(How the hell is your life different with $750M instead of $800M anyway?)
Also if you have all the material needs that is satisfied, then you go after the rare hard to get high value exclusive money drain this is human nature.
For your specific example what that 50m might make difference it maybe a bigger jet that flies further or a second jet for the family or a yatch or a castle in Italy or penthouse in New York.
For you and me that may seem ridiculous and unnecessary, yet we do the same thing too.
There are many many parts of the world owning a car (or even riding in one) eating three meals a day or eating out are luxuries many don’t see in their lifetimes. Yet we use do all those things without second thought to people leaving on $1 a day or less .
And while you say "human nature" I'd rather say it's "human illness." They someone are within a strata of society where there is no limit, a 20 minute private jet flight or a $20,000 meal is not out of the question and is in fact the norm.
They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive.
The sort of stable accumulation described is typical for a very small number of people overall, from low income to higher incomes, in my experience. Life is complicated.
I know of a billionaire (one of the ones most HNers consider evil) that had a lot of the local millionaires sneering at him when he didn't renovate the vacation house that he bought in the kind of place where those kinds of people buy vacation houses. According to the help at the yacht club his rational was that it wasn't worth his time to think about and there was no sense in paying someone to manage the process because from his POV there's no difference between vacationing in a house his contractor optioned out vs vacationing in one the last owner optioned out. That said, I think it may have been a "guest house" because upon Googling he has a much more extensive mansion in the area.
Imagine what that person would think!
My central point is this: People are quick to "normalize" their behavior relative to their perceived peer group.
So, yes, multinational CEO compensation is hard to comprehend. (It is arguably to the point where it does not serve those very corporations well. But that isn't my point...)
Just remember, the income and spending habits of a "typical" mid-range software developer in a major U.S. city are similarly incomprehensible for a wide range of people.
In some sense, it is turtles all the way down.
P.S. I'm not defending CEO pay. First, I haven't really studied it up close. I'd like to see more, erm, experimentation in it. Lowering it, sure. But also I'd like to see it deferred, for example, so a CEO's compensation is also tied to what happens after they leave. That would increase the incentive to not plunder the place or take shortcuts. Yes, I recognize this proposal seems to mix incentives between past and current CEOs. But that reflects reality. You can't just "wash off" a terrible previous CEO. And the "glean" from a wonderful predecessor will pay dividends for a long time.
P.P.S. Shameless plug: if you are a well-funded not-for-profit with a generous comp and benefits package, you could do worse than hire me. I'm an expert at studying CEO pay and pay inequity at organizations, both using intra- and inter- methodologies. I'm part of an exclusive self-selected, self-reinforcing group of self-proclaimed experts, so be sure to send your best offer.
Ask someone who makes $100, and they'll explain they don't have a lot because someone makes $500.
Ask someone who makes $100,000, and they'll explain they don't have a lot because someone makes $500,000.
Ask someone who makes $100,000,000, and they'll explain they don't have a lot because someone makes $500,000,000.
Not a job offer and no offense intended, but you sound like an excellent crypto startup founder there. Oh wait, they wouldn’t have used the term self and instead used a much more grandiose term. :P
Your first year, you’re only getting 20% off the position’s salary, and 80% goes to your predecessors. When you retire, 20% of your salary got the previous four years is based on how well the company does the year after you leave.
It strongly incentivizes healthy transitions and long-term plans.
Sure, I also value game theory, sociology, and psychology as well. People are complex, with culture, identities, imperfect reasoning, and biochemical influences.
That said, one key benefit of RL is the hands-on experimental aspect. You get to play God and see what happens. Surprise triggers cognitive dissonance and drives further questions. In contrast, some academic disciplines become rather enamored with their own theories, to the detriment of operationalizing them.
