4 ms·

The question is often framed as "fairness" but the more interesting question, are the high salaries worth it? One person they cite as a high salary is the Starb

by bko 1y ago

The question is often framed as "fairness" but the more interesting question, are the high salaries worth it? One person they cite as a high salary is the Starbucks CEO. > The report listed Starbucks CEO Brian Niccol as making 6,666 times more than the company’s typical worker, the largest pay gap in the S&P 500. (Niccol took over the company’s helm last September. The AFL-CIO annualized his compensation, listing it as nearly $98 million, compared to the typical Starbucks worker’s pay of less than $15,000.) But what happened after he was announced? The stock jumped nearly 25%, resulting in an increase market cap of 27.2 billion [0]. So the $98m per year compensation is a great bargain for Starbucks and all their shareholders. This at least suggests that CEOs are very important (or investors are stupid?). But the stock price today is about the same level post announcement, so the value of his leadership mostly matched expectations for now. It would be great if the article had some of this context and nuance rather than a press release from the AFL-CIO. https://www.forbes.com/sites/petercohan/2024/08/13/why-starbucks-stock-could-more-than-double-under-new-ceo/ https://www.forbes.com/sites/petercohan/2024/08/13/why-starb...

dvt 1y ago
> So the $98m per year compensation is a great bargain for Starbucks and all their shareholders. And their employees, too, actually, since they have something called the Bean Stock[1] program. But citing this wouldn't fit the article's narrative. Comparing salaries of a regular employee and a CEO (especially one of a public company) is like comparing apples to oranges; it has nothing to do with fairness. The two are fundamentally different in effort, incentive, and risk:reward structure. [1] https://www.starbucksbenefits.com/en-us/home/stock-savings/bean-stock/ https://www.starbucksbenefits.com/en-us/home/stock-savings/b...
- buerkle 1y ago
  Sorry but the risk:reward narrative is tiring. Many of these CEOs walk away with millions whether they succeed or fail, there's little to no risk for them. In fact, even they fail in cases they end finding another well paying executive position. Meanwhile, many of their employees are living paycheck to paycheck.
  - wat10000 1y ago
    Even if he got fired and had his entire pay package clawed back somehow, Brian Niccol would still be fabulously wealthy. His risk is basically zero. There's something about the human mind that makes it feel worse for a rich person to lose insignificant-to-them millions than for a poor person to lose a thousand bucks.
    - ryandrake 1y ago
      People have trouble with orders of magnitude. A billionaire could lose 99% of his wealth, and still have $10M--set for life, never having to work again.
  - dvt 1y ago
    I don't necessarily mean financial risk (though tbh, even the golden parachutes you cite are often a drop in the bucket compared to the market cap of these companies), but there's a lot of legal risk involved: think testifying to Congress, embroilments with the FTC/FCC, etc., dealing with a board of directors, navigating potential hostile takeovers or activist investors, etc. My point is that it's just a different ball game and being a CEO of a public company simply isn't the same thing as being an accountant that works 9-5. I personally have significantly more of a problem with Congress having no term limits and being able to trade on the very market they're regulating.
    - gitremote 1y ago
      Non-CEO employees like lawyers and corporate accountants have legal risks too and could be subpoenaed.
    - mattmanser 1y ago
      Where are these CEO convictions then? If there's this "risk"? And please don't cite deliberate fraudsters like Holmes or SBF. And what conviction length do those tiny few who get convicted of aomething actually get?
      - 1y ago
- danlitt 1y ago
  > citing this wouldn't fit the article's narrative Did you do any research at all into whether this makes a material difference to starbucks employees?
  - dvt 1y ago
