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Comment by jbooth | Hacker News Reader

I really don't understand why people think any amount of pay over, say, a few million, for any position, makes any difference to anyone.

Think about the people you know who are good at their job. Do they give a fuck about money if you give them enough that they're taken care of? No, they probably care a lot more about prestige, interesting problems, other ego-feeders besides a silly 8-digit number.

Of course, CEOs are bound to be good negotiators and will negotiate themselves a higher number because why not. But is anyone going to argue that there's a serious quality of life difference between 20 and 100 million?

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Because I want to have enough money to say hey, people should go to Mars and so I'll start a company that does that. I want to pursue social, medical research, and technological policy on my own terms which needs my own capital.

Because I want that apartment on One Central Park that costs $17 million and I want a chauffeur at 50k a year and a PA at 100k a year and someone to take care of my kids for 100k a year (no sketchies). I also want to be able to hire a plane when I want to do I can zoom out to Tripoli or Nigeria when interesting things happen and no private charter will go.

Maybe I'm being the stereotypical New Yorker, but I can see 30, 50, even 100 million dollars whisking away rather fast. You know what traders call $100 million of personal income? A unit. It's the starting point.

Note: CEO pay is not, when done sensibly, where the Board goes "Mark, you look damn handsome today - here is a hundred million. Go wild." It is a structured pay where you try and align incentives, that is, give the CEO upside when he does well and some downside when he doesn't. You want to encourage sensible risk-taking, remove principal-agent issues, and deal with moral hazard. Most pay for CEOs comes in stock grants or via other non-cash instruments. It is also usually not guaranteed up front.

So are you a douche, a douche sympathizer, or being ironic? Inquiring minds want to know.

CEO pay in Fortune 500s is upper-class back-scratching. Nothing more. It has nothing to do with performance.

Please keep your comments civil/constructive. Calling someone a douche because you disagree with their materialism does not add to the discussion, and is frowned on here.

I wasn't calling him a douche. I realized halfway through reading his post that he was being ironic.

It wasn't total hyperbole. I don't think it's fair to demonise one person's vanities over another on the basis of personal preference.

My vanity is technology. I also place a premium on having a living space that is aesthetically pleasing. A colleague of mine gets a similar aesthetic thrill from beautiful clothes. I tend to judge people whose vanities are primarily outward facing, e.g. buying an expensive car not because you appreciate the craftmanship but because you want to look snappy in it, but that's for the potential insecurity it alludes to rather than the indulgence itself.

A $17 million purchase is proportionally peanuts to some people. What you and I may call peanuts is a lifetime of difference to someone in the third world. Classifying materialism on such a high level seems absurd.

Paying $10 million for artwork and never looking at it makes a person a douche. The person is paying eight figures to deprive someone else of having it-- nothing more. It's not "supporting the arts". It's being a hypercompetitive shitfuck.

Paying $50 million for trophy real estate instead of investing it into better transportation (the only long-term solution to the real estate problem in New York and Silicon Valley) makes a person a douche.

Using a private 747 for casual transportation, logging an unconscionable ecological footprint through the unnecessary combustion of hydrocarbons in enormous amounts, makes one a douche.

Developing a tight social network to keep global society exclusive, closed and impoverished is a douche move.

Corrupting the U.S. political system and getting the world's most powerful nation into an unwinnable War of Corporate Enrichment (Iraq) is a douche move.

Morally speaking, the tip-top upper classes of the U.S. owe their lives to us in the cognitive 1 percent. They are deep in moral debt to us, and what keeps us from collecting is that we have more interesting things to do (in technology, where we can make positive-sum contributions to the world). We have the persuasive capability and the technological know-how to rise up and take them out, Paris 1793 style. We don't, because for enough of us, life remains pretty good. We're not "among them", and they constantly remind us of this fact; but we can work in technology, live pretty well, and generally control our own destinies. If that ever changes, though, those people need to watch the fuck out.

Someone who's obsessed with silly status-signalling stuff like that is almost guaranteed to be a bad leader.

That's why there's no correlation between the pay and the results, and that's why what you're defending is perverse.

The point I had was things can be bought for their inherent aesthetic value, independent of status signalling. Status signalling, while a deeply rooted biological behaviour, is a primitive imitation of the former.

Also, there is a correlation between pay and performance. You can't just strike out the empirical record for rhetorical convenience. It's closer tied to portion of pay in low-struck options, etc. versus cash pay but statistically significant nonetheless.

So, corporations should pay CEOs bigger salaries, because it's the most effective way to boost human space travel?

This is the highest voted counter-argument?

It's a broad metaphor for companies giving executives incentives to earn income that comports with the value they produced for shareholders. The incentives drive these executives far beyond where it has material significance for them because there are things beyond the material which money can increase the probability of attaining and that many people aspire towards.

Like almost every software engineer, I get paid far less than a few million dollars. And like almost every software engineer (the bachelors, anyway) I get paid far more than I "need". But according to many HN articles, if I were to accept a job without negotiating my pay upward as much as is reasonable, I would be a sucker.

