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Comment by MattRogish | Hacker News Reader

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.

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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 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.

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.

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.

"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.

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?

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.

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