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Comment by mpdehaan2 | Hacker News Reader

Excellent points in this article - another factor is they are often paid outrageous base salaries (plus options) for the success of a company, when the success of that company can often be in spite of the CEO, coming from within, and embodied equally by all of the collective employees.

Executive comp is a major racket, enforced by the standard that this is "what the market average is". Which is set by executives overpaying themselves.

Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you. The answer is usually a definite no. I'd really like to see more fair pay in this area and a culture that treats contributions of all employees more equally.

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> Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you.

That's distorting what shareholders look for in a CEO.

Let's say you have two CEO candidates, one you can hire for $100,000 (A) and another for $10 million (B).

Share holders would be stupid to ask themselves if B can make 100x the profits of A. They would be asking themselves if B can make at least $9,900,000 more revenue than A. If it's a billion dollar company doing ~$100 million in sales per quarter, that's not that unreasonable to expect from a CEO. It's expecting the CEO to raise revenue by ~2.5%, not 10,000%.

And the obvious developer question is:

If developer A can increase the value of your product by 1 million dollars, but developer B can only increase the value of your product by 100k.. why isn't developer A worth 900k (or at least 500k) more than developer B?

The big challenge is measurability. Stock price going up is easy. Profits going up is easy. An app being 1 million dollars better? No idea what that even means.

Yep, and then the follow up is just as difficult...is this dev not delivering value because she's not a good dev, or because those above her aren't giving her opportunities in high value projects?

"Am I a bad CEO or does my company just stink"

Who is the one person in charge of making the company not stink?

It's true that they could theoretically fire everyone, but practically speaking? They inherit the employees, culture, customers, vendors, and physical plant. It's (remotely) possible that Marissa Meyer is the world's best CEO, but she chose to play against a stacked deck when she went to Yahoo.

Every new CEO in a big company seems to decimate the employees anyway. Why none fires the right 10%?

Yes, you have a point, but getting on a failing company and failing does not reflect as bad as succeeding on such a company would look good. The only negative contribution Yahoo gave to Marissa Meyer CV was that badly managed data leak that is making every news.

In some cases, but in many cases its easy to see who is contributing above whom.

The problem really is at the level of a programmer politics is at play, given a whole lot of more number of people fight for fewer resources.

Assuming you can even measure this. How do you arbitrarily assign value produced by a dev vs produced by marketing vs produced by company synergies (could the dev really create 1 million in value without all those other people?).

I've long felt that the best devs should be building tools for other devs. The lower in the product pipeline the better, because that's where they can affect the most people, but it seems impossible to measure when you're talking about hard numbers.

E.g. in a large enough organization, if a good dev can make all your other devs even 1% more efficient, the value they just created will blow that $1 million figure out of the water. That dev producing "$1 million dollars in value" for your product owes much of that value to the devs that are creating tools for them to use, among other things.

The same line of thought can be put to CEOs. How do we know a CEO was responsible for a big bump in stock prices? Maybe the marketing team hit gold this year, the developers/engineers put out something truly game changing, or the entire market is just on an upswing and the company is doing better in spite of itself.

Sure, that's what share holders do. It's however not EQUITABLE.

To slowly change this over time, we have to work at it, by ensuring fair compensation at companies we start and for our employees.

This can change - it's not a statement of the present - the status quo is pretty bad - but a desire for the future.

To get there, we have to start expressing value for where creation comes from.

But the problem is from point of view of compensation fairness that was the CEO who got paid 10M 2.5% better than the less paid CEO or was he just lucky (great personnel, good market, etc). A CEO cannot function without a company.

Yes, a bad CEO can wreck a company really fast. I would claim there are no superhuman CEO:s who can outperform a market (there are CEO:s who have disrupted markets, sure but that is an exception and not a rule) by themselves - but, there are CEO:s who can wreck companies with a single misplaced stroke.

Are they paid not to screw up? The main problem of high-comp CEO:s IMO is that this view of a lord over his domain diminishes the value of the other personnel in the company. Teamwork and all that.

If there are really good statistics then yes, a single person can make a huge difference ala moneyball. But does an average Fortune 500 have such statistics?

> Are they paid not to screw up?

Thats an interesting insight; there isn't anything inherently wrong with this. DevOps and security are two critical technical roles that work similarly: if they're doing their job right, the machine continues to run perfectly.

This exactly.

A CEO is an asset/resource just like anything else in the company. It has a cost and a ROI.

Technically, any employee is like that too, except that when the position holds so much scrutiny, the ROI is analysed in greater depth. It may be unfair at a human level but is completely rational from an accounting perspective.

This is part of a larger pattern in capitalist systems: you want to position yourself within the major flows of money. CEOs may be the more obvious positions but other occupations such as software engineers or salespeople are in a similar position of enabling that flow of money.

"Technically, any employee is like that too, except that when the position holds so much scrutiny, the ROI is analysed in greater depth."

The point of the article is this flatly false. Almost all of the "ROI" attributed to executive skill is actually due to luck.

I guess the point is that it is the ROI calculations that don't differentiate between the skill or the market conditions.

Luck is a bad term here, Luck to me seems to imply something that surrounds the person. A force of nature. This is straight up random chance.

> except that when the position holds so much scrutiny, the ROI is analysed in greater depth. It may be unfair at a human level but is completely rational from an accounting perspective

The problem is that the position has an amount of "scrutiny" that is improper from an accounting perspective (...the point of the article...), but comes from the social status of the people holding the role. Of course, it's not actually accounting scrutiny at all that's the difference here (because if it were, even minimal scrutiny would reveal the error), but rather the social position of the people, and thus their access to influence of decisions.

Your argument is nothing but trying to guise an unsupported position about the relative importance of social classes in the terminology of economics, even though your economic arguments are baseless and wrong (in terms of their economic merit). This is part of a wider trend in the US to eliminate class consciousness and the social duty of the upper classes to the lower, and perhaps you're merely repeating those arguments without having really analyzed what they're saying.

