goes down only $65. There was also a law passed in the '90s that forced executives to have more skin in the game in the form of stock - which caused companies to give executives a lot more stock.
everybodyknows 2y ago
What did he do worse in 2023? Recall that Calhoun was brought in only after the MAX crashes, ostensibly to clean up after multiple decades of short-termist mismanagement by his predecessors.
CivBase 2y ago
I understand why CEO salaries are high. It's essentially a bidding war among companies. What I don't understand is the lack of responsibility CEOs are expected to take when things go wrong.

by xmprt 2y ago

infotainment 2y ago

It's so bizarre, considering that the modern CEO's only job is to issue meaningless positive statements to shareholders. If you look at many top CEOs resumes, they are almost always devoid of any real experience. People talk about replacing various jobs by AI, but I'm pretty sure an LLM could replace most CEOs and no one would notice.

cess11 2y ago
It's someone who can take blame to protect branding and is easily replaced.
- infotainment 2y ago
  Exactly; is someone who is essentially a replaceable scapegoat really worth millions per year in salary?
  - cess11 2y ago
    Sure, if it allows owners to stay in control and keep profiting from the people that perform the labour in the organisation. It's someone you can pin board and shareholder decisions on, as well as changes in market and accidents, that just goes away and lets some other people keep their power and profits instead of being accountable for their mistakes or lack of strategic performance.
    - klipt 2y ago
      But if it were just that, plenty of people would be willing to take the blame for less money. I think the problem is you have to hire someone highly qualified and with relevant experience to at least show you're doing due diligence, and those people aren't cheap.
      - cess11 2y ago
        It has to be someone who looks somehow impressive, it can't just be a random homeless person doing it for a meal, that would look like the enterprise is doing something criminal. Pay plays a part in that, it signals that the person is extraordinarily competent and all around great and important. In large corporations CEO:s aren't very important, it's just one person who mainly collects and structures information from people closer to the work and makes public appearances on behalf of the corporation and does paper shuffling required by the state and so on. It's not rocket surgery. Using this person to protect the reputation and image of shareholders and the board as well is a 'no-brainer' decision to make if your interests are well served by it.
    - dash2 2y ago
      I very much dislike these threads where two people act like sockpuppets of a single not-very-advanced llm, agreeing with each other's views which are invariably exaggerated, uninformed and cynical. I've been seeing more of them recently; if you see one, downvote it. American capitalism has lots of problems. The idea that CEOs "almost always" have no real-world experience is hardly worth arguing against: "almost always" is meaningless rhetoric and "real-world" likewise (what counts as real-world experience for Google? WPP? Northrop Grumman?). Jensen Huang is mentioned literally at the top of this thread and is an obvious counterexample.
      - cess11 2y ago
        Sorry, I don't mean for my views to hurt your feelings. I find it obvious from the context that they were referring to celebrity CEO:s in global corporations and not Mom or Pop in some small mom-and-pop corner store. When I look at en.wikipedia on Huang it seems he graduated into a managing role and then founded Nvidia. By "real-world experience" I'd mean experience as a worker, but I can't answer for the person you're actually quoting. However, it's an interesting example. Clearly Huang has managed to promote an image to you that is very different from mine. As I see it, Nvidia is a main supplier of hardware for globally fashionable grifts and scams, like large portions of so called 'crypto' and 'AI'. I also expect Nvidia to be an important supplier in the war industry, and I'm sure it is in surveillance tyranny.
  - SkiFire13 2y ago
    To be fair if I were to be a scapegoat for Boeing there's no way I would do that for cheap.
  - cootsnuck 2y ago
    When company valuations are fundamentally based on "faith to perform well", yes. It's a product of touting a speculative economy as one of "rational actors". CEOs function as mythological heroes more than anything. So there's no number too high to pay since even their defeat can be incorporated into the ongoing myth of the brand. It's very strange to me.
- deleted 2y ago
  [deleted]
bpodgursky 2y ago
I don't want to be rude but you have no idea what you are talking about and clearly have 0 insight into the day-to-day of an actual CEO. It's fine to argue that a particular CEO is underperforming, it's often true, but very few of them are "underworking" by any reasonable definition.
- gardenhedge 2y ago
  Empty rebuttal. Consider adding more substance to your comment. As a reader I have no idea which of you is correct.
  - bpodgursky 2y ago
    I hear you, but this isn't my day job.
- earnesti 2y ago
  CEO's definitely are underworking. Maybe not CEO's of publicly traded companies, though.
- cess11 2y ago
  Arguably CEO:s are administrators, not workers.
- roughly 2y ago
  How’s this for a definition: the average CEO gets paid 350x what the average worker gets paid, so unless they’re generating 350x the value of the average employee, they’re underworking.
  - deleted 2y ago
    [deleted]
  - EnigmaFlare 2y ago
    If they have 350 employees, then they double the company's profit, I suppose they just generated 350x times the value of an average employee. If they have more employees, they only need to increase it a smaller proportion to be generating 350x as much value.
pie_flavor 2y ago
If it's so easy, why aren't you doing it? Presumably it requires some amount of investment to break into, but with such a high upside it's still massively +EV.
- Planktonne 2y ago
  Some people want to do work they find meaningful.
  - paxys 2y ago
    Then why complain about how much someone else is getting paid?
    - Planktonne 2y ago
      The parent comment isn't complaining about the amount CEOs are paid, but the amount they are paid relative to the value provided.
- pydry 2y ago
  I dont know why on earth youd assume that the executive/board/CEO club is meritocratic or that it would be open to talented outsiders.
- maximus-decimus 2y ago
  The job being easy to do and the job being easy to get are two completely different things.
  - pie_flavor 2y ago
    So how are new ones minted?
    - consteval 2y ago
      By luck and status. Right place right time. They have some experience, and they just so happen to know X, Y, Z (probably because their dad knew X-1, Y-1, Z-1 and so on) so they get in. Maybe they went to harvard or something.

