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Comment by czbond | Hacker News Reader

When you have the responsibility of 1000's of people's livelihood, their paychecks rest on your hands - you don't think that's worth a heck of a lot more than an average worker? And before anyone downvotes this - think about the responsibility for a bit. Companies don't just plod along - they actively manage into greatness, or actively manage into death.

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But when an executive fucks up, he gets a golden parachute. Where is this "responsibility" you speak of?

Not in all cases, and at top levels, of top companies. While I agree some golden parachutes are extensive, one person cannot be expected to see and perfectly manage every severe situation; executive pay can help focus on strategies, but one operates in a fluid market, fluid economics, and fluid landscape.

It is hard to be perfect at one’s job, and no one expects anyone to be flawless executives. But I think we underestimate how much more high-level executives are compensated in relation to their actual duties, and that even a severance package that seems small to an executive is probably pretty large compared to the salaries of most workers, who also do a lot of important work beyond sitting in on meetings and enforcing a set of abstract values.

I disagree. Normal workers are managed via Gantt charts, tasks lists, and projects completed. High level executives are managed in stock price share increase, or business value increase each of which have multiplier effects.

But do any of those metrics really have much to do with how good CEOs are at their job? The “multiplier” comes from the efforts of workers. CEOs don’t create business value - workers do and get paid a fraction of the value they create for their employers. Low-level managers, not CEOs, are the ones making the task lists and the concrete decisions. The CEO just sits in on meetings and occasionally steps in to enforce “values”. At a certain level of abstraction from the actual work, don’t you think high-level management has less impact than the people actually doing the business’ work? Why, then, should they be rewarded more?

I thought the justification for their high salary was to manage dangerous situations as a single entity though? If the execs of DoorDash earn millions of dollars a year and leaked 4 million users data, that's on them.

And yet, they continue earning a salary in one year some will never make in their whole life. And continue to get away with these things.

So i think you're underestimating how many golden parachutes get handed out.

> responsibility of 1000's of people's livelihood,

There are plenty of workers for whom responsibility for other people's lives is a lot more literal than paying wages. Nurses, police officers, even teachers fall into this category, yet somehow we don't see reason to pay them magnitudes more than software developers.

In fact, many of them have much more education and a more qualified at their respective line of work than the average bootcamped software developer. Wages are mostly cultural, not some intrinsic value of work. Aliens would probably find this system one of stranger parts of human culture.

I can't think of many reasons my company couldn't keep trotting along if the CEO left and we went months without. The only thing I can think of is someone needs to appoint the people directly below him were they to leave.

You're assuming companies need to keep growing and need some flashy face of a CEO as a marketing gimmick. A steady business is fine.

A steady business is fine until conditions change. A good CEO can see those changes coming and convince the business to change course.

That change could save the investors and board millions (or could cost them millions) thereby justifying paying enough to get a good CEO.

This is exactly the problem that anarcho syndicalists are eager to solve via worker cooperation. https://en.wikipedia.org/wiki/Anarcho-syndicalism

Anarcho-syndicalism is one of the few alternative ideological strategies i can see working besides capital, but i'm not counting on it happening so for now some legislative measures against this kind of inequality would be ideal.

> When you have the responsibility of 1000's of people's livelihood, their paychecks rest on your hands - you don't think that's worth a heck of a lot more than an average worker?

No, this is absurd. Their paychecks don't simply rest only in the hands of the executive, but in the hands of the worker as well. I'll concede it's a more valuable position, but not 1000x or 100x or even 10x worth the value of the avg. line worker.

Taking it further, frankly most of the executives I've worked with aren't responsible at all. They're generally sociopaths as well!

The Gervais Principle holds.

It's a shame more HN people don't understand this. You can be pro-business and still recognise the injustice of executive salary.

you're totally free to start a few companies and pay 'fair' salary to the execs you hire

or, if an executive at some publicly-traded company is paid way over his/her value, it would mean that the company is inefficient; subsequently, you may want to invest in the competition, or short this company's stock to exploit this inefficiency

in other words, put your money on the line to prove your argument

They didn't used to receive anywhere near as much compensation and still did just fine. It has gone up steeply in recent history.

Wages are determined by supply and demand, no? The number of subordinates doesn’t even figure in the equation

The market for executives is highly affected by many factors that don't fit easily into an economic analysis.

But those factors can easily be summed up as: Trust. Not many are able to demonstrate that trust to the board, and so the supply is vanishingly small.

And trust, as we see in the totally-free-and-definitely- not-completely-composed-of-back-scratching-b-school-flunkies market, is very very expensive.

You forgot backstabbing on the side

The boards of firms like Google, Apple and Facebook are hardly composed of school flunkies. Aren't they mostly made up of former tech CEOs and similar?

I think the reality is that CEOs can get paid a lot because the number of executives who can meaningfully increase the value of a large organisation is vanishingly tiny.

Look at Microsoft. When Gates left and Ballmer took over their share price stagnated for over a decade. The organisation missed major opportunities and went nowhere. Now Nadella is in charge and suddenly things are moving again. To us maybe it seems "obvious" that Nadella would be a perfect fit for Microsoft and maybe his good decisions seem obvious, but apparently it wasn't so easy to find such a guy during Ballmer's reign.

What about Google? Does anyone really believe that since the Page/Brin/Schmidt triumverate stepped back that Pichai has been able to really fill those boots? The modern day Google is a visionless organisation that seems to spend its days cat-fighting over how many genders there are.

Getting the right CEO at the top of organisations like these would be worth practically any amount of money at all, because even improving outcomes by 10% immediately drowns their comp into irrelevance.

Yes, they are deeply effected by much handwaving.

Come again?

There are always a lot of people looking to justify how things are, independent of how much sense it makes.

Paying the CEO 1000x the average worker is more likely to be sustainable with 100,000 employees than with only 100 employees, so I think the number of subordinates figures in the equation somehow.

people don’t have to struggle needlessly so that one kind of work can be glorified

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