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This is great, but this statement from the author is a pretty terrible assumption: "It's nice to see an executive giving away a huge chunk of money to the empl

This is great, but this statement from the author is a pretty terrible assumption: "It's nice to see an executive giving away a huge chunk of money to the employees that had as much to do with Lenovo's successful year as any executive within the company"

swang720 14y ago
I think that's the impression the CEO is trying to give. I think it's a smart move that will improve morale and confidence in the company.
rayiner 14y ago
Why? Here in the US we have a cultural flaw where we irrationally conflate equilibria in the supply/demand of labor with distribution of credit for a company's success. The CEO gets paid a lot more because there is a much smaller supply of people who have the pedigree/qualifications to be CEO than to be a line worker. There is no chain of logic that can take you from there to the conclusion that he's more important to the success of the company than those 10,000 line workers.
- eliasmacpherson 14y ago
  I would take 10,000 Nokia staff over Elop any day of the week.
  - twoodfin 14y ago
    Our numbers are getting out of hand here: Elop doesn't make close to 10,000x a typical engineer at Nokia.
    - eliasmacpherson 14y ago
      It's a bonus, not salary, the fact that it is > 10,000x a typical bonus speaks volumes.
- brazzy 14y ago
  I'd say it's exactly the other way round: the CEO definitely has to make decisions that impact the company far more than what 10,000 line workers do, for better or for worse. The open question is whether the commonly used pedigree/qualifications that decide who gets to be CEO actually enable people to make substantially better decisions.
  - rayiner 14y ago
    Without the line workers, there is no product. Without a CEO there is no product. They're both but-for causes (in the legal sense), and in that sense equally indispensable. What you need is a sensitivity analysis, of profitability of the company versus changes in CEO versus line worker performance. I'd imagine you'd find that a 20% efficiency jump in the line workers would have a much bigger change on the bottom line than a 20% better CEO.
    - delinka 14y ago
      CEO takes two weeks off. What happens to the company? 10,000 "low-level" employees take two weeks off (all at once.) What happens to the company? Companies operate without CEOs while boards seek candidates. Companies can't produce product while it seeks 10,000 replacement workers. As long as we have the chief executive on one hand and the workers on the other, that is.
      - deleted 14y ago
        [deleted]
      - biot 14y ago
        If you permanently eliminate the position for one line worker, there is essentially zero impact to the company; it continues along with only a 0.01% drop of efficiency. If you permanently eliminate the CEO position, there is multiple orders of magnitude greater impact to the company. That's why the compensation for each role is different.
        delinka 14y ago
- zobzu 14y ago
  I think that's incorrect. It's not like if being a CEO was harder that many technical jobs. In fact, it's usually a whole lot easier. It is however about the amount, you're right on that. There is 1 CEO and there are 10 000 employees. It's much easier to pay 1 CEO "a lot" than 10 000 employes "a lot". (and to become CEO you have to look good/smart/etc but you don't have to be or work hard. You can however stab people in the back in the name of capitalism all day long. I don't know many "big" CEOs who haven't done that.) The only thing that really comes with a CEO title is the responsibility for other people's jobs. Large bonuses in that case make sense, but in general, they're already paid so well, that it's peanuts. Being peanuts, they can afford the luxury of redistributing to employees. Don't get me wrong, I admire the gesture. But if the CEO wasn't paid so much to begin with, and bonuses weren't out of proportion, he wouldn't have done that.
  - rayiner 14y ago
    I'm taking for granted the question of whether there really is a supply/demand imbalance justifying high CEO pay. I didn't want to cloud my post with that aspect. You're right though, you can argue that CEO salaries are not the product of an efficient supply/demand equilibrium, but rather other things.
  - harryh 14y ago
    Being a CEO is way way way way way way way harder than individual contributor technical jobs. The breadth of skill and degree of dedication required to do the job well is just insane.
    - _delirium 14y ago
      That may be, but there's actually little evidence that compensation relates to it. There are all sorts of studies attempting to link higher CEO pay with better performance, and the data is thin. There's also some evidence that firms with less diffuse ownership structures (i.e. owners more informed and in control) pay CEOs less, which at least weakly hints that high CEO pay isn't rationally chosen by owners who are paying attention. Now, even "less well paid" CEOs still get paid a lot, so that's not an argument for paying CEOs $100k. But it may be an argument to pay CEOs towards the lower end of the CEO payscale, rather than towards the higher end.
- deleted 14y ago
  [deleted]
- jasomill 14y ago
  I agree. Often overlooked is that not all qualifications directly relate to "running the company": relationships with people who hold high-level positions in other companies, governments, academic institutions, and other organizations also play a role. Executive and director biography pages for large public companies always make entertaining reading. To take just one random, high-profile example: David Ebersman, Facebook's CFO, while by all accounts a knowledgable and hard-working guy, was also the protégé of one Arthur Levinson, chairman of the board of Apple. This is the kind of thing that may be totally unimportant to Facebook's day-to-day operations, but that could also be very useful at some unknown point in the future (when negotiating to integrate Facebook products into as-yet-unreleased versions of Apple's mobile OS, say). Investors also pay attention to "who's who" in the executive suite, which is important to many companies.
ThePherocity 14y ago
Hardly. A captain steers the ship, but it's the rest of the crew that sails the boat. You can steer to your hearts content, but without the right team and culture, you aren't going anywhere.
- brazzy 14y ago
  But with the right team and culture and a drunk dimwit at the helm, you'll still going to crash.
  - antihero 14y ago
    With the right bloke at the time and a team of complete drunken dimwits, well you might just be in the navy.
  - zobzu 14y ago
    Generally you get a mutiny - or everyone leaves the boat. Hi Nokia :)

swang720 14y ago

I think that's the impression the CEO is trying to give. I think it's a smart move that will improve morale and confidence in the company.