dheera 2y ago

> Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024. 26.6M of that was stock. In percentage terms it's just equity that he effectively handed out before as a founder and is getting back in return for growing the company even more. I don't see a problem with it, considering that the median employee takes almost zero risks and can leave whenever they want.

TechDebtDevin 2y ago
Investing your talent and time in a company is a potential risk.
- chii 2y ago
  an employee is not taking risk "investing in time" in a company, because they are paid wages for it. If it were the case that employees need to put in capital into the business before being employees, then it would be a different story. In fact, those schemes exist - they're called MLM, or multi-level-marketing schemes, where you pay the company upfront to buy the product, and try to sell it at a profit (like herbalife), and try to recruit on behalf of the company!
RicoElectrico 2y ago
No, the risk for regular employee is higher due to downside vs upside. Once you cross some wealth threshold, it's not possible to lose everything (e.g. become homeless) unless you do something deliberately stupid like gambling or drugs. There's always plan B if you're rich. Like, rent out property or something.
- dheera 2y ago
  The risk for a software engineer at any of the big tech companies is extremely low if you have some common sense level of financial literacy. If you're an engineer at Nvidia you'd have to do some braindead stupid things with your money to end up homeless. Also, if you have technical skills at a level that Nvidia would hire you, you can easily get a job at probably a thousand other companies. Layoffs are a non-issue. Recruiters will be scrambling to hire ex-Nvidia folks in the event of a mass layoff, barring a major global financial collapse (in which case you're still better off than 95% of the population).

_thisdot 2y ago

Counter point. Most of salary is decided based on how much of a loss it would be if you left. A CEO leaving a company can immediately lead to serious consequences whereas an individual employee can leave and no one might bat an eye

anigbrowl 2y ago
True, but that's partly because power is excessively concentrated in executive officers and as a group of people they are (imho) excessively invested in leadership rhetoric that leads them to develop misconceptions about their contribution to the firm's success. Not wholly unlike ships' captains, when they're doing their job job well they're mostly just keeping an eye on things and while the execution is delegated across the organization. When they mess up it's catastrophic. This is not to say I don't think CEOs do any work. They may make major contributions in terms of developing strategic plans, communicating them to staff and inspiring them to carry them out well, negotiating with allies, outmaneuvering competitors, and balancing the conflicting imperatives of operations, finance, security, legal and so on. But they're not compensated for labor so much as given (via negotiation) a commission on profits, revenue, stock price movement or suchlike. Inevitably there are conflicts of interest with shareholders, staff, and customers, and as a class CEOs and other high level executives seem to have tilted the tables more and more in their favor over recent decades.
aziaziazi 2y ago
> A CEO leaving a company can immediacy lead to serous consequences Is it something that has been study or observed? Most company are resilient enough to handle the leaving of an individual, being a Chief or not. The opposite would be a flag for an instable company. Far tangent exemple: Belgium without government.
- _thisdot 2y ago
  I’m looking at this from a casual stock market perspective. If I came to know the CEO of the company is unhappy and planning to leave, surely I expect the stock prices to take a hit. And the recovery will mostly depend on their successor and is altogether an expensive exercise