Your point about the larger pattern in capitalist systems is correct: capture of market execution is sufficient for market corruption, but can be difficult to prove after the fact. This is the general strategy of the ruling class to control the lower classes in the US.

Let me tell you a story about a business I worked at.

This business had a CEO who was just plainly incompetent. The sort of person who was first to take credit and last to take blame.

We were operating with IT equipment that was a decade old (yet gifted after the equipment was written off in tax terms). As equipment failed, slightly newer IT equipment was put in place of it, also written off, and the reports went up to the parent business that the old gear had failed because production staff ("So how do I send an email again?") had not reported that it was failing because of bad fans and screaming hard drives. Last I heard, they were still operating with Windows 98 and NT 4 workstations in a couple of key roles, and XP on almost all of their other production systems.

The manager in charge of actually getting things done didn't get a pay increase in the decade I was there, and worked up to 70 hours a week (30 for free). All staff had to make up for the lack of investment by working extra hours for free, and refusing to do so was demonstrating a "lack of team spirit." Hours weren't recorded, legally required holiday pay wasn't paid. Reporting any of this to the authorities resulted in extrajudicial punishment (a visit from some friends of the owner).

The only time staff pay went up was when minimum wage went up. Training was non-existent; you were put in a job, they showed you which buttons to push, and if you didn't get it right you were reprimanded. I saw staff work double shifts for months and then get fired because of an inconsequential spelling mistake, and then the next person in the job (but with half the hours) get away with the worse mistakes for years.

Naturally, there was a high staff turnover. The more skilled the staff, the faster they were gone, but that meant the people who couldn't leave (for one reason or another) had to work much harder.

Ultimately, the business still exists because of the unrecognized and unpaid hard work of the staff, and absolutely in spite of the efforts of the incompetent and criminal CEO.

But what is the point of my story? ROI is seldom "analysed in greater depth" because few rich people want to be liable for the actions of their staff. Last I heard, the CEO was promoted, with the appropriate salary increase, to a second tier position in the parent organization because of his managerial skills.

Share holders rarely have any influence. It's the board, and the board is made of elites who are in the same social class as the CEO. Both conspire against the shareholders, in a variation of the public choice special interest problem.

The beatings will continue until dividends are deductible to the company and are taxed the same way capital gains are for the individual.

This is the part the people miss, they all "work" on each others boards. It is a you scratch my back, I'll scratch yours deal.

Rarely any influence? Interesting theory, except, shareholders can, you know, fire and hire the board members at will.

The fact that "activist shareholders" is a term that people have to use suggests that shareholders rarely do that.

Perhaps because, they're largely happy with the terms of there arrangement?

You should probably stop making assumptions as to why people do (or do not) make a choice. Ideological rationalization on your part does not create motivation for someone else.

That's hysterically naive or extremely disingenuous.

Why? Do you consider shareholders to not be smart enough to make their own decisions?

That's no more relevant to the problem at hand than asking if the populace is smart enough to elect good politicians. The public choice problem, costs are diffused, benefits are concentrated, is still there.

Focusing companies on paying dividends via policy choices would alleviate much of the problem.

I think you're severely understating the difficulty of getting a huge group of people to act like that against something seen as the status quo.

Your comment follows essentially the same logic as saying to somebody complaining of Government corruption, "citizens can just start a revolution and remove the Government at will - so if they haven't, they must all be perfectly happy with the Government."

Most dividends are qualified, which are taxed as long-term capital gains are, at least federally.

But they aren't deductible for most companies, which disincentives them from paying them (they'd rather give that money to the C-suite as bonuses, and this is their excuse: tax efficiency.)

Dividends should be deductible against corporate income, which would eliminate this issue.

"should be" - why? They're not an expense relating to producing income. COGS, cost of sales, overhead, etc are all related to producing income and so are deductible.

Dividends to me are an outcome of already earned income.

Yeah, I can see how would think about it that way if you get hung up on the idea of deductions as expenses. What I would prefer is if companies acted more like LLCs/flow-through entities, where all profits or losses flowed through to the owners, in proportion to their ownership stake.

Making distributions (dividends) deductible against the corporate tax burden allows companies to closely approximate this. It would encourage them to return cashflow to investors, which is the point:

Investors (in theory, owners) should participate in the cash flow of the companies they own, rather than bank on the capital gains/share prices leverage casino.

I don't disagree necessarily, but I'm definitely more cautious in criticising someone else's pay when I can't do their job.

I certainly know that a lot of people who know nothing about computers think that I'm overpaid as a software developer. Why should I earn several times their salary when I just sit at a computer all day, whilst they do hard work?

> Why should I earn several times their salary when I just sit at a computer all day, whilst they do hard work?

Yeah, why should you? I mean, you are essentially being paid to surf Hacker News and plunk out a few lines of code every once in a while, while the janitor is working hard all day.

You don’t pay engineers to write code, you pay them to understand subtleties and edges of the problem. The code is incidental. —Ted Dziuba

Which is an argument that applies just as effectively to executive management as it does to engineers.

Actually IT as a category of jobs requires constant knowledge and skill improvements. If you aren't reading HN and/or other tech news sites very regularly you're going to become obsolete very quickly.

If you're doing the same thing in IT for more than a few years chances are you're digging a hole for yourself. Just ask any Silverlight developer.

Yeah, that's the excuse I'm going to use when my boss finally realizes what that site with the orange bar at the top is ;).

I think caution is indeed warranted, but to say one shouldn't "criticize someone's pay when I can't do their job" is - IMHO - misguided. The problem I see is that the CEO is rewarded with the high salary (and exit options) regardless if the CEO does their job well! I can certainly criticize that.

I've misread the tone of a few HN posts lately ... this is sarcasm, right?

In my case, I CAN do their job. They have a lot of support structures to delegate between. You may think you can't do their job, but you could, if you wanted - though getting there is a game of thrones of sorts, and you may not wish to play.