rayiner 14y ago

Why? Here in the US we have a cultural flaw where we irrationally conflate equilibria in the supply/demand of labor with distribution of credit for a company's success. The CEO gets paid a lot more because there is a much smaller supply of people who have the pedigree/qualifications to be CEO than to be a line worker. There is no chain of logic that can take you from there to the conclusion that he's more important to the success of the company than those 10,000 line workers.

eliasmacpherson 14y ago
I would take 10,000 Nokia staff over Elop any day of the week.
- twoodfin 14y ago
  Our numbers are getting out of hand here: Elop doesn't make close to 10,000x a typical engineer at Nokia.
  - eliasmacpherson 14y ago
    It's a bonus, not salary, the fact that it is > 10,000x a typical bonus speaks volumes.
brazzy 14y ago
I'd say it's exactly the other way round: the CEO definitely has to make decisions that impact the company far more than what 10,000 line workers do, for better or for worse. The open question is whether the commonly used pedigree/qualifications that decide who gets to be CEO actually enable people to make substantially better decisions.
- rayiner 14y ago
  Without the line workers, there is no product. Without a CEO there is no product. They're both but-for causes (in the legal sense), and in that sense equally indispensable. What you need is a sensitivity analysis, of profitability of the company versus changes in CEO versus line worker performance. I'd imagine you'd find that a 20% efficiency jump in the line workers would have a much bigger change on the bottom line than a 20% better CEO.
  - delinka 14y ago
    CEO takes two weeks off. What happens to the company? 10,000 "low-level" employees take two weeks off (all at once.) What happens to the company? Companies operate without CEOs while boards seek candidates. Companies can't produce product while it seeks 10,000 replacement workers. As long as we have the chief executive on one hand and the workers on the other, that is.
    - deleted 14y ago
      [deleted]
    - biot 14y ago
      If you permanently eliminate the position for one line worker, there is essentially zero impact to the company; it continues along with only a 0.01% drop of efficiency. If you permanently eliminate the CEO position, there is multiple orders of magnitude greater impact to the company. That's why the compensation for each role is different.
      - delinka 14y ago
zobzu 14y ago
I think that's incorrect. It's not like if being a CEO was harder that many technical jobs. In fact, it's usually a whole lot easier. It is however about the amount, you're right on that. There is 1 CEO and there are 10 000 employees. It's much easier to pay 1 CEO "a lot" than 10 000 employes "a lot". (and to become CEO you have to look good/smart/etc but you don't have to be or work hard. You can however stab people in the back in the name of capitalism all day long. I don't know many "big" CEOs who haven't done that.) The only thing that really comes with a CEO title is the responsibility for other people's jobs. Large bonuses in that case make sense, but in general, they're already paid so well, that it's peanuts. Being peanuts, they can afford the luxury of redistributing to employees. Don't get me wrong, I admire the gesture. But if the CEO wasn't paid so much to begin with, and bonuses weren't out of proportion, he wouldn't have done that.
- rayiner 14y ago
  I'm taking for granted the question of whether there really is a supply/demand imbalance justifying high CEO pay. I didn't want to cloud my post with that aspect. You're right though, you can argue that CEO salaries are not the product of an efficient supply/demand equilibrium, but rather other things.
- harryh 14y ago
  Being a CEO is way way way way way way way harder than individual contributor technical jobs. The breadth of skill and degree of dedication required to do the job well is just insane.
  - _delirium 14y ago
    That may be, but there's actually little evidence that compensation relates to it. There are all sorts of studies attempting to link higher CEO pay with better performance, and the data is thin. There's also some evidence that firms with less diffuse ownership structures (i.e. owners more informed and in control) pay CEOs less, which at least weakly hints that high CEO pay isn't rationally chosen by owners who are paying attention. Now, even "less well paid" CEOs still get paid a lot, so that's not an argument for paying CEOs $100k. But it may be an argument to pay CEOs towards the lower end of the CEO payscale, rather than towards the higher end.
deleted 14y ago
[deleted]
jasomill 14y ago
I agree. Often overlooked is that not all qualifications directly relate to "running the company": relationships with people who hold high-level positions in other companies, governments, academic institutions, and other organizations also play a role. Executive and director biography pages for large public companies always make entertaining reading. To take just one random, high-profile example: David Ebersman, Facebook's CFO, while by all accounts a knowledgable and hard-working guy, was also the protégé of one Arthur Levinson, chairman of the board of Apple. This is the kind of thing that may be totally unimportant to Facebook's day-to-day operations, but that could also be very useful at some unknown point in the future (when negotiating to integrate Facebook products into as-yet-unreleased versions of Apple's mobile OS, say). Investors also pay attention to "who's who" in the executive suite, which is important to many companies.

ThePherocity 14y ago

Hardly. A captain steers the ship, but it's the rest of the crew that sails the boat. You can steer to your hearts content, but without the right team and culture, you aren't going anywhere.

brazzy 14y ago
But with the right team and culture and a drunk dimwit at the helm, you'll still going to crash.
- antihero 14y ago
  With the right bloke at the time and a team of complete drunken dimwits, well you might just be in the navy.
- zobzu 14y ago
  Generally you get a mutiny - or everyone leaves the boat. Hi Nokia :)