creato 2y ago

Hiring a Boeing CEO must be pretty hard right now because whoever takes the job is signing up for some miserable work (like testifying to a hostile congress and dealing with criminal liability on behalf of Boeing), and is likely to be blamed for decades of mismanagement coming to the surface now. Said another way: I’d demand a lot more in compensation to be CEO of Boeing than NVIDIA (or any other role for that matter).

vkou 2y ago
> because whoever takes the job is signing up for some miserable work I'm ready to do it for a mere 5 mill/year (less than a sixth of the incumbent), and I'll happily take all the blame for all my predecessor's failings, and more. Will I do a worse job than the incumbent? Maybe, maybe not, how the hell will anyone know?
- eru 2y ago
  Please feel free to make your pitch to whoever is in charge of hiring CEOs at Boeing.
- robertlagrant 2y ago
  I disagree that everyone is equally suitable for every job. Why should someone pay you £5m? What would you do better than anyone else?
  - consteval 2y ago
    They don't need to be better. In fact they just need to be 1/5th as good, and then it's worth it. That's the whole point here - CEOs aren't paid proportionately like you or me.
    - eru 2y ago
      > They don't need to be better. In fact they just need to be 1/5th as good, and then it's worth it. Usain Bolt can run 100m in around 9.58s, and gets paid a lot for that ability (indirectly via sponsors etc). Assume I can run half as fast, say 100m in 19s; do I 'deserve' half of Bolt's fame and half of his sponsorships? Similarly, you can't hire five 20% generals to put in charge of your army, and expect the same result as hiring one 100% general. Or try hiring five 20% novelists or film makers or artists or actors etc. > That's the whole point here - CEOs aren't paid proportionately like you or me. Yes, and pay _not_ being proportional to ability is common and normal in all kinds of fields. It's nothing specific to CEOs. If anything, pay being (even approximately) proportional to ability is probably the exception.

Stealthisbook 2y ago

It helps that board members are often fellow CEOs or members of multiple other company boards. They have an incentive to negotiate high pay packages and shareholders in general get presented with a yes/no question

dclowd9901 2y ago

They are ok with it because they believe there’s a correlation between how well a company is doing and how much they pay their CEO.

flanked-evergl 2y ago
They are OK with it because they are not paying any attention and their voting rights are managed by companies like BlackRock who has a list of priorities from here to the moon that come before profit.

lynx23 2y ago

"Who watches the watchers" is what it comes down to. Politicians, Executives... I once heard politicians need to earn a lot because otherwise they wouldn't be politicians but executives, who earn even more.

tacocataco 2y ago
The voters, who elect the representatives who regulate the executives. Unfortunately the voters are handcuffed to the two party system by First Past the Post voting and the spoiler effect that comes with it.

roenxi 2y ago

I doubt they are happy as much as disinterested. The economy has been heavily financialised, interest rates have been at 0% [0] and a big chunk of economic activity is government spending. Shareholders don't appear to be worried about how the company actually runs in the details. What matters is that the CEO is positioning them to tap in to the money printing and borrowing game. IE, the wages suggest workers don't really matter because they don't. Profits will come from things like being in Crypto or AI booms at the right time. It isn't the be all and end all, but I'd rather be a shareholder in, say, a military production company with solid government contacts & contracts than one with capable workers. [0] Thank goodness that has finally changed but there is a bit of a lag while everyone catches up to the new normal.

graemep 2y ago
I was going to say this. In addition to what you say a lot of shareholders are in i for the short term. They are interested in what the share price will do in the short term. Directors remuneration mostly decided by other directors (and just approved by shareholders who are not bothered), who tend to take the view that it is worth paying directors very highly. Its something that has got worse, but its not new. As GK Galbraith said "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself."
- robertlagrant 2y ago
  > "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself." The board decides the CEO's salary, no?
  - adrian_b 2y ago
    The board members are frequently CEOs of other companies, where the CEO whose salary is decided may be a board member.