However, they can't do your job. Assuming you are a developer, they are making a living based on your work. Your work has equal value. Well, if you ARE doing hard work. If you are just sitting at a terminal, more ambition might be a good thing :) Cultivate it and you can get there. If you want.

We need not assume all leadership at the top is steering the entire ship, more so than steering parts of things, decisions trickling up as well as down, alongside information.

I think this is a bit naive. You seem like the software engineer type that thinks the company revolves around you, that both middle-managers and upper management are clueless, and you could do anybody elses job if you just put a weekend into studying it.

Getting a MBA, getting experience leading companies from the director level, then VP level, then CEO - that is valuable experience.

Should probably read the posters profile

Again, see profile :)

>>In my case, I CAN do their job.

Your overall point is diminished when you say things like this, because it comes across as arrogant. Without substantiating that, you're just pandering to everyone who holds the same ideology on CEO pay.

The way you describe it, technical jobs are the hardest in the world, and everything else is comparatively easy. You make it sound as though there is only one truly difficult discipline, which happens to be yours.

Furthermore, you're lumping the job duties of all CEOs together as though they all share a homogenous skill set you could pick up.

I'm unconvinced by an ethos that boils down to, "My work is hard because it's programming, their work is not because it's soft skills."

Missing lots of context.

(A) See profile. These are a lot of skills I HAVE picked up (B) I'm pretty non-technical these days. (C) when I'm suggesting hard work is hard work, I include everyone putting in hard effort - not just developers, but I do lean heavily in endorsing those who build the product.

I'm not saying I can run Goldman Sachs. I can run a few software companies a lot better than they are being run.

What I'm saying here is that CEOs are mortal. The more you know the more you know this. If you're just starting out you may not realize this, but as you start to experience various executives and know the decisions they make, and what the people under them do, with the experience over time - you just see the value that people should be valued more equally and the system should be fixed. To do this, we need the support of everyone in at least knowing the system is broken, not the defense of the broken system.

I am not a programmer these days. Hard work is hard work, and is mostly measured by the stress it inflicts on you. With practice, things get easier. But all people have value.

I think, though, Ycombinator is premised on the idea technical people can learn a CEO's job much easier than vice versa. I'm pretty sure he says something very close to that in one of his essays. (Business being relatively easy to learn for a talented technical person.)

Yes, and that premise is controversial at best.

True, but the YC success stories offer some anecdotal support for the idea.

That's the least that I expect. The implication that technical people can learn to hold a CEO position and do well is very anti-status quo.

This is a really, really naive thing to say - bordering on completely delusional. The CEO job is so much harder than you think it is. As a VC I see a huge number of amazing engineers and very few amazing CEOs. They are incredibly hard to find and can change the outcome of a company from a complete failure to a wild success. You MAY be able to do their job but in my experience very few can do it competently.

So why do they all get paid gangbusters?

Don't appreciate being called delusional. That being said, you underscore the point that many CEOs are not great -- which is exactly the point about overcompensation. Also, see my profile.

It's not wrong to tell everyone they may have the skills to match their current mediocre CEO that is pulling down the megabucks today. And believe me, a lot of mediocre CEOs are pulling down megabucks.

Being you are in the VC game, you are dealing with people in startups, where the compensation hasn't gone crazy away from things yet.

Finally, some of these views may be seen as socialistic. It matters what you value. In general, I have seen a lot of VC decisions that value capital ahead of ethics, and this is unfortunate.

I've been a software engineer for close to 10 years now, and we are definitely overpaid for what most of us are doing, and that is mostly because of supply and demand.

I'd suggest rather than look at it as you being overpaid, look at it as everyone else being underpaid - in other words, corporate profit sharing is not what it should be.

We automate things. As Jaron Lanier says, "code is people who aren't there". We create substitutions for labor. The lot of mankind only began to improve rapidly after human and animal muscle power was substituted-for by engines.

All production is a mix of land, labor and capital. So it depends on cases, but when we are in the right place at the right time, we deliver stupendous amounts of value.

I've been involved in cases where two, three, four, twenty people could address tens of millions of cost $US per year. The interesting thing is that sometimes, even though you have the numbers on your side, the management team demurs.

It's all but impossible to actually evaluate what we're worth.

Appealing to supply and demand may involve what's called "The Lump of Labor Fallacy". We're not stevedores, and we're not surgeons. We're somewhere in between.

Nonsense. Relative to the value we provide, even average or mediocre developers are underpaid. "Everyone" else is, too, who isn't in upper management.

Define 'value'.

That turns out to be a deep and interesting question.

One response: https://archive.org/details/lectureonnotiono00lloy

Compared to our peers in the law and medicine and other professions we are not even more so outside of SV.

In the UK the average GP is on around £120k I bet very very few chartered (Peng) engineers make as much.

No, we're not. Considering how much money our stuff makes/saves, we're drastically underpaid.

If we were overpaid, companies with a large portion of developers would all go out of business. But they're not. Where is the money above the value we create coming from?

A general case CEO/exec job is far, far riskier than a IC software developer. If you're a fantastic (heck, halfway decent) developer, you can be fired, laid-off, or simply quit and find a new job relatively quickly. And yes, you're generally paid a lot of money (compared to the rest of America).

As an executive in a general case (sure, we can all find outliers) company, there are comparatively far fewer jobs for you to go to. If you fail, you fail spectacularly/publicly and may not be employable for years. The high compensation is in exchange for the risk of the job and the low probability of finding a new one.

Semi-related (not what you said - of course): "I deliver $1M in value to the company so I should be paid $1m" is a thing I see every now and again. That's not even remotely how any of this works.

I'll disagree with this. If you are in a position where you make $10M a year, you could effectively not work for 20 years and be completely fine. By the time they've done this for a few years, they have obscene levels of wealth and no risk.

There are also the golden parachutes.

"The high compensation is in exchange for the risk of the job and the low probability of finding a new one."

