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Comment by JTbane | Hacker News Reader

C-suite salaries are so high in America I'm wondering if these sort of co-ops could be more competitive on that cost saving alone.

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It’s really the non-employee shareholders that take the value, so instead of comparing with CEO and management, you should instead be asking:

“How to transfer ownership of all publicly traded shares such that they are owned solely by the employees and not non-employee investors”

CEOs and management are simply there to prevent the above from happening, which is why they are paid by the board so much.

The boards are the unelected non-employee owners that need to go away

> not non-employee investors

I must be thick, but I fail to understand how shareholders are "investors" of a publicly traded company? Yes, at some point, the company went to the market, and large sums of cash were exchanged for company shares, with the promise of a future return of part of the profit on that share. So yes, that moment could be seen as an investment.

But from that point onward, holding a share of a traded company has nothing to do with investment. Share holders are exchanging shares on the stock market, but at no point is any of that money going back to the companies they are trading shares of. They are just exchanging the "profit sharing promise" among each other, with no positive financial impact on the companies whatsoever. Quite the contrary, as they eat up a huge quantity of the available net profit, that could have been reinvested in the companies themselves.

IPO creates the “public market investment vehicle” by liquidating the assets of the private equity holders onto retail investors.

In single share class companies then, the entirety of the “value” from a financial perspective is held in stocks and corporate bonds. Whomever owns these, has voting and control rights in a way that non-voting equity holders do not.

Notably almost no public companies give voting shares to employees- I’m sure there are examples but incredibly rare.

Shareholders benefit materially from the labor of the company by holding the asset that (theoretically) accretes value with no actual labor inputs.

That means that anyone doing labor is paying the shareholders from their paycheck every month.

Why is it like this, because the contracts people sign and the egregious power disparity makes it such that capital, the voting share holders, have ALL of the value that they can turn trade or liquidate or whatever because they gave money for shares and more shares means more power in the company. The board ultimately encourages this because they are only interested in capital returns and stock price.

Totally valid question I struggled with for years.

Simply yes, the most of the investment happens when shares are issued - notably the IPO. However companies can issue new shares, or buy back/retire shares and reissue at a future date. The value from people holding shares maintains the price for which companies can cash in at a future date. So demand for shares on the market is sort of a store of value for companies.

Your question on reinvestment: a company is under no obligation to return profits to shareholders and can reinvest as much of their profit as they please. Amazon did this for years. Of course there are practical limits to this as board members often are representatives of shareholder interests. When a company no longer can make new credible investments, they are likely to return excess profits to shareholders. Different companies have different mandates from shareholders and different levels of scrutiny for what counts as credible reinvestment.

Now in practice there is the added layer of shares representing the interests of the make up of the firm. Board seats often are shareholders, creditors give preference to firms with valuable shares, Ceos are often paid in shares as sometimes employees at many firms.

Ultimately, there is no legal claim to profits from shareholders, nor is there legal claim to control. (Look at Google's multi class share obfuscating control). However giving profit and control helps stoke share price which is the store of value for firms as well, helps maintain access to credit/ financial strength, and represents the interests of the firm itself (via its board, creditors, CEO, employees etc.)

TLDR: companies issue /reissue new shares to finance their business. Maintaining share price stores value for business (and new demand builds that value)

Jamie Dimon, the CEO of JPMorgan Chase, was paid $36M in 2023. The company had, at the end of the year, 310,000 employees. So we can assume that if got paid zero, the company would've been able to distribute about $116 to each of them. Doesn't look very compelling to me, in that particular case.

I believe the idea is you replace individuals who solely manage across the board, with the idea management is really a part time job. That so many executives split their time would suggest that might very well be the case. With that in mind, there are many efficiencies imaginable beyond just the C-suite. And the employees now have ownership, so they have more of a reason to take up more responsibility than the current environment where employees are increasingly detached from their work, for good reason.

Huh, that sounds like taking yet another full-time job and smearing its workload across everyone. That already happened with quite a lot of occupations - thanks to "increased productivity" brought by computers, a typical white-collar employee is now also doing the job of a secretary (calendar, mail, setting up meetings), graphics department (PowerPoint), financial department (managing and reporting travel expenses), and couple other ones as well.

And then everyone is surprised that real productivity doesn't seem to track the theoretical increase brought by technology. Well, maybe because most of that turns out to be replacing legible expense (salaries of well-defined jobs) with larger, illegible ones (everyone else doing tiny bit of extra work). Feels to me that your proposal would end up being just another case of that.

> graphics department (PowerPoint)

You started the paragraph with the word "workload," but here the load is about as close to zero for the average employee as one could get without being pedantic about it.

