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>And they wouldn't be building the business by paying more for engineers Sure, they would be but like any business with a finite amount of money, they apparent

by jasode 12y ago

>And they wouldn't be building the business by paying more for engineers Sure, they would be but like any business with a finite amount of money, they apparently feel they get more bang-for-the-buck by paying $124m to executives rather than divide that $124m as a +$3100 pay raise to all non-management employees. They also feel that paying $124m to key people is smarter than reducing Net Income by billions to afford paying $300k/year salaries to all non-management programmers. Google may be wrong with the above analysis but based on their actions, that's what they think. Like many other companies, it is implicit in their thinking that there is a law of diminishing returns if they pay much more in programmer salaries than they're already paying now. (Therefore, they think the bigger levers of growth is paying the management team to execute their business goals.) Since we don't have multiple alternate universes to experiment which scenario would be the best, we can only approximate which profits-vs-compensation structure would be the most effective by looking at different existing companies. Gravity Payments has a lot of recent press for setting $70k minimum wage. If they can compete and grow to be on par with, or beat other companies like PayPal, Apple Pay, Stripe, etc AND their unconventional salary structure is credited with making it happen, you'd have some evidence that Google Inc's compensation system is wrong. On the other side of the coin, when some observers see that founder David Price is giving up money to pay employees more, they would assume he does not have new business ideas that could use that money. It may be unfair to view it that way but it's a market signal nevertheless especially since another CEO like Jeff Bezos is reinvesting virtually all profits back into Amazon. The market thinks "Jeff has new ideas for putting capital to work; David does not."

rayiner 12y ago
Earlier in the thread you said that if Google paid out more money in employee compensation, it'd have less money to invest in the business. But then you tried to categorize executive compensation as investing in the business. My point is that both should be in the same bucket,[1] instead of thinking of employee compensation as an expense while executive compensation is an investment. [1] Though IMHO both belong in the "expenses" bucket, not the "investment" bucket.
- jasode 12y ago
  >But then you tried to categorize executive compensation as investing in the business. No, what happened was 2 separate conversations took place because one topic morphed into another. My original reply to pjc50 was over the formal accounting label of profits-vs-expense. His scenario of paying out the Net Income while still retaining profits is mathematically impossible -- unless you do Enron type of accounting. (pjc50 later clarified he didn't mean all of the $14B would be paid to employees.) On the other hand, I interpreted pjc50 and your usage of "building the business" as a different topic that transcends accounting labels to talk about what's good/bad/effective/moral/whatever for the business regardless of what bucket it's in. In other words, I took a charitable reading and basically agreed that expenses for employees can also "build the business" -- I simply put it in a larger framework of business "priorities" because they have finite resources.

by jasode 12y ago

rayiner 12y ago

Earlier in the thread you said that if Google paid out more money in employee compensation, it'd have less money to invest in the business. But then you tried to categorize executive compensation as investing in the business. My point is that both should be in the same bucket,[1] instead of thinking of employee compensation as an expense while executive compensation is an investment. [1] Though IMHO both belong in the "expenses" bucket, not the "investment" bucket.

jasode 12y ago
>But then you tried to categorize executive compensation as investing in the business. No, what happened was 2 separate conversations took place because one topic morphed into another. My original reply to pjc50 was over the formal accounting label of profits-vs-expense. His scenario of paying out the Net Income while still retaining profits is mathematically impossible -- unless you do Enron type of accounting. (pjc50 later clarified he didn't mean all of the $14B would be paid to employees.) On the other hand, I interpreted pjc50 and your usage of "building the business" as a different topic that transcends accounting labels to talk about what's good/bad/effective/moral/whatever for the business regardless of what bucket it's in. In other words, I took a charitable reading and basically agreed that expenses for employees can also "build the business" -- I simply put it in a larger framework of business "priorities" because they have finite resources.