This is not how things work, either.

Anything that seemingly violates supply and demand is a scam. Another way to say "The jobs are too few" is to say "The CEO's are too many"

Yes. And if there are more CEOs than available gigs, why are salaries not going down?

Executive compensation has a nasty ratchet effect built in that I'm really surprised more shareholders aren't fighting.

This is ridiculous. By this logic, the working poor in areas of the country where jobs are scarce would be paid much, much more, to offset the extremely damaging effects of getting laid off.

The general case is CEOs are part of the management club, a club that protects itself much like a trade union.

CEOs fail all the time, and they aren't shunned but rewarded with golden parachutes and positions on boards of other companies, biding their time until they can "come off the bench".

The management club is something to be admired and I wish engineers would try to adopt some of its behaviors instead of viewing ourselves as mercenaries.

It's divide and conquer.

Engineers are too impressed by their own intelligence.

No, it's that we are too idealistic and are turned off by the messy, immoral greater world in which the management club makes their money. We want things to be beautiful and fair and so we spend our time constructing abstract fantasy lands in miniature.

The great irony, of course, is that the messy and immoral world intrudes even there because rational idealists can't find consensus and are subject to the biases that require conventions, institutions, politics and regulation just like the legal and business worlds.

If we were rational you might say we chose "playing with fun toys" over "controlling thousands of people and millions of dollars, and influencing millions of people and billions of dollars". Perhaps, for some people, that is indeed the rational choice if you don't really trust yourself.

I would love to hear more about what these behaviours are and how engineers could possibly adopt them.

This is exactly it. When you're recruited (and you're always recruited - it's super rare to have a C-level position open on the website and submit a resume to) to a firm as an exec you have (generally) tremendous leeway to negotiate your own contract, exit criteria, etc.

Yes, the board provides a starting point, but it's much more collaborative negotiation - and you (as the incoming exec) are gonna negotiate based on the criteria I mentioned. It's not at all like an IC where you basically get a "take it or leave it, plus a few % more on salary if you push back" offer. It's a different universe.

Is it fair? I dunno. The "intrinsic value" argument doesn't really apply - the CEO is worth $10M/yr if the board thinks they are.

No way. Getting a prestige gig may be difficult, but you can worst case get "empty suit" gigs in sales or consulting.

I've seen some spectacular SVP+ flameouts, and they all land on their feet. The only exceptions are substance abuse and other problems like that.

Yeah, that tracks with reality... https://en.wikipedia.org/wiki/Tony_Hayward

Another good one: https://en.wikipedia.org/wiki/L%C3%A9o_Apotheker

This is laughably incorrect, that's not how the world works at all

Do you have citations corroborating this hypothesis, or are you just speculating?

I disagree on this point. It makes sense when you examine it naively. However, dismal past performances of a CEO's former company is not an impediment to hiring.

The hiring of a CEO isn't as technical or data-driven as one would think such an important decision would be. It often comes down to who the board feels most comfortable with/trust, often times based on personal relationships. As you ascend beyond the 1% to the .1% or .01%, you're playing with a vastly different set of rules.

People on corporate boards generally are on multiple corporate boards. I'd wager that if you looked at the social network graphs of board members, the CEO's they choose are almost never more than one hop away. CEO's that have faced massive scandals or have torpedoed companies seem to always find new jobs because once you're in that CEO/board member social network, you're never really out unless you do something unforgivable like Bernie Madoff. Most important, they have the luxury of time and options since working at this point is purely optional and not needed to pay for expenses. They can work on a vanity project, start their own foundation, join other corporate boards, focus on investing in companies instead of running them, make inroads into the public sector, or they can wait until any heat dies down or is forgotten before re-entering. This is one list of what execs did after a scandal: http://money.cnn.com/gallery/investing/2013/09/13/financial-...

It's a different dynamic since most people work for money while CEO's accumulate wealth. Their money works for them, not the other way around.

That theory is not holding up, CEOs are much more willing to overlook failures and flaws of other CEOs - usually some external force or group is found to take the blame, and the game goes on.

Compensation has nothing to do with whether somebody works harder or is smarter than everybody else.

Perhaps you would like to step in Satya Nadella's shoes for a couple of weeks?

No. But I get the feeling almost anybody could have filled Balmer's ...

Do you have any knowledge about what Balmer's initiatives at Microsoft were? What his goals and objectives were?

No. But I know their stock was pretty much flat for 14 years.

The growth during those 14 years was factored in the stock... This exact thing was actually discussed on Martin Shkreli's stream a couple of weeks ago.

Maybe you shouldn't have such strong opinions about things you perhaps don't understand? And not even attempting to understand according to your own admission.

It is known he didnt successfully lead microsoft into the mobile computing industry, and its known he didnt successfully lead microsoft into the cloud computing industry... so whatever his initiatives, goals and objectives were, they were wrong.

I disagree. Under Ballmer, Microsoft more than doubled its revenue, profits, and employee base. By standard measurements of CEOs, he did great. (Although the stock price didn't grow, but that may have had to do with the 2001 crash and timing more than anything)

In contrast to all of Microsoft's rivals: IBM left the PC Business. Sun literally died and got bought out. Oracle's products were eaten alive by Open Source.

Under Balmer, Windows 7, XBox and XBox 360, Kinect. Do remember that Windows Mobile 6 was a major competitor vs Blackberry through the early 2000s.

Ballmer tripped up in his final years with Windows8 and failing to bring the success of Windows Mobile 6 to post-iPhone markets. But I think he did good from 2001 through 2011 overall.

Microsoft stock was essentially flat across his entire 14 year tenure, despite being the dominate OS and Office suite that entire time. By standard measurements he was not a success.

Double the revenue, double the profits, double the employees.

The CEO doesn't control the stock price. He controls employees, revenues and profits. Lets not blame Ballmer for having the unfortunate luck to become CEO at the height of the 2001 stock bubble, and instead look at the things he actually could control.

