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Comment by Tiktaalik | Hacker News Reader

I like the idea of building in greater alignment of incentives between all the workers at the company, from the lowest worker to the top.

By all means CEOs should be highly paid, but if the company is successful and doing well, the workers that are enabling that success should see their fortunes rise as well.

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It’s a balance. A 100x pay gap between employee and ceo is close to a 1000x gap in disposable income. How many ceos are truly better than 1000 employees?

In that case we should see companies that have the 10x CEO and 900 more employees doing well.

The best ceos will work at the highest paying firms. This does not mean that this is the most efficient arrangement in aggregate or for an individual company. How often have we seen claims that lowly engineers are overpaid?

Is it though, or is it the best CEOs at marketing themselves work at the best firms? The idea is that you're sort being Skinner boxed since each CEO and company is different and it changes with time too.

Is the number of people who can be good CEOs close to the number of CEOs needed? If not, it should be possible to get more CEOs.

By anecdotal evidence - we have no good mechanism to evaluate a ceo. Nor do we have a good mechanism to discover ceos looking for employment.

An inefficient market breeds corruption.

Quite a lot I would say. A CEO is making daily decisions, any one of which could be be the start of a company’s death spiral that results in tens of thousands of job losses. The amount of leverage they have over a company dwarfs that of any other individual worker. Besides what should I care what they earn if they pay me well for what I do, relative to the market? This is lazy, greedy socialist thinking where they want money for nothing’s

CEOs have a lot of leverage, yes, but how do I know that a particular CEO is making good decisions? If we look at a random CEO who is making XX,000,000/year, can you make an evidence based case that they are providing millions of dollars worth of value over a replacement level manager? I'm genuinely interested to know if there is a meaningful way to demonstrate this, because I have looked and haven't found one.

> …but how do I know that a particular CEO is making good decisions?

We used to call that “profit”.

As a measurement over time at how well a business is performing this used to be the standard measurement but it seems to have been supplanted by other measures such as wealth inequity and twitter mob ragefests.

bezos was a shit CEO for two decades and then somehow fell into a bunch of profit out of nowhere!

Apple had 5 failing CEOs in a row before Steve Jobs. Then look what happened.

From an investment standpoint, could you predict Steve Jobs would be successful?

His performance with Pixar - taking it also from near bankruptcy to enormous success.

CEOs are also the ones setting things up so that everything important is in the hands of the CEO, which just happens to justify their spiraling pay. Can you imagine if we ran countries that way? The president/emperor/whatever keeps hoovering up more power, which then justifies giving them more and more of the wealth?

Capitalists talk a lot about the power of marketplaces, but internally companies are little feudal empires with ongoing wars of succession. And as The Economist points out, actual marketplace competition is in decline, so there's little in the way of external checks. Especially given that CEO tenure has dropped dramatically, meaning that the correlation between CEO pay and CEO value delivery has also dropped.

The visible decisions that I've seen attributed to CEOs range from "absurdly and obviously bad" to "good, until you find out the same decisions are already echoing throughout the industry". It begs the question did they come up with it themselves? Or did they just happen to hear rumblings before the grunts did?

I would argue that an above average CEO has a negligible effect on the company and an average one actively damages the company. The good ones make the decisions that everyone copies shortly after. We could probably replace >90% of them with AI and be better off.

If you're right, start your own company and put ChatGPT in charge of it.

Perfect!

I think it's better to ask "what percentage of an employee's output is attributable to the ceo's leadership?"

A reasonable answer, IMO, would be somewhere between 0.5% and 5%. The average CEO gets maybe 1%, which I think is pretty fair.

Often if a CEO makes 1000x an employee, it's because there are tens or hundreds of thousands of employees under them. The executives still get a relatively small portion of employee output.

I must say though that being more valuable than 1000 employees seems like a very low bar to me. I'm sure there are many people who are more valuable than even 100,000 employees.

Why should the answer be positive? I have worked places where the CEO's contribution was obviously negative. But that didn't matter, because the CEO's goal wasn't to maximize total societal wealth, or even the company's health, but to maximize the CEO's income. So anything that resulted in a stock price bump that lasted through their tenure was plenty. And given that CEO tenures are much shorter than they used to be, it's easier than ever to juke the numbers.

Steve Jobs turned a company that was 90 days from bankruptcy into the richest company in the world, with the same employees.

That’s one of … 10 million CEOs? The vast majority of CEOs are not capable of this, Steve Jobs undoubtedly had lieutenants and plain engineers who did brilliant work under him.

A long winded way to say that you are probably not working with Steve Jobs and regardless you need great employees to make a Steve Jobs successful.

> regardless you need great employees to make a Steve Jobs successful

A great CEO knows who to hire.

> Steve Jobs undoubtedly had lieutenants and plain engineers who did brilliant work under him

That didn't happen at random. Jobs also set them to work on the right things. When he took over Apple, he went through everything the company was doing and reoriented it all.

Jobs saw opportunities that everyone else missed.

Similarly, Terrence Tao was taking university-level mathematics courses at age 9. Does that justify teaching all 9-year olds mathematics at that level?

No, but it does justify not legislating away the possibility to teach any of them at that level.

That's stretching the analogy a bit; in today's economy, a great number of CEOs think that they deserve to be paid as if their impact was on par with Steve Jobs. If there were legislation to prevent a large Gini index at companies, Steve Jobs could have still been paid exorbitantly, if only his employee's compensation increased proportionally. And that's fair, because Steve Jobs wouldn't have gotten anywhere without excellent people to execute on his dreams.

I don’t think it’s particularly stretching the analogy, unless you think it would be appropriate that Terrence Tao could only be taught as he was if the lowest 9th grader would be taught Algebra II.

I'm having trouble making sense of what you're trying to say but note that Tao was 9 years old and not grade 9. Even I knew a kid in high school who was taking university classes.

I think that's purely a practical question that should be decided by the owners of the company since it's their money at stake.

What prevents Canadian companies from just moving to the US?

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