People aren't using virtual brushes and learning color theory to digitally paint their PowerPoints, or even composing their slides effectively in the visual space provided as a graphic designer would in Photoshop. They are writing and revising their drafts in PowerPoint, often using the default templates or perhaps 2-3 minutes of trying out different themes.

That ends up smearing all the costs and benefits of default PowerPoint look-and-feel across the audience for all these boring presentations.

But I claim the cost to the employee's time and education due to them technically having taken on the responsibilities of a graphic designer are, on average, effectively zero.

Maybe I named the department wrong, but my point is, back before PowerPoint, in the era of more analog presentations, large companies had a separate group of people you would ask to prepare charts and graphics for your presentation. Nowadays, you have to do it yourself.

My point is that all of us are constantly distracted by random, intermittent tasks outside our specializations, which previously were done by dedicated specialists - people who could afford to become proficient at that work. This is a huge productivity hit for everyone.

A few corporations still have a separate department dedicated entirely to generating things like PowerPoints. McKinsey for example. The consultants are good at creating PowerPoints if they need to, but they can just outline it or flesh it out as much as they like and toss it over the fence to the "PowerPoint department" which will complete it overnight based on the instructions/outline/information/draft sent in by the requesting consultant.

Yeah but slide shows are a core competency for McKinsey.

Cool, now combine the salaries of the entire C-suite. That’s what the parent comment is referring to.

OK. Let's assume that the rest of the C-suite combines to give that number a solid 5x multiplier. How accurate that is is left as an exercise to the reader, but be aware that the CEO is almost always the highest-paid member of a C-suite.

That would turn $116 into $580 per year. Spread out, that would be approximately $22.30 per paycheck if biweekly, or $24.16 if twice a month. All before taxes, of course. Real life-changing money for hundreds of thousands of people, right?

The point here is not that spreading the money from the C-suite to the workers is in any way a bad idea. The point is that it doesn't go nearly as far as we might like to think. We might want to adjust our policy preferences and goals to reflect reality instead of dreaming of us all dining endlessly on the the fat of the C-suite.

Oh, and here's a reference for C-suite comp at JP Morgan Chase. Reliability unknown, but if accurate it means my assumption of a 5x multiplier is overly generous: https://www1.salary.com/JPMORGAN-CHASE-and-CO-Executive-Sala...

> instead of dreaming of us all dining endlessly on the the fat of the C-suite.

I thought the issue with such high/concentrated C-suite compensation isn't the envy (though that may be the case for some). The issue is that just by squeezing $116 per employee such a CEO can pay herself. Like if removing armrests from all employee chairs nets you a few additional millions of dollars, the temptation to do so exists.

If there was no such C-suite, there would be less incentives for pennypinching over basic employee wellbeing.

If you look at sibling comments, you'll find a whole discussion where users talk about the major significance to many people of a different numerical estimate. With that in mind, I think that for many people the issue is indeed greater employee income instead of avoiding pennypinching over basic employee wellbeing.

Also maybe do it across a few more industries.

Also maybe move whatever other goalposts you can find until the Marxist theory begins to make sense.

Also keep stubbornly clinging to the idea that organizing and coordinating workers is not real work.

It is, but it's not worth the massive sums some executives pay themselves.

Haha, imagine being the type of person who attacks anyone who criticizes ultra-high C-suite salaries by calling them a "Marxist".

How is it an attack? What would be a more accurate descriptor for someone who appears to subscribe to the idea of an oppressed class and an oppressor class?

This has nothing to do with class warfare. We're talking about individuals who make several orders of magnitude more money than regular employees, despite the impossibility of demonstrating that they add an equivalent amount of value to the organization. The idea isn't "everyone should make the same amount", the idea is that pay should be proportional to one's value add.

Lmao this is not marxism this is much much closer to falangism and Catholic Syndicalism. Also answering to your comment "How is it an attack? What would be a more accurate descriptor for someone who appears to subscribe to the idea of an oppressed class and an oppressor class?"

Nobody talked about that or said that they just asked to replicate the model in more industries, and seeing the sorry state of many products, that seems wise.

As someone that escaped a socialist country, I can and will have to ask you to take five minutes to enage with people comments instead of blindly barking.

You end up with ~$2300 more per employee, assuming they all get paid the same and there are 20 of them. Which still isn't much.

Ask the average American worker if they'd like an extra $2300 a year. And yes I understand thats pre-tax. But even so, thats a non-negligible amount for a lot of people.