Wait. I was EXCLUDING the stock bubble. If you include that he's DOWN over his tenure.

Ballmer did a terrible job. Basically stalled the company for 15 years and put them far behind Google and Apple. "he did great" and "the stock price didn't grow" are the opposite of one another.

Ballmer ran the company after the fat part of the Windows rollouts was done. Microsoft was then an incumbent firm, not a growth company. He could have done great and the stock was flat at the same time.

The problem is Ballmer point blank completely utterly failed to successfully transition Microsoft in the single biggest revolution in the Computing Industry in the last twenty years. He also utterly failed to successfully transition Microsoft in the second biggest revolution in the Computing Industry in the last twenty years.

Ask microsoft right now, they would probably trade 50% of their windows and office business to have a strong 25% share in the mobile market. They would also probably trade the other 50% of their windows an office business for 50% of the worlds cloud computing business.

He had no CEO vision, he was an excellent COO who streamlined and improved margins, but absolutely failed to make any of the moves necessary for Microsoft to continue to be at the top of the software industry over the long term.

CEOs need the vision to recognize, and the cajones to go after the big 'bet the company' moments...

Compare Microsoft with their 90s peers: IBM, Sun, and Oracle.

Tell me who you'd rather be among the major forces of the 90s. My bet? I'd rather be Microsoft.

The responsibilities of an enterprise-level deployment mean that Microsoft was ill-suited for the changes that occurred in the mid-2000s, just like its other enterprise competitors.

Still, despite being handicapped by Enterprise customers, Microsoft performed okay in the transition to cloud. I mean, Azure actually exists and arguably is a bigger platform than Google's Compute Engine.

Microsoft's track record is that it's 2nd best at a lot of things. Microsoft is 2nd best at cloud (Azure), 2nd best at Bing (remember: Yahoo uses Bing as a backend), 3rd best at web browsers (Edge / IE). 2nd best at gaming (PS4 > Xbox > Wii U in terms of this generation's sales).

They're not really in a bad position at all. They're just not a dominant giant.

sounds like a true comment from someone who's only seen some memes about "developers" and assumed he was smarter than Balmer. There's a reason Microsoft was used by every IT department in the world when he left. He may have had some weaknesses on the consumer front but he made MS into a juggernaut on the business side. I still don't see any other company come even close.

Not at all. I believe the largest thing Nadella did was get out of the way of the individual organizational units and let them do their job; that's why he had so much success in his first few months as he simply unstoppered a blocked up product flow.

Clearly it does not. However, it should.

I could probably do a better job - many people here could. However one of the perks of getting out of the corporate game is getting out of the corporate game.

The point is, executive pay is entirely out of whack with the value (most) provide. Orders of magnitude out of whack. Sure I might not fill a good CEO's shoes but you or I can likely do the same job as a lot of lackluster CEOs that get paid insane multiples of our salaries.

So how much compensation do you think executives should get?

I have no idea, but if you run a company into the ground you probably shouldn't be making more in a year than I will in a lifetime.

A common complaint (At least from my mouth as well) is that I would _love to_ but even achieving the chance to prove yourself is as much luck as it is personal direction. You might not believe the number of times I've asked to be given greater purview, more leadership opportunities, even asking for no "promotion" and offering to put my money where my mouth is re: being punished if I fail, but being told "do your time" or "you're not a high enough rank" to even try. (The insult to the injury is that I've been in industry longer than some of those with "sufficient" rank who have been 1 company tenants.)

I would not look as askew at executive comp if I didn't have a nagging doubt that large portions of it are smoke and mirrors, obscured by extremely high and socio/political barriers to entry by which if you're the sort to pass, you're the sort to not "rock the boat"/"call the bluff" so to say.

If you're such an amazing leader then why not start your own company?

For your own benefit, please understand that suggestion sounds idiotic in context.

You don't say? Well perhaps then maybe not every employee is capable of doing the same quality work of their leadership.

I intend to, and do as much to that end as my current situation allows. The barriers currently are largely wanting to be sure I have enough saved up that my family won't suffer if I end up failing. I market side projects during my personal time, and am constantly looking for opportunities on my own outside of a formal work career progression.

Do not take my earlier comment to mean I simply complain and languish; merely why there might be a natural frustration to some of the judgments/environment/deifying surrounding leadership positions (notably for my argument, bigCo leadership)

(To add another point I was nervous to say since it sounds arrogant; but I've ostensibly managed at a comparable scale to what some of the positions I'm aiming for would require, but in situations that don't hold the same level of credential-ism/tenure focus. This just adds to the open question in my mind of why those teams were able to find success with less rigid progression while others offer so much resistance. I mention this not to humble-brag but again, to point out mental dissonance.)

You might be facing very byzantine leaderships. But you might also be severely overestimating your skills. Not only your technical ones but your political ones. A key requirement for a leadership position is being convincing. Social intelligence is of paramount importance. Leadership is not about technical acumen. It's about managing people. Getting them to trust you. You can't get people above to trust you and you think you will be able to make people bellow do?

That would be fun and at least I wouldn't shoot my self in the foot when asked an easy softball Q about diversity.

MS should have gone with Alan Mulally.

Yes, please. In 3 weeks, I can do whatever and still earn enough money to retire before the end of October 2016.

And while we're talking about shoes, a good shoe-seller could do the job of about any CEO in those huge companies. Would be harder in a small one, though.

How would you feel if somebody who saw what programmers do only on TV tells you "A very highly trained monkey can do what you do - type on a keyboard." Because that's what programmers do, isn't it?

One might offer to sit them down at the computer for a while and see what they accomplish. The skeptic can probably even provide his own computer. Most people don't have a large corporation they can just casually make themselves CEO of in order to prove a point.

I think professional athletes make an interesting parallel with CEOs. The majority of athletes are unarguably the absolute best in the world at what they do.

Superstars have a far bigger impact on their team's performance than an average player in the league. Many commenters have argued that good CEOs have large impacts on company performance.

