GM CEO salary went up from 23M to 29M between 2021 and 2022.
Signals matter , if you expect workers to empathize with management then management should not be getting 30% hikes y-o-y on top making 500-1000x the salary of an average worker .
Usually, the vast majority of compensation is scheduled a few years in advance, defined as a certain number of shared. Clickbait is then made using changed in the price of these shares even though the compensation agreements did not change.
My answer won't fit in the margin of HN's CSS controlled layout.
However this puts management interest in direct conflict with employees . More you exploit/squeeze the last bit of productivity the law and job market permits you will do so in determinant of employee health, fair and living wages.
As a shareholder, that is rational behavior, you only care to maximize returns to the extent permissible by the law[2] . Environment, employees or any other non profit concern cost money if not required by law why should you do it? the competition will not be doing it. They will become cheaper and be able to out compete.
Aligning management to shareholders solved the problem for shareholders, but it has made the problems for workers worse, combined with weak labor protections in this country means only protection workers have is the market, if their skills are niche and in-demand they will be able to negotiate better wages, otherwise they are screwed.
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America's unique strong immigration over the last two centuries is why labor protections are pretty weak compared to most of Europe and other developed economies, if citizen labor protests too much, America in the past always imported foreign labor to keep the supply high and market cheap for businesses.
Funnily all the right wing anti-immigration rhetoric is really anti-business as it gets- if it actually impacts policy in reduced immigration then workers will be able to push the labor demand-supply equation to their favor as they did in 30s. This is not necessarily a good thing for workers in the long term either, when America no longer is able to attract talent in same way as before, jobs will go abroad instead of being cheap and domestic.
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[1] Even when required by law, we will the follow the law only if there is any real threat of enforcement and penalties actually that are high enough to hurt. When the cost of breaking the law is negligible or non existent the law will likely be ignored.
[2] https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...
However, the notion that any increase (or decrease) in that assessed value is the result of the work of the executive in question is almost always false. So, if the stock gains 10%, the stock-compensation gains 10% ... but non-stock compensated employees, who may have been just as responsible for the 10% gain, if not more so, likely see either no gain or a smaller one.
Stock-based compensation for any employee that is not available to all employees is just allowing the ones who receive it to free-ride on the back of the accomplishments (or failures) of the entire enterprise.
Shall we tie all workers compensation to a high base + lots of options ?
- 2020 profit $13.672B - 2021 profit $17.878B - 2023 profit $20.981B - 2023 profit $22.344B
Yet GM cannot afford to give 10% year on year hikes for next 4 years ?
If management is responsible for profits then they are responsible for the losses too do they return money back in bad times ? Of course not , they will just negotiate more options to compensate for low price . Do you think she will stay and work even one year at her base compensation level of 2M ?
hypothetically let’s say the better salary is going to cost GM 10B a year . The profit would halve and stock would crash , it would still be a healthy company with 15B in profits but management and shareholders will be pissed, would it bad outcome for society or the company ?
In a unregulated capitalist ecosystem, the company will always pay the bare minimum, the shareholders and management incentives will not allow anything else .
Look at Apple for even starker example, most valuable company on earth unimaginable profits every year yet they pay their retail staff peanuts and don’t give them basic benefits because they can and the market expects them to.
[1] It does , all else being the same - They could have sold the stock for the same money in the market, or simply not diluted everyone with new issues and increased the stock price to reflect that.
It matters because words have meanings and using words correctly facilitates effective discussions.
i get where you're coming from, but also sympathize with the position of "if the compensation changes in value, the value of the compensation has changed"
maybe time to question this whole stock option thing for c-suite and just grant all employees a similar share of company performance
That is both wrong and misleading. Wrong for obvious reasons, but misleading because the nature of salary is that statement suggests that someone (the board or compensation committee) made an explicit decision to change their salary from $X to $Y.
"Today’s announcement that eligible UAW-Stellantis members will receive a record average profit-sharing amount of $14,760..."
"Ford...members are expected to receive an average of $9,176 in profit sharing."
"UAW members who work for General Motors received the news that they may receive up to $12,750 in profit sharing"
also phrasings like "average" and "up to" tend to obstruct an important part of the picture (i.e. the common worker)