    What do you mean by "material" difference? The stock literally went up 25%+, so of course every SBUX employee got to share in that rise. Or are you asking if it minted any new millionaires? Maybe a few, who knows.
    - danlitt 1y ago
      It is not hard to understand. Does it prevent them from having to use government welfare in order to survive on their meager salary?
- wasabi991011 1y ago
  Very quick and shoddy estimates: $100m per year / $400k employees = $250 per employee per year. Meanwhile, $ of stock per year is really hard to estimate, but one person online said ~$500 per year for a barista. A 25% increase in price due to a new CEO is then +$125.
danlitt 1y ago
Why is that the more interesting question? It seems obvious that the salaries are likely to be worth it. Our entire society is optimized to do nothing other than increasing shareholder value. It seems surely more interesting to ask why the rest of us bother to go along with it.
- renewiltord 1y ago
  Because we are all shareholders and this has worked much better for us than all the shit other people have tried elsewhere.
  - TFYS 1y ago
    The bigger these pay gaps get, the more expensive for the average person those shares get. We are not all shareholders in any meaningful sense, and over time less and less of us will be. This works better than other things we've tried, but we've only tried about three things. There's plenty of ideas that we should look into.
    - BobaFloutist 1y ago
      You...you know you don't have to buy whole shares, right? VOO has a minimum investment of $1.00. While I won't argue that not a single person in the country is incapable of investing $1.00, the % of the population that couldn't stick a few bucks every now and again in a free account is probably single digit.
      - TFYS 1y ago
        Sure, but owning one trillionth of a share or even a few whole shares doesn't help you in any way. You're a shareholder in name only.
  - BrawnyBadger53 1y ago
    The current form of the system we practice is massively different from the one that put us so far ahead. We tried many things trying to push it to be more successful. This gap change is a result of some of that. We now need to evaluate whether that change was actually better. This gap may be short term worth it but with trends like quiet quitting, we probably should think about whether these changes will slowly cause larger long term losses in productivity at the lower ends of these hierarchies.
cycomanic 1y ago
Interestingly, I don't know why the investors thought this is such a great deal. Looking at the financials, he certainly did not have a significant impact on growth (it's been stagnating for the last 2 years it seems). So maybe the conclusion is, investors make decisions based on vibe much more than facts?
- xnx 1y ago
  It could also be that the previous CEO was so bad that investors expected growth to be worse or negative.
j_w 1y ago
Your data point for the stock uptick is so cherry picked. Aug 12th, 24: Stock price is 77.03 Aug 13th, 24: New CEO announced, stock price is 95.9 Sept 9th, 24: New CEO starts, stock price is 92.21 (Peak) Mar 3rd, 25: 117.46 (est) (Trough) Apr 30th, 35: 75.5 (est) Jul 23rd, 25: 95.92 In no way do I look at the starbucks stock price history and think "wow the new CEO really turned the ship around!" There was a huge spike when he was ANNOUNCED and no growth since. Vibes economy. Edit: Data from NASDAQ https://www.nasdaq.com/market-activity/stocks/sbux/advanced-charting?timeframe=1y https://www.nasdaq.com/market-activity/stocks/sbux/advanced-...
- bko 1y ago
  How is it cherry picked? The day the announcement was made the stock jumped 25%. That's the market digesting new information. Or do you believe that jump was just coincidence. And that level persisted so the CEO roughly met expectations or the market is still irrational. But that's a pretty long time to be at this elevated price
  - j_w 1y ago
    Because you still seemingly haven't actually looked at the chart, just some "sweet" spots. Prior to the new CEO announcement there was a 3 month dip in the stock price. Prior to that? The price was averaging higher than the current price. The gains are tied to the ANNOUNCEMENT of a new CEO, not during his tenure.