The average NFL career is 3.5 years; the average NBA career is 4.8 years. Several commenters have pointed out that CEOs of failing companies risk this being their last CEO job.

Athletes are derided if they cannot save enough to ensure their retirement when they are making millions of dollars a year. Why can't we expect CEOs to manage their own finances responsibly and plan for a future where they aren't earning millions?

After their playing careers, many athletes choose to work lower paying jobs as assistants, coaches, commentators, consultants, etc. Why can't a CEO take a step back after a failure and be a COO, CMO, VP of Sales, etc.?

During their careers, NFL and NBA players' earnings are limited by a salary cap. LeBron James can't earn more than ~$30MM from his playing contract, even though he generates far more revenue in TV contracts, jersey sales, gate receipts, etc. Why can't we impose salary caps on CEOs?

We can impose salary caps--it just means that the people who are really good at this stuff will play in a different league. If there were another NBA where LeBron would make 10x his salary, he'd play in it. All the best players would. And then that league would be more successful.

Now instead of "league" and "LeBron," substitute in "country" and "the world's best corporate executives" and you'll see why it's a bad idea. We want the world's best here.

There are other professional basketball leagues that don't have salary caps, and LeBron doesn't play for them. The NBA salary cap is close to or exceeds what he could make in other leagues. Additionally, playing for the NBA gives him greater exposure to the American market.

Do you have any countries in mind that are going to pay executives more per year than the US, even with a salary cap? My understanding is that the US is already so far above the rest of the world that it would have to come way down to lose out on a raw compensation basis.

IMO, a cap would mostly serve to rein in the well-networked, measurable-performance-leveraging aspects of CEO compensation. Compared to every other employee, CEOs have a far greater ability to extract money from a company, mostly independent of their contributions to that company. Is it any surprise, then, that they leverage that ability to earn far more than their coworkers?

> Executive comp is a major racket, enforced by the standard that this is "what the market average is". Which is set by executives overpaying themselves.

> Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you. The answer is usually a definite no.

Ask yourself, does a software developer in SF work 1000x harder than a laborer in the Congo? Is a PhD Physicist really as smart as a NYC sanitation worker?

Apart from the emotionally manipulative language, I'm not sure what your point is. CEO compensation is a price. What does hard work or intelligence have to do with the price of something?

Reapplying it doesn't actually change the argument. Janitors can be underpaid compared to CS people and CS people could be underpaid compared to CEO's at the same time.

Underpaid according to who? The point I was making was that salaries, like all prices, are dictated by market forces. They aren't dictated by some arbitrary metric (e.g. hard work or intelligence) that you, as some uninterested third-party, decide.

Underpaid according to people with sense. For one, market forces do not dictate reality. They are an artificial construction WE created and WE are responsible for. If they result in someone's mistreatment we should see it as it is and not wave our hands and say "well, market forces". Perhaps the mistreatment is not obvious to you but it is obvious to plenty.

For another, the "market forces" aren't really market forces because there are too many other things involved because we don't live in a vacuum of perfect capitalism. There are things like collusion, there are things like threat of loss of shelter and health, etc., that corrupt it. Proper market forces would require extremely powerful and knowledgeable agents that can freely accept and reject products. We're nowhere near close such a reality.

For an obvious example of immoral effects of "market forces", see googamooga's post over here: https://news.ycombinator.com/item?id=12553936

If you don't see anything wrong there and your reaction is just "well, market forces..." I think you need to take a step back and think about what we humans are doing on this planet.

I'm not seeing the "market forces" in googamooga's post. Rather I see men with guns (the Russian government) prohibiting hospitals and clinics from purchasing stents. The initiation of force here is quite obviously immoral. I'd like to see less of it on this planet, not more.

The same thing is present in the other situations. People don't get to pick and choose where and how they work, they have families to feed. The pure ideal market forces you're talking about don't exist, most of this is ran by much more depressing forces, such as the prisoner's dilemma.

I've just brought up collusion, it's a concern for software engineering jobs, look it up. Not pure market forces? Exactly! So why are you assuming the CEO's job and pay are pure market forces?

> Is a PhD Physicist really as smart as a NYC sanitation worker?

... and often the same person.

I was going to post something similar. Us humans sure do love our social hierarchies. Most people find it untenable that random chance and/or the independent actions of a multitude of phenomena make up a great deal of what we perceive as reality. We are heavily biased towards order both as a means to explain the world around us and operate within it. It's why so many people fall prey to conspiracy theories. There's a comfort in knowing everything is under control. I have a pet hypothesis that the invention of Gods went like this:

Uggg: When I look up at the sky, I more or less see the same thing day after day. However, the events that happen infrequently, the eclipses, blood moons, shooting stars, gamma Ray bursts, etc. shows a level of variance and complexity beyond measure and comprehension.

Krug: Even though it looks random and chaotic, there's gotta be some big guy up there behind the curtain. Otherwise, what's the point?

Uggg:Yeah, that's too depressing. Life is brutish enough as it is. We're still part of the frakkin food chain! Let's not consider existentialism for another 20,000 years. Big wizard guy in the sky it is!

That type of thinking permeates in all facets, so we think it's only natural the guy on top is the essential person in a company.

I've had the fortune of working at startups that were comprised of intelligent and talented people from bottom to top. In fact, at a couple of gigs, the ceo doggedly tried to keep their original vision as their fortunes sank. It was the non c-level employees that recommended and executed plans to pivot.

There are those rare unicorns like Elon and Jobs. Although they consistently work with some of the most talented people in the world across multiple disciplines, they set forth a vision that would be considered ludicrous by almost any standard. Yet, whether it's by cult of personality or some other rare trait they consistently have success across different fields. Also, it is important to distinguish founder/CEO's who generally risk all they have on something that is likely to fail.