TBH, if I heard a CEO of a for-profit didn't try to get a higher pay package, I'd be wondering about this CEO's business skill.

>TBH, if I heard a CEO of a for-profit didn't try to get a higher pay package, I'd be wondering about this CEO's business skill.

That's because you, like all people, suck at thinking rationally.

Of course he's gonna negotiate upwards. Someone good at the job of CEO would do so instinctively, because negotiating is a big part of their job and they like to do it well.

But it's not what his performance or his quality of life is based on.

The fault isn't being placed on the CEO. He is an individual who seeks personal gain primarily, places family interest and other similar motivators ahead of the needs of the organization he leads.

Rather, fingers should be pointed at Boards who agree to ridiculous compensation packages.

Most economists say that every good is non-satiable, except money, which people only want for the purpose of consuming goods.

In reality, the reverse is often true. You can have too much pizza (though it can be fun to try). You can't have too much in your bank account (or investment portfolio).

True, you can't have too much, but you can have enough that it puts you well past the point of diminishing returns.

If I, for example, were making 1m a year as a software engineer but still had to answer to someone else and deal with bullshit (read anything I didn't want to deal with - politics, TPS reports, writing boring software, limits on vacation), I'd still be as unhappy as I would be at twice the pay. More money wouldn't make the situation any more palatable. Getting a position that lessened the bullshit would. That position could take several forms, and there's many different levers (e.g. paid vacation, a position of substantial autonomy) I can pull besides money to increase my satisfaction.

I can't imagine, though, that most CEO's can move those levers drastically. It's not like you can negotiate for a more reasonable board come hiring time. CEO's don't take vacation in the same way you and I do, and even if they did, I'm not sure a CEO who fought to take time away from his company would be thought of favorably.

> You can have too much pizza...

But you can't have the best pizza in the world without potentially spending thousands of dollars to get yourself to Naples.

That's an extreme example, but I assume those economists mean that almost any category of good can reach arbitrary levels of consumption. If I had several billion dollars, my pizza acquisition budget might literally be 1000x what it is now.

Maybe, but I doubt it. And a holiday to Naples is not pizza, it's a holiday to Naples. In virtually every respect worth speaking of, they are entirely different products.

But is anyone going to argue that there's a serious quality of life difference between 20 and 100 million?

You're only looking at it from the executive's POV, not the company's. They are looking for the best they can find. It may be worth it to them to pay, $X million more for somebody who scores a 99 on a hypothetical CEO test, compared to somebody who scores only 98. The company wants to get somebody better, and to get that higher quality, they've got to fork over additional compensation.

Of course, companies are frequently wrong in the way that they score their candidates. But that doesn't change the fact that they've bidding on the highest perceived quality.

I am in fact looking at it from the company's point of view.

Anybody who doesn't want the job enough to do it for 10 million but would do it for 100 million is going to SUCK at the job. Period.

Anybody who doesn't want the job enough to do it for 10 million but would do it for 100 million is going to SUCK at the job

I think you're assuming to much in this statement. It's not clear that they would not be willing to do the job for $10 million. But there are 100 different companies who would be willing to pay them that much, and they've got to make a decision somehow. Other things being equal, they'll go with the one that offers the most.

This is exactly what pricing does in a market. It allows the participants to signal the importance of a product to them. That $100million bidder is signalling that it's more important to him to get mister AAA CEO. Is there some reason that we should ignore that bidder's signal?

You're arguing that the highest paid people in the world operate at the bottom of Maslow's hierarchy of needs.

Was Steve Jobs a $1/year CEO? How about Sergey Brin?

Good leaders typically have different motivations than "I could afford to upgrade my yacht from 10 million to 25 million". I understand that that complicates your economic model, but guess what, it's people we're talking about here.

And the job isn't so hard that they couldn't find a passel of candidates at $10MM.

This video cites several studies showing just that: beyond a certain threshold, money does not improve performance

http://www.youtube.com/watch?v=u6XAPnuFjJc

Michael Lewis points out in one of his books that for people on Wall Street, income is just a way of keeping score - which implies that money still is an incentive, just that the reasons change.

This actually implies that they don't really care about the money, only about the relative 'score'. Which means that they would not be disincentivized by heavy taxes, since their before-tax score is what matters to them.

Past a few million, wealth has basically no correlation with consumption. So to the extent that economic inequality is about unequal access to consumer goods (vs unequal numbers in a brokerage account), those high incomes are not a factor.

But they have an important indirect impact: wealth correlates with power; if you're richer, you can control more businesses, and run them the way you'd like. Thus, high marginal income taxes keep the old guard in power longer, and mean that ambitious people with new ideas take longer to take control.

High income taxes and capital gains taxes will mean that proportionately more of the world's companies will be owned and run by Rockefellers and du Ponts rather than Zuckerbergs.

Nobody's talking about taxes here, and your assertions are completely unfounded. Save it for meet the press.

I can't address the part about my assertions being unfounded, but you can replace "high marginal tax rates" with "lower levels of executive compensation" without affecting the argument.

So, what false assertion did I make?

It's interesting to read the first Forbes 400 list; there's a lot of old money there. Not so much lately.

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