3 ms·

> the CEO who reduces payrolls is doing right by the shareholders. If the company is really struggling so much, the CEO can do even more right by the sharehold

> the CEO who reduces payrolls is doing right by the shareholders. If the company is really struggling so much, the CEO can do even more right by the shareholders by cutting their own pay. After all they're more responsible than anyone else for the company being in that situation. The article isn't arguing layoffs shouldn't happen. It's stating that they should be a shared sacrifice. If the CEO personally benefits in the short-term by laying people off their interests are in conflict with long-term shareholders' interests. So align those interests better - make it so the CEO doesn't personally benefit from layoffs. Only the other shareholders do. Specifically: "freeze CEO pay and stock options and prevent stock sales for a year following any layoffs that exceed 5% of the workforce." If they still "do right by the shareholders" when it doesn't line their own pockets, then fair enough. It was really necessary.

nickff 2y ago
You’re assuming the layoffs are a reaction to poor strategy and/or decrease revenue potential, but that’s not always true. It could be that the market is shifting away from that company for some external reason, or that those employees were truly redundant.
- triceratops 2y ago
  > It could be that the market is shifting away from that company for some external reason The CEO is the main strategy and vision guy at the company. They're supposed to be able to foresee market shifts. If they don't do that, why do they deserve to be paid so well? Because they negotiated so hard with their golf buddies on the board? It's a one-year pay cut, not the end of the world. > or that those employees were truly redundant. Maybe. In that case, the long term increase in stock price should make up for any short-term pay cuts, right? The CEO will benefit eventually too.
  - aidanlister 2y ago
    I’m a CEO, I was not given a magic ring to predict the future when I took the role, I make the best decisions I can as a totally flawed human being. Businesses have natural expansion and contraction cycles. New products are built and iterated on with a hope of finding product market fit, but most of these endeavours fail. I am paid to make the hard decisions. Sometimes that hard decision is to scale down the workforce. Yes, it sucks, but a large majority of those impacted end up financially ahead (rehired quickly and one, two or three months ahead because of the redundancy payout). Penalising a CEO for making hard decisions is a great recipe for stagnant companies. What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed?
    - happymellon 2y ago
      > Penalising a CEO for making hard decisions is a great recipe for stagnant companies. What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed? The situation they were both in, if the CEO had just cut staff and taken a windfall bonus then there wouldn't be the cash to pivot. Because thats what we are talking about here. It would have taken a couple of years to pivot successfully, so they should be compensated a couple of years after the layoffs not firing workers and taking their salaries as a bonus before quiting.
    - triceratops 2y ago
      > What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed? The CEO would have made less money for a few years while the turnaround was in progress. If it succeeded, the stock would take off and they'd profit handsomely. I don't see the problem with these incentives. Let's remember again, the proposal from the article: "freeze CEO pay and stock options and prevent stock sales for a year following any layoffs that exceed 5% of the workforce" What you don't want is a CEO dumping the stock when it goes up after the layoff. That's a conflict of interest. And if the company needs to do layoffs to conserve cash, the CEO and rest of the leadership taking pay cuts will also help the shareholders.
credit_guy 2y ago
Do you know that there were times when there were elevator operators? Based on your line of argument, if a hotel really could not afford to keep the elevator operators employed, the CEO should have taken a pay cut.
- triceratops 2y ago
  If 5% of a hotel's employees were somehow elevator operators then maybe the CEO should be fired, not just made to take a pay cut. That's poor management. And like why not? Maybe you'd see the CEO try harder to find these people alternative roles, instead of immediately discarding them the minute guests got comfortable with pushing buttons themselves. An elevator operator could retrain as a bellman, janitor or housekeeper, something in the kitchen, maybe the front desk.
  - eschaton 2y ago
    Hell, they’d probably be easier and less expensive to reassign than to hire anew for other roles because they’re already on the payroll, aware of policies, have their access provisioned, vetted for trustworthiness, etc.
    - credit_guy 2y ago
      And you think those CEO's are not aware of that? Maybe we should invite them to read hacker news. Sometimes you can reshuffle people inside a company and find jobs where they are more productive. But sometimes you can't. The OP did not care about these distinctions. If a CEO fires people, he should get a pay cut.
      - eschaton 2y ago
        The behavior of many CEOs engaging in mass layoffs certainly doesn’t demonstrate that they’re aware of it. That’s why requiring massive CEO pay cuts when they engage in mass layoffs would be a good thing. It would help remind them that layoffs are a failure and the buck stops with them.