Just throwing numbers out there, but I'd wager that 95% of current CEO don't come up with anything groundbreaking and are executing pretty standardized plans for the duration of their tenure. Personal relationships do matter, but their importance generally has an inverse relationship to the size of your company

This is how the real world works. Its far less meritocratic than we're brought up to believe and based much more on perception than reality.

It's also the way that the world has always worked and probably always will work so long as we have a capitalist system. Thomas Edison didn't invent the lightbulb and Elon Musk is not "the founder" of Tesla.

The big difference is decisions that CEO take are 100x more important than the one we take. Pretty much every one on HN is tech based employee, technical problems are 'easy' compared to where a company of 10k employees should go in the next 5 years.

You should see my earlier post about the company I worked for. It stands as evidence that this is plainly irrelevant. A terrible CEO can be rewarded far in excess of his value and competence while the true heroes are the people who keep the business afloat with massive cash injections (their uncompensated spare time).

To elaborate on the sibling, comparing multiples of your salary is irrelevant. The question is, how much does the company stand to gain by putting this CEO in place? Imagine this CEO is just 1% better than you; they've just made the company millions.

While that is true, they often suck too. Goes both ways.

Think about how much better, say, Cisco could be, than what Cisco is. And then what their execs get paid. There's a club at the top and they value weird things.

One employee's work can also make a company millions - I know in many cases many of my fellow developers have built things, often single-handed, that have made companies millions, and received less than $100k/year. The sales guy probably got a huge commission.

This is the system we should - as best we can - press against.

I guess I'm missing the part where I'm supposed to care that CEOs are in the long, long line of people fleecing dumb investors.

A lot of people forget that, at least for large companies, the CEO's life is the company 24/7. They don't have to worry about work/life balance, because there is none - it's all work, all the time. Got some time off? Work is still on the mind. Got a family? Good luck getting an hour or two a week of quality time with them.

The CEO's compensation isn't tied to how much work they do, but how little time they get to spend on anything else - mind, body, and soul.

I wish this were true. A lot of software developers put in this much time due to abusive working conditions and still net poorly.

Even if it were true, there would be no valid argument for $1M/year vs $60M/year differentials.

In startups, folks are doing this for programmer-level salaries.

CEOs are still finding time for some family time - maybe not a lot, but there are a lot of people under the grindstone feeling the exact same problems making low software developer and manager wages.

The CEO is the company. They give up their social life and personal life and family life to be the face of the company.

They should be paid accordingly. (Although I won't disagree with the fact that some CEOs are indeed overpaid.)

>>They give up their social life and personal life and family life to be the face of the company

Seriously? Look at all the big co's CEO, They make it look like , that is it.

The business I previously posted about robs their staff of at least 50% extra working hours every year. The staff literally give up their social and personal lives to work for free so the CEO can wander off and show the business how brilliant he is.

They were threatened with dismissal for not doing so. I was threatened with dismissal for not doing so.

I worked from early morning until early the next morning. I saved the core business on multiple occasions, my manager was working 14 hours a day 7 days a week at a minimum.

The CEO went home at 5pm every night, when I still had a full shift ahead of me, and had weekends off with his kids, when I was working at home. He was paid three times what I was paid, and 50% more than my boss.

You speak of ideology, not reality.

In that case, I agree with you. I'm not a fan of paying morons to waltz around and do nothing.

But I would like to believe that for every terrible CEO, there's one that actually gives his all in growing the business.

I speak of idealism and not reality, yeah. This doesn't invalidate what happened to you, which I agree is awful. But if someone is legitimately putting work into their company, as many CEOs do, they deserve to be paid.

I'm afraid I can't agree with this either. There are tons of jobs, including software development, that put this sort of strain on a person but don't compensate like a CEO. My wife is a registered nurse, and that's another job in the same class. I agree that CEO pay is tied to risk, but I think it's the other way around: boards and exec. search committees are willing to pay perceived superstars huge amounts to mitigate the risk of having picked the wrong person. If the stock price goes up or down a little bit as a result of the choice billions can be on the line.

The question is not whether the CEO is working harder or smarter than me. It's whether or not the CEO is returning more value or taking more risk than me.

I'd like to see a culture that understands economics more clearly such that this doesn't have to be constantly explained. I think it would help if less people worked for large corporate institutions and ran their own small businesses instead. It would also help if mass media didn't play along with the ignorance.

On the other hand, my CEO is probably stressed 24/7 about the company, whereas I can just go home and not think about work.

> * Ask yourself if your CEO is really working 100x as hard as you, or 100x smarter than you*

You price on value, not on effort. I may think CEO's are overpaid, but let's not confuse how salaries are negotiated at jobs. They are negotiated by perceived value you bring to a company as well as the supply/demand for your particular position.

Most people with the title "CEO" don't make all that much money.

Much strangeness happens just because of mutual funds and the general distorting effect of the public stock markets. We've decoupled the owners from the "runners".

Prior to roughly the period of time in which Micheal Eisner became CEO of Disney, compensation was mainly salary. People complained that it was too much. So more complicated arrangements emerged - options, that sort of thing.

For a modest firm of say, 1000 employees, every 100k to the CEO costs each employee $100 ( assuming all is otherwise zero-sum and perfectly linear). So it's not like there's really much that can be done to improve things for the rank and file.

I was watching the beating given to John G. Stumpf by Congress on CSPAN yesterday. It seems that incentive pay/pay for performance might be on the way out if that is any sort of bellwether.

It's fine to talk about hard work and smarts, but you also need to consider risk.

Let's use software engineers as an example. You make a mistake.. it's unlikely you get fired, and even more unlikely that it ruins your career. Most likely, it results in better practices and a post mortem. And even if you do leave, there will be hundreds of job openings for a competent engineer.

It's different for CEOs, even competent ones. One moderately bad decision (or to your point, a little bad luck) can result in a "change of management." And it's non-trivial to just jump into another CEO role.

And that's not even taking into account other aspects such as supply & demand, accountability, stress levels, etc.