by bko 1y ago

dvt 1y ago

> So the $98m per year compensation is a great bargain for Starbucks and all their shareholders. And their employees, too, actually, since they have something called the Bean Stock[1] program. But citing this wouldn't fit the article's narrative. Comparing salaries of a regular employee and a CEO (especially one of a public company) is like comparing apples to oranges; it has nothing to do with fairness. The two are fundamentally different in effort, incentive, and risk:reward structure. [1] https://www.starbucksbenefits.com/en-us/home/stock-savings/bean-stock/ https://www.starbucksbenefits.com/en-us/home/stock-savings/b...

buerkle 1y ago
Sorry but the risk:reward narrative is tiring. Many of these CEOs walk away with millions whether they succeed or fail, there's little to no risk for them. In fact, even they fail in cases they end finding another well paying executive position. Meanwhile, many of their employees are living paycheck to paycheck.
- wat10000 1y ago
  Even if he got fired and had his entire pay package clawed back somehow, Brian Niccol would still be fabulously wealthy. His risk is basically zero. There's something about the human mind that makes it feel worse for a rich person to lose insignificant-to-them millions than for a poor person to lose a thousand bucks.
  - ryandrake 1y ago
    People have trouble with orders of magnitude. A billionaire could lose 99% of his wealth, and still have $10M--set for life, never having to work again.
- dvt 1y ago
  I don't necessarily mean financial risk (though tbh, even the golden parachutes you cite are often a drop in the bucket compared to the market cap of these companies), but there's a lot of legal risk involved: think testifying to Congress, embroilments with the FTC/FCC, etc., dealing with a board of directors, navigating potential hostile takeovers or activist investors, etc. My point is that it's just a different ball game and being a CEO of a public company simply isn't the same thing as being an accountant that works 9-5. I personally have significantly more of a problem with Congress having no term limits and being able to trade on the very market they're regulating.
  - gitremote 1y ago
    Non-CEO employees like lawyers and corporate accountants have legal risks too and could be subpoenaed.
  - mattmanser 1y ago
    Where are these CEO convictions then? If there's this "risk"? And please don't cite deliberate fraudsters like Holmes or SBF. And what conviction length do those tiny few who get convicted of aomething actually get?
    - 1y ago
danlitt 1y ago
> citing this wouldn't fit the article's narrative Did you do any research at all into whether this makes a material difference to starbucks employees?
- dvt 1y ago
  What do you mean by "material" difference? The stock literally went up 25%+, so of course every SBUX employee got to share in that rise. Or are you asking if it minted any new millionaires? Maybe a few, who knows.
  - danlitt 1y ago
    It is not hard to understand. Does it prevent them from having to use government welfare in order to survive on their meager salary?
wasabi991011 1y ago
Very quick and shoddy estimates: $100m per year / $400k employees = $250 per employee per year. Meanwhile, $ of stock per year is really hard to estimate, but one person online said ~$500 per year for a barista. A 25% increase in price due to a new CEO is then +$125.

danlitt 1y ago

Why is that the more interesting question? It seems obvious that the salaries are likely to be worth it. Our entire society is optimized to do nothing other than increasing shareholder value. It seems surely more interesting to ask why the rest of us bother to go along with it.

renewiltord 1y ago
Because we are all shareholders and this has worked much better for us than all the shit other people have tried elsewhere.
- TFYS 1y ago
  The bigger these pay gaps get, the more expensive for the average person those shares get. We are not all shareholders in any meaningful sense, and over time less and less of us will be. This works better than other things we've tried, but we've only tried about three things. There's plenty of ideas that we should look into.
  - BobaFloutist 1y ago
    You...you know you don't have to buy whole shares, right? VOO has a minimum investment of $1.00. While I won't argue that not a single person in the country is incapable of investing $1.00, the % of the population that couldn't stick a few bucks every now and again in a free account is probably single digit.
    - TFYS 1y ago
      Sure, but owning one trillionth of a share or even a few whole shares doesn't help you in any way. You're a shareholder in name only.
- BrawnyBadger53 1y ago
  The current form of the system we practice is massively different from the one that put us so far ahead. We tried many things trying to push it to be more successful. This gap change is a result of some of that. We now need to evaluate whether that change was actually better. This gap may be short term worth it but with trends like quiet quitting, we probably should think about whether these changes will slowly cause larger long term losses in productivity at the lower ends of these hierarchies.

cycomanic 1y ago

Interestingly, I don't know why the investors thought this is such a great deal. Looking at the financials, he certainly did not have a significant impact on growth (it's been stagnating for the last 2 years it seems). So maybe the conclusion is, investors make decisions based on vibe much more than facts?

xnx 1y ago
It could also be that the previous CEO was so bad that investors expected growth to be worse or negative.

j_w 1y ago

Your data point for the stock uptick is so cherry picked. Aug 12th, 24: Stock price is 77.03 Aug 13th, 24: New CEO announced, stock price is 95.9 Sept 9th, 24: New CEO starts, stock price is 92.21 (Peak) Mar 3rd, 25: 117.46 (est) (Trough) Apr 30th, 35: 75.5 (est) Jul 23rd, 25: 95.92 In no way do I look at the starbucks stock price history and think "wow the new CEO really turned the ship around!" There was a huge spike when he was ANNOUNCED and no growth since. Vibes economy. Edit: Data from NASDAQ https://www.nasdaq.com/market-activity/stocks/sbux/advanced-charting?timeframe=1y https://www.nasdaq.com/market-activity/stocks/sbux/advanced-...

bko 1y ago
How is it cherry picked? The day the announcement was made the stock jumped 25%. That's the market digesting new information. Or do you believe that jump was just coincidence. And that level persisted so the CEO roughly met expectations or the market is still irrational. But that's a pretty long time to be at this elevated price
- j_w 1y ago
  Because you still seemingly haven't actually looked at the chart, just some "sweet" spots. Prior to the new CEO announcement there was a 3 month dip in the stock price. Prior to that? The price was averaging higher than the current price. The gains are tied to the ANNOUNCEMENT of a new CEO, not during his tenure.