CEO pay is up 78% over the past decade
jabberwocking.com
jabberwocking.com
https://www.cringely.com/2018/02/26/win-lose-wall-street-scr...
From there, you're not beholden to shareholders to maximize their value by paying employees poorly, etc. You can pay them whatever you want, although you are still beholden to math and accounting to pay wages that keep your company profitable, at least.
And all along the real solution is so obvious: make the employees and customers owners.
The co-op ownership model aligns all interests in ways that actually make sense.
"I don't care about the success as long as I get paid" is typically something you hear from people who have never tried a truly democratic workplace before. It's a transformative experience.
Yes, co-ops are rare.
Like kids :P
Then there's also simple profit-sharing. When I worked at a small mortgage company, each employee got a certain number of dollars for every loan that the company closed, based on how many years they'd been with the company. When things got stressful and busy it definitely eased the blow, and it helped tremendously with retention too.
That's a great example of why simple profit sharing or equity compensation is not enough: it corrupts even engineers to economic myopia!
What about the existing customers that need their stability problems fixed? No time for that! Gotta hajj together new features for the next big contract! You should never cheer sales making up vapourware. Any scheme that does has misaligned incentives.
This has been shown before though I don't have a source at hand: focusing on stock market value leads to short-termism which leads to lower stock market value in the long run.
https://economicsfromthetopdown.com/2020/01/17/debunking-the...
> This wasn’t a matter of productivity, either: workers were more productive every year, we just stopped being rewarded for it.
In particular, this point is being disputed.
Besides, I object to the use of the word "worker" here; some workers are surely more productive, but I can think of many classes of work that are fundamentally the same as they have been in the 70s; indeed, this kind of thing has been talked about under the heading of "cost disease" already: https://en.wikipedia.org/wiki/Baumol%27s_cost_disease
Note that the article still points out inequality as a problem.
Maybe everybody should vote on everybody else's comp. I'd love to see how that plays out for a company. Anyone know if it has been tried?
Similar to calls for paying “fair share” of taxes
I think with CEO I don't understand how the demand and offer works.
Wouldn't there be tons of people willing to do the job for way less? So why is it so high? Is it true that there are very few qualified individuals that can do a good job at CEO?
Companies with top tier management like Apple have had a non stop run of success for a while now and it’s not just luck. They pay Tim a $99 million package, and he certainly earns the company all that and more back.
That's why I'm not sure why it's any different for CEOs. I've rarely seen a CEO repeat success from one place to another, granted I don't pay that much attention. But I doubt if you moved Tim to Microsoft that suddenly he could revive Windows Phone and overthrow Apples smartphone dominance.
I feel the evidence that a CEO has any significant impact on company output seems lacking. Yes they have impact in that they make important decisions, but compared to the decisions being randomly made or made by any other person that could have made them, can you really single out one CEO as being consistently beating others?
And can you ignore the executive staff and everyone else as well? How much is it the CEO or the particular set of people in the executive decision making branch, along with all the consulted employees?
An interesting thought experiment is to see what public servants in position of authority and responsibility get paid. Can’t think of anyone higher than a US president. Turns out that the president gets paid 400k a year. Not a lot relative to what corporate ceos make.
I also am very interested in the co-op model that I've seen a few places (mainly in Europe I think?).
Is a sales person who can close a deal on client worth a $10M contract "smarter" than a principal software engineer at the same company? The capacity to bring in revenue isn't necessarily based on the "smarter" metric.
I full understand that's not the way things are done today, I also think we do things pretty terribly today.
Maybe a better way to phrase it is "I refuse to accept that they (CEO) are somehow worth so much more to the company compared to the people that actually do the work", "Smarter" was a bad word to use originally.
To simplify - a company should hire more/pay more until the marginal value of that employee < the marginal employee cost.
If the 2nd best option for CEO would result in increased revenue by 1%, and the best option by 3%, then it makes sense to pay up to 2% of revenue to get that better CEO.
Compare that with the best SWE option (in terms of marginal cost vs marginal gain) vs the 2nd best candidate.
Compared to the CEO, the SWE may be far more intelligent, more hardworking, and directly improve the product more. But pay is unfortunately not based on that or any notion of “fairness”
That’s somewhat the entire purpose of this HN post though.
I understand how we got here, I think it’s stupid and silly. Furthermore I don’t for a second believe that the information exists to actually make the calculations you list. There is literally no way to determine those percentages, it’s all a guess and often a bad guess IMHO.
Presumably they meant “the prevailing model”, that you partly (accurately, in my view) describe. And by wrong, I guess they just mean “bad” and not what they want, because the rest of the comment describes some hopes and dreams.
