For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024.
It's difficult to understand pay of that size on a rational level. That represents individual shareholders voting for a significant dilution just to retain an extremely controversial celebrity CEO at a time when sales are falling. https://www.theguardian.com/technology/article/2024/jul/02/t...
I see this kind of thing more as "how much the CEO is allowing himself to steal from the till because there's nobody above him" most of the time. Except in this case the shareholders really did make an expensive choice.
It isn't the be all and end all, but I'd rather be a shareholder in, say, a military production company with solid government contacts & contracts than one with capable workers.
[0] Thank goodness that has finally changed but there is a bit of a lag while everyone catches up to the new normal.
Directors remuneration mostly decided by other directors (and just approved by shareholders who are not bothered), who tend to take the view that it is worth paying directors very highly.
Its something that has got worse, but its not new. As GK Galbraith said "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself."
The board decides the CEO's salary, no?
This, in turn, is caused by the size of the companies being so large.
You can still make everyone's wages better without paying millions to each person and definitely not to the CEO
> You can still make everyone's wages better without paying millions to each person and definitely not to the CEO
The point is that the CEO's pay typically scales with the size of the company more than the media wage. Moreover, the latter is set by supply and demand in the labor market, so if you want it to go up you either need less labor or more demand for labor.
Unless you want to get into anti-immigrant and protectionist measures, the first one looks like instituting a UBI or increasing the child tax credit so people are less compelled to take bad jobs for low pay. The second one is "make the economy stronger" (e.g. reduce corruption/waste or lower taxes) and "make the market more competitive" (e.g. make companies smaller so there are more of them and they have to outbid each other for labor and customers, so labor receives the gains as either higher wages or lower prices).
There is no point at which "expect publicly traded for-profit companies to spontaneously become charitable with wages" is a viable strategy, and they do not respond to shame.
People who have a job at Boeing are already well off by global standards (and probably even by developed world standards). If you want to take from the rich and give to the poor, how about we give to the actual poor?
If you want to be dramatic: we had negative real interest rates for a long while.
Nominal interest rates were close to 0% and inflation was positive.
> Shareholders don't appear to be worried about how the company actually runs in the details.
And shareholders who are interested get vilified as activists or short sellers.
> IE, the wages suggest workers don't really matter because they don't.
The labour share of GDP has been mostly stable for the last few decades between 55 to 65%-ish See https://fred.stlouisfed.org/series/LABSHPUSA156NRUG
Profits have also been fairly stable as a share of GDP at around 5-10%-ish: https://fred.stlouisfed.org/series/W273RE1A156NBEA
Just to be clear: going up or down by 5% of GDP is a lot in absolute terms, but not enough to justify hyperbole about "workers don't matter".
If you look at many top CEOs resumes, they are almost always devoid of any real experience. People talk about replacing various jobs by AI, but I'm pretty sure an LLM could replace most CEOs and no one would notice.
It's someone you can pin board and shareholder decisions on, as well as changes in market and accidents, that just goes away and lets some other people keep their power and profits instead of being accountable for their mistakes or lack of strategic performance.
I think the problem is you have to hire someone highly qualified and with relevant experience to at least show you're doing due diligence, and those people aren't cheap.
Pay plays a part in that, it signals that the person is extraordinarily competent and all around great and important.
In large corporations CEO:s aren't very important, it's just one person who mainly collects and structures information from people closer to the work and makes public appearances on behalf of the corporation and does paper shuffling required by the state and so on. It's not rocket surgery. Using this person to protect the reputation and image of shareholders and the board as well is a 'no-brainer' decision to make if your interests are well served by it.
American capitalism has lots of problems. The idea that CEOs "almost always" have no real-world experience is hardly worth arguing against: "almost always" is meaningless rhetoric and "real-world" likewise (what counts as real-world experience for Google? WPP? Northrop Grumman?). Jensen Huang is mentioned literally at the top of this thread and is an obvious counterexample.
I find it obvious from the context that they were referring to celebrity CEO:s in global corporations and not Mom or Pop in some small mom-and-pop corner store.
When I look at en.wikipedia on Huang it seems he graduated into a managing role and then founded Nvidia. By "real-world experience" I'd mean experience as a worker, but I can't answer for the person you're actually quoting.
However, it's an interesting example. Clearly Huang has managed to promote an image to you that is very different from mine. As I see it, Nvidia is a main supplier of hardware for globally fashionable grifts and scams, like large portions of so called 'crypto' and 'AI'. I also expect Nvidia to be an important supplier in the war industry, and I'm sure it is in surveillance tyranny.
I'd say so called AI is largely a scam. It's wobbly databases with non-deterministic query languages dressed up as a substitute for intelligence. Email is similarly a scam. Through mail you send someone an item, which might or might not have some script on it. Email is very different, and it's largely used for spam, even though the name seems to say it is very similar. Is this what you call progress?
