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Comment by segasaturn | Hacker News Reader

Personally, while reading this, I was thinking of the recent waves mass layoffs (just today, massive layoffs and studio closures at Epic Games and SEGA), all while executives appear to be comfortable and keeping their million dollar salaries. I wonder how many jobs could be saved if a CEO making $40m+ just temporarily cut their salary? And I wonder how much more productive could a company be if so much of its funds weren't being funneled into the executive suite's pockets?

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Famously, Nintendo's president Satoru Iwata slashed his pay in half in 2014 due to the failure of the Wii U, and imposed pay cuts of 20-30% on all other executives. I don't recall any layoffs being announced in this period.

https://www.polygon.com/2014/1/29/5356812/nintendo-boss-sato...

It's an attractive idea for sure, but it's probably not that much in the scheme of things.

Say a full time employee earns $150k - total cost to employer is usually 2x so $300k. $40m / $300k = ~133 jobs. So if the company is laying off 10k employees it's close to 1% jobs saved - almost a rounding error. And that's if you cut the CEO's pay to $0.

A CEO would have to be earning something like 1000x more than their average employee for it to start making a really noticeable difference in actual layoff decisions.

Where are you getting these numbers? Ten thousand lay-offs seems like an arbitrary number to make this math look better. The most recent lay-offs by Epic were less than a thousand, roughly 830. Using, that number, even with the other figures you've chosen, a CEO pay cut would've definitely been noticeable.

This is a good point, the smaller the layoff the more you can argue that the CEO (or others) should just take a pay cut instead.

>Say a full time employee earns $150k

I don't know why you would. That's an egregiously high mark to use for a general statement on CEO vs employee earnings. It better figure is probably close to 1/3rd than even 2/3rds of that. Their total cost is not going to be 2x.

I don't know why you'd obfuscate with such unrealistic numbers, because the fact remains that cutting the CEO down to 0 is probably still not enough. The correct thing to do would be to cut the CEO down to zero AND cut most of the C-suite a significant portion* AND cut management and supervisor roles some smaller amount AND cut a nominal amount from all employees earning over a certain mark (perhaps 2x the median). With that, you will have executive, management, and labor all alike able to weather the economic storm. I find that more morally palatable than the seeming status quo of kicking out the workers least able to deal with a downturn.

*(as mentioned in another comment, Nintendo did this after the Wii U came in last during its console generation)

Your calculations seem so complicated that it is hard to point to any fault in them... An executive often earns 50x of lowest paid employees. Cut CEO salary in half saves 25 jobs.

I would say the CEO could still live comfortably and be proud of keeping those people working while adding value to the company.

> I would say the CEO could still live comfortably

The CEO would take another job. It isn't about comfort.

>earns $150k - total cost to employer is usually 2x so $300k.

2x? why this much? Oo

My bad, looks like the direct costs of an employee are more typically 1.4x the salary. That's basically taxes, benefits and perks and benefits. There also indirect costs like equipment, working space and administration so I believe the true cost of having an employee actually doing work is higher but probably more like 1.6x salary and not 2x.

A VP at Google makes about 5-10m in comp with SVPs making about 2-4x that (and CEO about 10x that (these are ranges so very unlikely will have some one with all those multipliers in the "extreme" range)

There are about (guessing and talking to people) 100-200 VPs conservatively and a dozen or so SVPs. So cutting leadership comp is reasonably feasible to save 10k jobs no? We haven't even talked about senior directors and directors.

At an average cost of 300k that comes to about $3B? At 5M average VP comp, even halving VP comp alone (not unreasonable given company direction is largely impacted by VP perf?) can save a good amount of job?

True, I think cutting pay for all executives would make a meaningful difference in a layoff. But don't forget that some fraction of execs might also be getting the axe in said layoff. GP was talking about CEOs specifically.

My brother was the ceo of a smaller company. In 2009 he cut his own salary to be able to retain employees. A few years later he resigned when the founder and chairman was pushing him to do something semi-illegal. While he was looking for a new job, which takes some time at this level, his wife divorced him and somehow instantly had a new relationship.

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