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Comment by dcchambers | Hacker News Reader

Isn't the obvious answer that CEO/executive pay should be tied more closely to performance? I don't root for anyone to lose their job, but in this case, it seems like the leadership of Mozilla is failing to lead them in the right direction. I don't see how that gets rewarded. If my performance metrics at work go down 85% - I'm probably getting fired. In this case, executive performance metrics should be closely tied to the fate of the company.

I understand it's hard to get someone "good" in as CEO of you can't offer competitive pay - they'll just go somewhere else. But I think the last few years of Mozilla and Firefox falling into the realm of niche developer/nerd tools needs to serve as a sharp reminder that even "good" executives can fail.

Time for an ultimatum - offer a reasonable salary with a large bonus based on improving market share. Get someone in there that really wants it.

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No it's not obvious. It's actually the #1 problem in Big corporations' governance.

If you are a For Profit company with share-holders, you can define performance as money gain by shareholders, i.e financial performance. This is always short term and it's the #1 cited reason why private long term investment has basically disappeared in the last 40 years. BigCo are managed with a 6m horizon and both eyes lock on the stock prices.

But if you are a non-profit how do you define performance ? How do you define Good ? What horizon do you set ?

And BTW : why do you think higher comp will lead to better work ? Was Einstein the most paid individual ?

>why do you think higher comp will lead to better work ?

While I do partially agree, I don't fully. Those who are good at what they do get paid more. Now, that means they generally start competent and well intentioned. No amount of money fixes an idiot with ill will. I think a lot of firms are ignoring that concept in the past 10-20 years.

The short term outlook is also a huge problem. You see it often in action on Bloomberg with the markets. It's Christmas or Crisis every other day, absolutely ignoring long term positions. To me, that's the difference between capitalism and profiteering. Capitalism is a long term infrastructure play to make money (like Disney buying Marvel and setting up the MCU in a way that can create many, many products that build off each other) while profiteering is just turn and burn, short-term plays ignoring more than 12 calendar months.

Perhaps your non-profit question is the real kicker. How does Mozilla measure success? Market penetration? The end of IE? But then by taking in Google money, does that make Chrome a competitor or ally? From a user standpoint, Chrome isn't exactly the "good guys" either due to epic tracking. So that in turn makes a bit of a conflict of interest when you toot your "privacy and user first" horn while you're paid by one of, if not the biggest privacy invader... ever. Financial independence would be a good current metric... but with the ceo pay hike... I doubt that'll happen.

> Isn't the obvious answer that CEO/executive pay should be tied more closely to performance?

Short term or long term? How do you measure performance in a way that can't be gamed? How do you prevent alignment of the company to achieve the metrics you set at the expense of all of the other things that make a thriving corporation?

Oh no, you've gamed the system to maximize your compensation and the long-term success of the company.

Sure setting good metrics is hard, but that doesn't mean you should not set and publish metrics.

What seemed to have happened is that pay was simply increased without strings. There are a bunch of cultural outcomes then across the company when you have this kind of absurdity.

(A previous company I worked for the CEO had a multi-million dollar loan for his family-home/mansion written off by the company/board... the company was losing money.)

Mozilla as many other software companies plays with words and their meaning trying to develop newspeak instead of working on a browser, and most importantly wants to abolish meritocracy because it does not suit their needs of diversity, see: https://blog.mozilla.org/careers/words-matter-moving-beyond-...

So please remember: every time you want to say 'meritocracy', you say 'discrimination' instead. Therefore, any your statement about performance is not valid.

Supply and demand dictates pay. People who rise to become CEOs are not going to take bad contracts.

I don't think this is true at the CEO level. A big reason why CEO's get big pay packages is to incentivize all the aspiring middle managers to work hard.

That sounds like an urban legend. Most middle managers know they will never be CEO, there are orders of magnitude in difference in available jobs.

Power dictates pay.

CEOs prior to being hired have little direct power - their power comes from low supply of qualified candidates and they can negotiate extremely favorable terms.

If everyone could be CEO like anyone could be a laborer, they would not get paid well.