For whom $2,300 / year is meaningful is, dare I say, hard to answer question. Most of the people for whom an additional $2,300 / year is meaningful pay little to no taxes. However, a large chunk of these people also get Earning Income Credit. These people would lose at least part of this credit if their income increases. This question I believe can be answered by the bi-partisan U.S. Government Accountability Office or U.S Treasury- they certainly have the income returns for all Americans.

Stepped tax thresholds are always a problem when they incentivise low-earners to keep their income below a certain, arbitrary level. However, it would be inappropriate to deny employees a raise based on the existence of tax levels - after all, wouldn't the employees pay exactly no tax at all if they weren't paid? The tax is also guaranteed in most cases to improve the economy of the local area. I don't know the specifics of how it works in the USA, but I am aware of 'buy American' policies for federal public spending and equivalent rules for local government.

Say an employee effectively gets $10 less money, but the company effectively now pays the government $1000 in the same period. That might mean new bus subsidies, legal aid, development grants... things which make everyone slightly better off in the long-term. I think that's a good trade-off.

> For whom $2,300 / year is meaningful is, dare I say, hard to answer question

There were many articles written on the impact of the 2021 Advance Child Tax Credit (up to $1,800 per child over a 6 month period). The impact was very significant on lower-income families - which makes sense because for those earning less than $40,000 per year, that amount is more than the amount in one's paystub.

And how many JPmorgan employees fall into that category?

Glassdoor tells me the salaries of JPMorgan tellers ranges from $38,000 - $62,000 with a median of $42,000. So without digging into salary distribution at the entire company, I can yell you with certainty that it's a non-zero fraction.

I'm not diaagreeing, but most of the people working for JPM are not average.

thats still 2000+ dollars per employee that can go into the economy, or help a family get through a rough patch no?

JP Morgan works in 65 countries, in some of them 2300 would be a year of salary.

Venezuela avg salary 230$ per month

Vietnam avg salary 277$ per month

Lebanon avg salary 190$ per month

Nigeria avg salary 730$ per month

Pakistan avg salary 293$ per month

In all those countries, average salary for JP Morgan employees is significantly higher (especially if you include expats). Also I think you are significantly off with Nigeria avg salary - no way it's so high in such a poor country.

Nigeria is tricky - I've seen estimates ranging from $130-$750. World Bank classifies it as a "lower middle income" country at this point, which would suggest they at least think the median is <$4k or so per year, I think.

If we factor in not just C-suite but the entire middle to top management, then I definitely think there is something to come for.

Though, in the end, the US is extremely adversarial. So these people standing to loose out on the competition would do anything to stifle such innovations.

So in this utopia does the organization run with no management at all or does management all work for $0?

wut? where does this comment even come from?

are you under the belief that you either earn 400k a year or 0?

what if middle management just got a reasonable compensation in line with what ordinary people earn? this is actually not even a foreign concept in the us. just look to the 60s.

Unlike some of these executives, we're not animals. We won't make them work for less than the living wage.

But there will be fewer perks.

The US reputedly has the best Democracy money can buy.

They actually have a lot of difficulty in hiring good directors for this exact reason, they have widened the gap several times and are planning to keep widening it.

Coops have a hard time hiring directors because they can get paid more in standard corporations?

What a heartwarming story of employees knowing their worth and not settling for less.

C-suite compensation, especially stock-based, is often in part to ensure management loyalty to shareholders vs other things. Worker board membership means management once again has competing loyalties, but now de jure. That means it is not worth it to the share holders to pay the extra "ransom compensation", in addition to workers probably outright being against it. I would thus expect C-suite compensation to go down.

"ensure management loyalty to shareholders"

Everyone's pay is to keep them, isn't it? Nobody is loyal beyond being paid.

Do CEO's really provide so much 'extra' benefit to justify the premium? Is their loyalty in particular worth paying so much for?

I'm just not seeing how 'ransom' is needed. Isn't growing a healthy business supposed to be the goal for CEO and Board? And if employee owned, it is same.

The only reason to pay the extra 'ransom' to be loyal to shareholders, is when they want the CEO to do things that are 'not' for the benefit of the company, but only to benefit shareholders, who can sell and exit.

I think the question is who is the business healthy for, and who is the c-suite and up loyal to?

It is possible, and even likely, that a healthy business differs in some material ways for a CEO+board than its employees, though I also expect there are also overlaps

The ways the stock price influences a business that already has gone public are subtle and not to be taken for granted

It is an interesting question why they don’t outcompete other businesses.

Most likely because growth is not really the primary goal.

If an organization has any goals besides growth at all costs it will fall behind.

The simple explanation is that the actions of C-suite executives add value, even after factoring in their compensation

shades of https://www.newyorker.com/cartoon/a16995

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