Treating people well tends to have good long-term results. There are exceptions, situations, and cases where you have to be more cautious. To put it nicely, there are some people who favor shorter-term strategies. We all should recognize there is a fraction of people lacking in awareness or empathy or ethics. Some of the folks, wittingly or unwittingly, will bring down the entire ship if you let them. Still, IMO, a wise, ethical person gives the benefit of the doubt and helps others to the extent possible, without overextending themselves. As time passes, a good strategy is to help relatively more people who (a) need the help; (b) reciprocate, to the degree they are able; (c) and let's face it, those who can help you get a foothold. The third point is based on this logic: if you are a conscientious person, it is your ethical responsibility to not be naive. You should carefully strive to use your power to help. Sometimes this means playing the game.
What I've said above leaves open all sorts of paradoxes, value judgments, and dilemmas. Such is life. I think it is useful to frame ethics as striving towards an ideal (not just a goal) despite all the complexities. I could use all the feedback you all have to offer... I have a long way to go.
There's an absolute threshold at a few million dollars that guarantees financial independence wherever you are in the world. These rich people are well above that threshold. That's why it is more ridiculous to chase ever more money at their level than it is for you to purchase an expensive bike.
I see plenty of people on HN complain that no, they are not middle class while making $400,000/yr because they can't afford a 2,000 sq ft house in the most expensive area of the US.
Like the old saying "An alcoholic is someone who has one more drink than me."
For another, it’s not like it’s just cash sitting in a checking account. It would be stock in the company. Since he’s a CEO, he can’t just sell it whenever he wants, insider trader rules mean there’s only certain windows when he could buy or sell, and the CEO selling off that much of his holding would raise all sorts of questions among investors.
If he did it as a personal gift to each employee, there’d be enormous gift taxes that would eat most of it.
If he did it as part of their compensation, it would be coming from the company, not him, and he would have to justify to the board of directors and shareholders why he’s spending so much on a lavish severance package that is far beyond the industry norm (assuming they aren’t already getting generous severance packages)
It’s not as simple as “Oh rich people could just fix every problem by giving away all their money, but they’re just greedy jerks”
What I'm saying is, Vlad could most likely buy an expensive yacht without ever having to actually sell stock, so the argument that "it’s not like it’s just cash sitting in a checking account" is not that fair as well. Makes it seem like the uber-rich are actually quite restricted and that all of their money is locked up in investments and other things. Which is simply not true, they can use these locked-up assets in very attractive ways.
See this article for a better write-up: https://www.businessinsider.com/securities-asset-backed-loan...
Sure, he can borrow a bunch of money against his stock and buy a giant a yacht or give it away to people who got laid off, just like a normal person can borrow a year’s worth of salary from credit cards or take out a high interest loan to buy an expensive car, but that doesn’t mean it’s a good idea.
How as an investor or shareholder can you not look at this as downright robbery?
It definitely happens in some cultures. I remember reading about the CEO of Nintendo taking a temporary pay cut after the botched launch of the Wii U. At the time, people were talking about other Japanese CEOs that had done this too.
Stock is absolutely more difficult to liquidate for a CEO.
Or is it more that most public-company CEOs are probably not playing above replacement level?
IMO we as a society should pass rules and laws to prevent people from acting this way ie limits on compensation.
I guess it's true that you can't sell "whenever you wish", but if you set up a rule 10b5-1 plan your shares are effectively as good as cash.
Probably still getting much more than they need to live off of, so some of that should go to the people getting let go.
When I was young (and poor) I also believed that being rich meant having Scrooge McDuck piles of cash to swim in.
After my first big RSU payout I quickly realized that nobody with more than a few 100k in assets keeps anything close to the majority of them in cash. Savings accounts are for the poor. Anyone, even in the every day millionaire level, keeps most of their wealth in non-cash investments, leaving only enough cash to cover crisis situations. Especially with inflation this high, holding cash is literally throwing money away.
Nobody has a bank account with 8 zeros, except maybe lottery winners that never learned the basics of asset management.
Haha, I have an idea. P.S. Dealbreaker.com is great in general for tabloidy high finance news
The post-IPO 2021 price stabilized for a while around $50, so $50M is about 1M shares. The article says about 1,000 people were laid off, so if split equally that's 1,000 shares per employee. Since then, the price has come down to about $9, so it's a severance of $9,000 today.
I would hope everyone getting laid off receives at least that much.