> their power comes from low supply of qualified candidates

When they fail, were they among the pool of qualified candidates, or is their qualification determined by whether they get hired for the job? In other words: are they highly qualified at working as a CEO, or is their specialization in getting hired as a CEO/looking like they'd be highly qualified in the actual work?

I recall a study a few years back that found that CEOs did not appear to have a large impact with regards to company success. We're looking at successes and attribute it to the CEO, but when a company fails, there are a million things they had no control over so it's not fair to attribute the failure to them.

Sometimes a CEO is brought in to clean house, sometimes a CEO is brought in to right the ship and stop bleeding, sometimes a CEO is brought in to liquidate everything or make the company attractive to buyers. And yes, sometimes CEOs fail, or succeed.

I find it highly unlikely that people hired for CEOs do not have excellent CVs or success stories to point back to, or a strong network vouching for them. This isn't a level I networking certification. This is a top position with top pay - the idea that there is a subset of people just gaming their way to CEO is hard to believe. That's not to say they don't politik. But I don't think it's like a programmer lying on their first resume about how much of that project they really contributed to on internship.

But that's just it -- the "common sense" qualifications for a CEO position (namely, having pertinent leadership roles in the past) not only don't correlate especially well with outcomes, the correlation is actually negative, and becomes more so the more success they've had (as measured by number of roles).

This isn't consistent with the "rare qualifications create a positive edge, multiplied by lots of leverage" value story, but it is consistent with the "climbers get good at climbing" story. It's also consistent with my anecdotal observations where the biggest executive jumps involved dirty tricks that transferred downwards momentum to the company they springboarded up from.

Are boards stupid? Probably not. My guess is that investors have a cognitive bias towards simple stories and "qualified" CEOs help the board serve up simple stories to their investors while also providing ample opportunity for mutual backscratching. It doesn't matter whether or not they have an actual edge, the story is the product.

It's a good hustle if you can get in on it, but that's the trick, isn't it?

Are you going to cite this so called correlation? I would love to see the study.

> "climbers get good at climbing" story.

This isn't true. There are plenty of climbers - and if all that mattered was being good at climbing, boards would work to save millions of dollars by hiring cheaper "climbers."

>My guess is that investors have a cognitive bias towards simple stories and "qualified" CEOs help the board serve up simple stories to their investors while also providing ample opportunity for mutual backscratching. It doesn't matter whether or not they have an actual edge, the story is the product.

Or, perhaps, experience matters, and they just don't want to give it to people who don't have experience leading large entities. Just like anything else.

I'm sure you trust a plumber of 15 years over his journeyman of 4. Is it some secret evil cabal working against the plumber? No, it's just common sense.

> There are plenty of climbers - and if all that mattered was being good at climbing, boards would work to save millions of dollars by hiring cheaper "climbers."

Are there though? By nature of that kind of climbing, they get thinned out quite quickly, plucked from the wall by those more adept at hyper-competitive climbing without rules and sheer randomness. Here's a short overview with a few links pointing to studies that suggest that CEOs aren't having the impact common perception attributes to them, and whether they succeed or fail often depends on luck: https://www.inc.com/will-yakowicz/study-luck-looking-the-par...

> I'm sure you trust a plumber of 15 years over his journeyman of 4. Is it some secret evil cabal working against the plumber? No, it's just common sense.

Especially in tech, we don't see a lot of old CEOs though, and if we did, that still doesn't explain why any one in particular is chosen: the pool for any age group is large, they'll all have roughly the same number of years in experience. If luck is a large part in whether they succeed or fail in their role, if you continually test, you'll end up with people who rolled the dice and got lucky multiple times in a row, or you'll end up with people who manipulated the dice (or your perception of the dice).

Exactly, it's common sense: it doesn't matter if it's wrong, it's what people believe, so if you want to sell those people something, you'd better play into it.

If I remember tonight I'll dig through my archives and pull up the study.

>Isn't the obvious answer that CEO/executive pay should be tied more closely to performance? What are the implications of optimizing for those metrics over all others?

Define performance? (not trying to be rude, just using a little Goodhartian pedantry)

Firefox usage would be the most obvious metric.

In this case I think browser market share is a good example of overall company performance.

> I understand it's hard to get someone "good" in as CEO of you can't offer competitive pay [..]

Q: Can you define "good"?

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