Case in point: Intel's CEO's 2021 salary was reported as almost $180M. In reality, he got only about $10M. He hit literally none of the targets that would allow him to get the rest of the compensation (although in theory he has a few years to hit those targets).
As for Intel: $10m a year is still a lot of money.
I have also heard that targets are occasionally hit. ;-D
In absolute terms, 100% yes it is.
In "CEO of a major corporation most people in the world have heard about," it's basically nothing.
If you're in charge of managing 121k people - 10x the average salary seems like a minimum. 100x seems in the realm of reasonable.
If the CEO's salary is distributed to all employees, they would get a ~0.05% raise. If distributed to the shareholders, it would increase profits by ~0.01%.
Yet this person's decisions can have much bigger consequences to both employees and shareholders.
Except, that’s not a CEO’s job. Even remotely. At best they “manage” a few department heads who each manage a few middle managers who each manage a few direct managers who then manage the workforce.
Even then, that’s a misrepresentation however. They are in charge of managing and directing overall company strategy in the interests of the board. The COO (and, sometimes, the CTO; in tech firms) is usually (indirectly) in charge of managing people.
I think it’s a valid point that they bring large value to a corporation, but it would be very difficult to quantify that value to be anywhere near 100x any other non-Csuite employee.
The risks of a bad CEO are enormous.
1 - https://www.forbes.com/sites/annefield/2022/05/23/ceo-worker...
And yet, SW professionals did just fine for decades when making anywhere from a quarter to a third of today's FAANG salaries (inflation adjusted).
So the question becomes, are CEOs pay commensurate with their added value? Put differently, is the rise in production mainly attributable to the CEO (as wages were largely stagnant prior to 2020, yet CEO wages increased rather dramatically.) Are they adding more value now than they did before and, if so, can we actually measure it?
Try again.
Do you have a source supporting your comment that SWE comp in 2005 was the same as it is today?
But sure, from a super simple query on any search engine:
https://insights.dice.com/2018/02/09/tech-pro-jobs-pay-2018/
Feel free to gate your query to anytime between 2003ish to now, the results are all the same with a few exceptions (MLE and DeFi jobs, for instance): stagnant or decreasing.
According to BLS data [1], the median computer scientist salary in 1997 was $82k, adjusted for inflation [2]. The same data has software developers median salary today at $121k. It seems SWE are getting paid much, much better today.
Granted, the occupation titles don't align perfectly. There was no "software developer" role in the 1997 dataset, but most of the computer science positions have a median salary in the low $80k-range in todays dollars. Also note that the timeframe you chose was at the peak of a tech bubble. Probably not the best for comparison, just like you wouldn't want to use 2006 or 2021 for a gauge on housing costs.
They absolutely did not with just a BS. Perhaps a few companies paid that high, but 100K would be an easy outlier.
To give you an idea, even in 2010 most non-big names outside of SV and Seattle paid under $100K right out of school. Many companies in my city were offering $70-80K. Even my big name company paid under $100K in those days.
But you bring up an interesting point. The CEO may be incentivized to promote wealth disparity. If they are measured by profitability only, without regard to the larger systemic effects, it incentivizes them to take a myopic view. This could mean implementing policies that help hit short term targets without regard to long term health, suppressing wages, etc.
To a certain extent, whichever side we’re on is really just a narrative we tell ourselves since there doesn’t seem to be conclusive data about CEO impact.
I agree they manage the strategic vision of the company. The research on whether they make a real difference in the long term trajectory seems mixed.
Except if the CEO screws up the company goes bankrupt and people lose their jobs. Look at Nokia and RIM.
Exactly why you need a good CEO at the top to understand that the landscape has changed with a new competitor but Nokia and RIM failed to adapt.
The board of directors are the ones who measure CEO performance and set compensation but most of the times they just rubber stamp whatever the CEO does.
Perhaps CEO pay is beyond the pale generally, and these are obscene expectations.
https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
Their salary has a higher salary than you.
I’m stealing this line