“It used to be that in the 1950s, 60s, and 70s, CEOs made 3.3 times what a top 0.1% earner made. Now, it’s more than six times,” says Mishel. “CEOs now are making 351 times that of a typical worker, but back in 1978, it was only 31 times. In 1989, it was 61 times.”
My background is financial services.
So here's a question for you.
If the banks are big on outsourcing, and a Canadian bank CEO makes 10+ Million a year while the CEO of the largest banks in the world earns just $185,000
Would it make sense to remove the $10 million dollar CEO and outsource the position?
Why does the CEO of a bank which is 10x the size earn less?
How many "low level" positions need to be outsourced to equal the CEO's compensation?
It isnt up to the employees to determine CEO compensation, it is the board of directors job. The issue is they all sit on one another boards and it is highly nepotistic. Also, once one CEO gets a hike, everyone knows becaues this is public info and they all want matching hikes.
Lastly, COVID19 resulted in a lot of companies losing a lot of money, many people losing their jobs, buy why was CEO salary up?
Video calls? those can be done offshore...
Using your logic, they accomplished nothing during the covid19 lockdowns as hey were unable to meet anyone?
it is rare a bank CEO meets anyone, they sit in their podium, out of reach of all but the top most layer of management.
This is why they have a CFO, who often does the shareholder meetings, etc.
If the highest tax bracket is 100% then there's no reason for a CEO to want a higher income, as it will all go to taxes.
In 1960, the highest tax bracket was 91%, for incomes above $200K (that's $5.6M in Y2022), or filed single or separate) or 300K ($2.9M in Y2022) for married+joint.
A CEO in the highest bracket would have to justify a $10K raise that cost the company $100K.
While the highest bracket now is 37%, for those making $314K or above. Asking for a $100K raise only costs the company $160K.
I think that's an easier sell.
So another way to affect CEO compensation is to raise the income (and wealth) tax rate.
I would guess but do not know that ESOP corps generally have much lower executive comp for this exact reason? Attempted some limited googling but the (seemingly) best source for this is a lil expensive for me: https://www.nceo.org/data/esop-executive-compensation-survey...
I would think that employee ownership would generally do a good (or at least better, probably depends on the specific structure?) job of balancing employee comp/executive pay/company success/value
?:shrug:?
Tit for tat.
The problem is more core, it’s that people are paid their market rate which is largely based on economic impact and ability to be replaced. Which is massively unequal between roles.
No but the work from a CEO may have way more than 100x the economic impact of the work from a worker.
For example, the CEO of a car company may decide whether or not to build a new assembly line, on that decision, the company may lose or earn billions. A single assembly line worker can make the company lose or earn thousands depending on whether he messes things up or is particularly productive. The impact is many orders of magnitude different.
As a result, companies will make sure that their CEOs are the best, because what it a few million in pay when a good CEO can make billions. The rest is just supply and demand.
Personally I have absolutely no problem with my CEO being paid 100x, 1000x or more than what I make, if it is worth it. I want the company that hires me to succeed, that's how it can afford to pay me. Sure, that a company is successful doesn't mean their employees are treated well, but it is simply impossible for an unsuccessful company to treat their employees well.
Of course, and the ones who gather and analyze the data tend to be well paid too, for the same reason. But turning data into strategic decisions is an important skill, and one a CEO is expected to have.
> And if the CEO was the only person to make that decision then that is only because it is afforded to them by their role, not like a software engineer or...
So, why don't you apply as CEO instead of as a software engineer if you want the big fat pay? If you can show the board that you are the best suited for the job, they will hire you.
> so there is no reason why they should be getting 100x or 1000x what others are making
Tell that to the shareholders. Do you really think shareholders want an overpaid CEO to eat their dividends if it is not for a good reason? If they are paying that much, it is because they think that a lesser paid CEO will not bring as much value to the company. If you can convince them that it is not the case, they will definitely cut the CEO budget so they can make more money for themselves.
Only the top layer is well paid.
People produce, collect, and analyse data throughout the organisation. As the data passes up through the hierarchy, management bureaucrats present it as their own to the next level up, thus using people's work to justify their own higher salaries.
That goes on for O(log n) levels and ends with the CEO doing the same.
I think most good decisions I've ever seen a CEO make have already been made inofficially at the lower ends of the organisation. Or at least would have, had the lower ends had access to the relevant information.
Of course, the CEO wants to keep the relevant information to themselves, because again, that's how they justify their salary.
> So, why don't you apply as CEO instead of as a software engineer if you want the big fat pay? If you can show the board that you are the best suited for the job, they will hire you.
My experience is that these jobs generally go to the well-connected and politically affluent in the right circles. It has little to do with suitability or skill.
If only CEOs would be 100x more responsible for their impact.
I wonder what the average pay for top developers has done in the last 10 years.