No, I'm pointing out that Nvidia are supplying criminals and tyrants with the tools they need for their abusive and oppressive activities. I do not expect your mood to change from having this pointed out, rather the opposite, I expect you to already be somewhat aware of it. Personally, I try to avoid doing business with such people, and I would prefer to not be dependent on their enablers, though that is almost impossible for systemic reasons.
It's the dissonance between promise and delivery that make the term appropriate in my opinion. There's nothing intelligent about AI, and you can't transfer a package to a friend through email.
And, well, yes, one might argue that capitalism is basically a scam. Instead of serfs and slaves that were traded and exploited personally, we're now being traded and exploited collectively. I think Engels said this more succinctly at some point.
In general prisons are suppliers of cheap labour, and don't allow people to actually rot in them, though some inmates aren't actually supplied as labour, for reasons. As the person you're likely alluding to shows, grudge-laden manifestos and bombs don't do much to change society. It's a better idea to get organised around mutual aid and strikes in a wide sense.
If you have 10M of revenue and 9.5M of expenses then an increase of 500k in sales doubles your profit. Given that everybody in the company is needed (for sake of argument) to produce the initial 10M I wouldn't say that the CEO inking a new sale for 500k is worth the entirety of the original company.
> the company would make less money and it would be the CEO's fault.
It would be the CEO's fault, and the workers who were not at fault would be fired when the company needs to tighten the belt.
The money that workers bring into a company is often not being used at all to pay these CEO's. It's why so many CEO's have $0 salary or $200k salary.
It's a critical distinction because it clears up so much confusion people have about this topic. Those 300x multiple stories you see are almost always comparing two completely different income sources. You can almost think of it like a 3rd party is paying the CEO to run the company.
If you get 1% more work out of 350 people than the alternative.
If you get 1% more productivity out of 35,000 people than the alternative you have done it.
We don’t need deep packet inspection to spot a very out-of-the-chart huge traffic.
We don’t need micro-details of an economical agent actions to spot an anomaly in wealth distribution.
You could probably get away with it for months, honestly.
Simply being born into a richer family means you're significantly more likely to earn a higher education. Simply being born into a white family means you're more likely to finish high school.
And this is leaving out connections. If you know the people hiring, you have a better chance of getting hired. High-status people know other high-status people. If your family is high-status you're at a HUGE advantage.
That doesn't mean the opportunity "manifested" for you. But, it does mean your likelihood of obtaining said opportunity went higher.
I mean, when you look at the proportion of CEO's who are white, tall men as opposed to the regular population you notice that. It's an open secret. Some say its coincidence. I don't think anyone really believes that.
Said another way: I’d demand a lot more in compensation to be CEO of Boeing than NVIDIA (or any other role for that matter).
I'm ready to do it for a mere 5 mill/year (less than a sixth of the incumbent), and I'll happily take all the blame for all my predecessor's failings, and more.
Will I do a worse job than the incumbent? Maybe, maybe not, how the hell will anyone know?
Usain Bolt can run 100m in around 9.58s, and gets paid a lot for that ability (indirectly via sponsors etc). Assume I can run half as fast, say 100m in 19s; do I 'deserve' half of Bolt's fame and half of his sponsorships?
Similarly, you can't hire five 20% generals to put in charge of your army, and expect the same result as hiring one 100% general.
Or try hiring five 20% novelists or film makers or artists or actors etc.
> That's the whole point here - CEOs aren't paid proportionately like you or me.
Yes, and pay _not_ being proportional to ability is common and normal in all kinds of fields. It's nothing specific to CEOs.
If anything, pay being (even approximately) proportional to ability is probably the exception.
However, the jobs you listed are creative jobs. Not methodical ones. A filmmaker, truly, can never be replaced because he is his brain. He invented worlds nobody else could.
A CEO, however, does not make products generally. Nor does he come up with new things. He's a face, a leader, and not much beyond that. He could easily be replaced with an algorithm - if humans were receptive to that. They're not, unfortunately. So for now we need a warm body. Who that body actually is... meh, not really important. Best case, pick someone tall, white, and handsome. That usually works out.
And yet, we see companies opt for highly paid CEOs.
Sure, you can claim that boards (or whoever picks CEOs) to be all in cahoots with each other. But we also don't see greedy, activist investors racing each other to force companies to replace highly paid CEOs with the kind of anonymous dolls you describe; even though they are otherwise quite happy to clash with incumbent management, and even replace them wholesale, when they get control. Usually with some other highly paid and experience people.
Do you have any hypothesis as to why?
> I would agree that pay not being proportional is common because as you get closer to the skill ceiling the job becomes more difficult. You need more amount of effort/expertise/knowledge per unit of skill.
I'm not sure that's the right argument to make. I can't look into Usain Bolt's mind, but I don't think he'd be paid any less, even if hypothetically his running wouldn't take him any effort at all?
For the other two (expertise and knowledge), how would you define them in such a way that your statement is not circular?