Is the comp "fair"? I have no idea. I don't even know how you would evaluate fairness in that regard.

There can be a lot of spin in CEO exits. Connections made in even a failed position can be used to gain ability to acquire investment or useful position in other companies. Extreme networking value.

Again, the obscene compensation exceeds the risk. Even going back to a VP position somewhere is still lucrative.

I'd question the non-trivial part. True in some cases but also I can think of plenty of Cxx level people that have just walked off into the sunset of a new role after crashing and burning a company.

Additionally the compensation is so great that I think a lot of people would gladly take that risk given the opportunity. If in a few months you can earn a x years engineer's salary why not take the risk and then worst case is a nice holiday whilst looking for the next company to ruin.

I think your point holds better at middle management level.

I suspect a higher percentage of developers are fired from one bad mistake than CEO's. Remember, it's often debatable if a CEO makes a bad decision and simply replacing the CEO often has significant downsides. Further, a CEO making a mid sized mistake is often seen as simply taking or not taking risks.

As to pay, generally CEO's can find a high paying job easily. They simply don't need to.

This is such a pernicious justification for CEO compensation.

You don't need to "jump to another CEO role" to continue to be fabulously wealthy.

Failing spectacularly as a CEO often does nothing to impact your employability for future roles.

https://en.wikipedia.org/wiki/Tony_Hayward

Or Carly Fiorina or loads of others we could sit here and review if we were so inclined.

There is, ultimately, no justification for the compensation CEOs receive. They don't deserve it. They haven't earned it. And often their actions are degrading to the company they are hired for, yet they still get paid exorbitant amounts and go on to other positions of responsibility and high compensation.

I've seen this claim multiple times in this discussion, with no data to back it up. How do you know a CEO's job has more "risk" than a developer?

The question isn't if the CEO is working 100x as hard or is 100x as smart. Their decisions have an impact across the organization, so even if they were just a little smarter, they would make a big difference.

As the cited research reveals, while their decisions may have an impact across the organization, the results can be mostly be attributed to luck. They are being paid astronomical amounts not for being smart, not for ability to read the markets, nor for hard work, but simply for being able to convince someone else that they are responsible for being lucky.

The fact that some outcomes are driven by luck does not mean that there isn't still a very large difference from small differentials in skill/experience/dedication.

Imagine a company with $100M in annual revenue and an annual growth rate between 10 and 20 percent. On average, the growth rate would be 15% (say), and skill of the CEO could have some impact that pushes it up or down 10% (that is, ±1.5%). The difference between 13.5% an 16.5% represents a $3,000,000 revenue differential. The impact on profits is likely much higher (due to fixed costs of production, which exist in nearly all industries).

So even if you take the research findings as true, it still makes sense to prefer an executive with more skill, experience, and dedication. Even if 90% of outcomes are driven by luck, the 10% that he or she contributes is still meaningful.

CEOs get higher and higher pay because they say that's what others are getting.

Women get lower pay because they say that's what other women get.

Ahh, the spinning of facts that keeps giving and giving, to the rich and powerful.

> Women get lower pay because they say that's what other women get.

At least in the U.S., sex-based wage discrimination is prohibited under the Equal Pay Act of 1964. If you find an employer paying women less because "that's what other women get", be sure to let us know.

The cost of options is borne by shareholders more than by the company's compensation budget. I picked a random large company from Yahoo finance (Proctor and Gamble). The CEO's pay is $4M/year. If you paid him nothing, the rest of the employees would get an additional ~ $.75/week.

GE (another fairly large company) is in approximately the same situation. Immelt gets about 4x as much, but GE has about 3x as many employees.

One explanation I was given by an economist for excessive CEO glut is that it incentivizes the C-level execs directly below (which arguably are the ones responsible for the company's execution) to work their hardest, such that they could one day be considered a candidate for the next CEO.

Sounds plausible. But if it is true it is a terrible thing because it means that the C-level are competing against each other for a very scarce resource instead of spending their efforts doing the best for the company.

I guess you don't believe in 10x or 100x programmers either?

With a few exceptions, a "10x" programmer is in most companies making maybe 1.5x than other people his age, possibly quite less.

This may be an extra $50k in some places.

I have not met a 100x programmer, but there are many people who lead important projects (say Linus, Guido, etc). They also do not deserve 100x a standard programmer salary if they were employed at a corporation either :)

This is why you get an MBA and join a couple boards.

Would you take the CEO job for your current salary?

No but I know plenty of people who would take it on for say two or three times my salary.

No, particularly because salaries and wages in my area are amongst the lowest in the nation, while CEO salaries are amongst the highest in the nation. (Which is remarkable given the region's sheer excess of corruption and incompetence at that level.)

Oh come on, a level 1 argument about CEO salary? They don't work 100x as hard? Aren't we collectively past that gut feeling argument on HN?

You don't have to work smarter or harder than everyone else - you're in the driver seat and make the call about strategy which will make or lose the company big %'s of its revenue which has huge value.

Why should we be past it? Because new employees are generally ok with this perception, we do not IMPROVE the perception, and we allow things to continue.

I've seen quite a few CEOs of companies I've worked at where most of the employees could make a lot better decisions. You probably have as well.

These "people in the drivers seat" are often not very good drivers. Some are. Most are terrible, and while the company (the collective of all the people working there) may be making "huge value", it is by no means certain that it could not be making 100x more - and sharing it better with the people underneath.

CEOs are just humans, like you, who happen to be leading something. They do not have magic brainpower skills.

We should be past it because it's incomplete and wrong.

So fire the bad CEOs. I did not imply that all CEOs are all good drivers, and it doesn't matter if some are. They are in the position to make decisions that change the course of the company, whereas an individual engineer or sales person isn't doing that, and doesn't have that responsibility. Magic brain power skills are not required so I am not sure why you are bringing that up.

Well, since the research explicitly says that the abilities of the CEO are more-or-less inconsequential, I think you've rather missed the point.

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