nickff 2y ago

You’re assuming the layoffs are a reaction to poor strategy and/or decrease revenue potential, but that’s not always true. It could be that the market is shifting away from that company for some external reason, or that those employees were truly redundant.

triceratops 2y ago
> It could be that the market is shifting away from that company for some external reason The CEO is the main strategy and vision guy at the company. They're supposed to be able to foresee market shifts. If they don't do that, why do they deserve to be paid so well? Because they negotiated so hard with their golf buddies on the board? It's a one-year pay cut, not the end of the world. > or that those employees were truly redundant. Maybe. In that case, the long term increase in stock price should make up for any short-term pay cuts, right? The CEO will benefit eventually too.
- aidanlister 2y ago
  I’m a CEO, I was not given a magic ring to predict the future when I took the role, I make the best decisions I can as a totally flawed human being. Businesses have natural expansion and contraction cycles. New products are built and iterated on with a hope of finding product market fit, but most of these endeavours fail. I am paid to make the hard decisions. Sometimes that hard decision is to scale down the workforce. Yes, it sucks, but a large majority of those impacted end up financially ahead (rehired quickly and one, two or three months ahead because of the redundancy payout). Penalising a CEO for making hard decisions is a great recipe for stagnant companies. What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed?
  - happymellon 2y ago
    > Penalising a CEO for making hard decisions is a great recipe for stagnant companies. What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed? The situation they were both in, if the CEO had just cut staff and taken a windfall bonus then there wouldn't be the cash to pivot. Because thats what we are talking about here. It would have taken a couple of years to pivot successfully, so they should be compensated a couple of years after the layoffs not firing workers and taking their salaries as a bonus before quiting.
  - triceratops 2y ago
    > What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed? The CEO would have made less money for a few years while the turnaround was in progress. If it succeeded, the stock would take off and they'd profit handsomely. I don't see the problem with these incentives. Let's remember again, the proposal from the article: "freeze CEO pay and stock options and prevent stock sales for a year following any layoffs that exceed 5% of the workforce" What you don't want is a CEO dumping the stock when it goes up after the layoff. That's a conflict of interest. And if the company needs to do layoffs to conserve cash, the CEO and rest of the leadership taking pay cuts will also help the shareholders.

credit_guy 2y ago

Do you know that there were times when there were elevator operators? Based on your line of argument, if a hotel really could not afford to keep the elevator operators employed, the CEO should have taken a pay cut.

triceratops 2y ago
If 5% of a hotel's employees were somehow elevator operators then maybe the CEO should be fired, not just made to take a pay cut. That's poor management. And like why not? Maybe you'd see the CEO try harder to find these people alternative roles, instead of immediately discarding them the minute guests got comfortable with pushing buttons themselves. An elevator operator could retrain as a bellman, janitor or housekeeper, something in the kitchen, maybe the front desk.
- eschaton 2y ago
  Hell, they’d probably be easier and less expensive to reassign than to hire anew for other roles because they’re already on the payroll, aware of policies, have their access provisioned, vetted for trustworthiness, etc.
  - credit_guy 2y ago
    And you think those CEO's are not aware of that? Maybe we should invite them to read hacker news. Sometimes you can reshuffle people inside a company and find jobs where they are more productive. But sometimes you can't. The OP did not care about these distinctions. If a CEO fires people, he should get a pay cut.
    - eschaton 2y ago
      The behavior of many CEOs engaging in mass layoffs certainly doesn’t demonstrate that they’re aware of it. That’s why requiring massive CEO pay cuts when they engage in mass layoffs would be a good thing. It would help remind them that layoffs are a failure and the buck stops with them.