bell-cot 2y ago

But Jensen Huang is both (1) extremely technically competent, and (2) a founder of Nvidia. My sense is that both (1), and the (1) && (2) combination, correlate fairly strongly with accepting a more-modest pay package. Such people seem to actually care about the organization. Or appreciate that others are doing 99.9% of the work. Or lack "the usual" pretend-to-be-emperor-while-looting-Rome sociopathy. Or something.

pjc50 2y ago

The limit case is of course https://www.forbes.com/sites/antoniopequenoiv/2024/06/13/tesla-shareholders-greenlight-elon-musks-50-billion-pay-package/ https://www.forbes.com/sites/antoniopequenoiv/2024/06/13/tes... It's difficult to understand pay of that size on a rational level. That represents individual shareholders voting for a significant dilution just to retain an extremely controversial celebrity CEO at a time when sales are falling. https://www.theguardian.com/technology/article/2024/jul/02/tesla-second-quarter-sales https://www.theguardian.com/technology/article/2024/jul/02/t... I see this kind of thing more as "how much the CEO is allowing himself to steal from the till because there's nobody above him" most of the time. Except in this case the shareholders really did make an expensive choice.

renewiltord 2y ago
Worked out for me. I bought a bunch on the last time everyone claimed Tesla was dead and then voted to keep Elon. Up 28%. Everyone’s got theories. I prefer money. What use are your theories if they don’t predict the outcome.
- Shawnj2 2y ago
  Tesla stock is basically Monopoly money and has no real relationship with how Tesla as a car company as actually doing

strikelaserclaw 2y ago

This phenomenon is a function of attributing all the positive developments within a company to the C-suite executives. Just as shareholders profit from the productive work of many employees, the C-suite executives often receive credit for the achievements of a large number of people. I think it is related to a fundamental characteristic of humans, that being we can't understand information unless it is calculated into simpler versions ( concepts like medians, averages, variance, "who is the best", "who is the worst", "who is the most evil", "who is the least evil" all come out of the same human need to get simplified answers). When credit and information moves up up the funnel from employees to c - suite, it gets - credit gets assigned at higher and higher levels. It is not team xyz that did it, it is their manager, or their manager's managers until it gets to the ceo who only knows that "svp x was responsible for this successful product launch" - since the people at the top determine pay scales, if theres 10-20 million to pay out in terms of increments, the board rewards the ceo with 10 million because he is apparently responsible for ALL the successful product launches, the ceo decides to reward svp with 2 million increment etc... It truly does pay to sit at the table with the decision makers.

joker99 2y ago
I don’t consider this being a bug. The big issue is: while they get the praise, they reject or pass on the blame to the employees.
- strikelaserclaw 2y ago
  It is not the same thing but probably related to whatever mechanism in the brain causes https://en.wikipedia.org/wiki/Out-group_homogeneity https://en.wikipedia.org/wiki/Out-group_homogeneity - The people in a position of power regularly interact with the ceo, so they can see all the nuances that go with that but to most people at the top, "employees" is a homogenous bunch of replaceable cogs.

Workaccount2 2y ago

CEO pay, like in the case of Boeing, is borne by shareholders, not the company itself. It's chronically repeated as if companies are robbing salary coffers to pay exorbitant CEO compensation. But that is not true. It's Boeing shareholders forking over $34M, not Boeing inc.

AndrewKemendo 2y ago
Which is precisely the point the article is making If the CEO works for the shareholders because they are part of the investor class, they aren’t prioritizing workers or customers - and we all know at this point that improving service isn’t part of increasing profit

Nifty3929 2y ago

Higher corporate taxes create a discount on worker pay, including executive pay. Basically if I pay a worker $100, that reduces my taxable income by $100, which saves me $35 in taxes, so my net profit goes down only $65. There was also a law passed in the '90s that forced executives to have more skin in the game in the form of stock - which caused companies to give executives a lot more stock.

everybodyknows 2y ago

What did he do worse in 2023? Recall that Calhoun was brought in only after the MAX crashes, ostensibly to clean up after multiple decades of short-termist mismanagement by his predecessors.

CivBase 2y ago

I understand why CEO salaries are high. It's essentially a bidding war among companies. What I don't understand is the lack of responsibility CEOs are expected to take when things go wrong.