I tend to see this as more of a case of marginal contribution. If you have a big, complicated machine that needs a tiny screw somewhere to work, and a normal screw costs 5 cents, but there's a fancy screw that enables the whole machine to be 1% more productive, the fancy screw might be worth up to ten million dollar a year, if your machine's output goes from 1 billion dollars a year to 1.01 billion dollars a year.
(I say 'up to', because in practice it depends on the supply of fancy screws. If there are lots of suppliers in the market, competition will drive their price down to close to production costs, even if they still give you ten million dollar in increased productivity.)
Similarly, perhaps a brand name CEO would only increase output by 1% over your hypothetical anonymous handsome guy, but that might still be worth millions a year.
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In any case, I would be quite baffled if famously greedy and supposedly short-termist shareholders, would leave money on the table by not replacing name brand CEOs with some anonymous doll, if that worked as well as you suggest.
I'll take the role for a wildly discounted $20m.
It would be hard to do much worse than the recent incompe .. uh, incumbents.
26.6M of that was stock. In percentage terms it's just equity that he effectively handed out before as a founder and is getting back in return for growing the company even more. I don't see a problem with it, considering that the median employee takes almost zero risks and can leave whenever they want.
If it were the case that employees need to put in capital into the business before being employees, then it would be a different story. In fact, those schemes exist - they're called MLM, or multi-level-marketing schemes, where you pay the company upfront to buy the product, and try to sell it at a profit (like herbalife), and try to recruit on behalf of the company!
If you're an engineer at Nvidia you'd have to do some braindead stupid things with your money to end up homeless.
Also, if you have technical skills at a level that Nvidia would hire you, you can easily get a job at probably a thousand other companies. Layoffs are a non-issue. Recruiters will be scrambling to hire ex-Nvidia folks in the event of a mass layoff, barring a major global financial collapse (in which case you're still better off than 95% of the population).
> Loosing job before that wealth threshold means homelessness and poverty.
No, it doesn't. Maybe don't borrow money and buy a fancy car and vacations you can't afford? Buy a normal car with cash and go on normal middle-class vacations?
If you work in an mid-level engineer capacity at a FAANG or Nvidia in the Bay Area you can easily live on 1/3 of your take-home compensation (that's including a normal car, a couple economy-class vacations a year, and a modest apartment) and invest the rest in index funds. Within a few years of working, you would have banked enough to have a decade worth of expenses saved before you'll be homeless, and I'm sure you can find another job in that decade.
I work at a big tech company, my (very normal) car cost me 1/10 of my annual take-home salary, I've never flown anything but economy class, and I save 60-75% of my take home pay and invest it. I can't afford rental properties or any of that, but I do have enough funds to last me several years at my current lifestyle.
Back when I was at startups (including co-founding one), I was never able to save more than a few months' worth of emergency fund, and that was not good for my mental health. That's one of the reason I joined a big tech company for now -- to de-risk myself financially.
Startups are financially FAR higher risk. You'll get 1/4 the pay that Nvidia gives you, the equity may end up being worth $0, and if it does end up being worth $0, you'll have missed out on the opportunity cost of being hired at any of the FAANG companies for whatever time you spent there.
I'm not discouraging anyone from doing a startup, but it IS higher financial risk in every way.
> I can't afford rental properties or any of that
Back in the days when I didn't have money to buy a car with cash, I just didn't buy a car and used a bike and public transit to get everywhere.
I mean, maybe that's why I have a high savings rate.
I can quit my job with full peace of mind, that's what this whole thread is about.
If and when I have money to buy a house, I'll just buy one. It's not that different from buying a fancy meal or a plane ticket. If I have the money I might buy it. If I don't, I don't think about it. I'm simple like that, and as a result, I have very few financial worries.
People start businesses and actually risk everything they have on them. If you only look at someone who owns and runs the biggest company in the world, you're just using the apex fallacy[0] to justify your perspective, and hoping nobody notices.
He's getting a 30M paycheck today only because he built a trillion dollar company from nothing and sacrificed the job opportunities he could have had at other companies for three decades.
But that is his stock he kept from founding the company. Not today.
He should of course still be CEO of Nvidia and get the money(stock awards), because unlike others, Nvidia execution is excellent (see market cap) and has been for decades, but that is not really any risk for him personally.
I say give him the 30 million dollar package because he's the only guy I can think of that has hope of turning NVDA into a a 10 trillion dollar company in a few years and I can't think of any other CEO that would do better than him.
And sure, maybe at that point his comp will be 300 million, that's fine, my NVDA stock will 10X as well and I'll be more than happy.
Agreed it is not about the risk
According to Wikipedia:
As of 2024, Huang has been Nvidia's chief executive for over three decades, a tenure described by The Wall Street Journal as "almost unheard of in fast-moving Silicon Valley".[14] He owns 3.6% of Nvidia's stock, which went public in 1999.[5] He earned US$24.6 million as CEO in 2007, ranking him as the 61st highest paid U.S. CEO by Forbes.[5]
This should tell you all you need to know.
With 20/20 hindsight which seems like the better path now?
>This should tell you all you need to know.
>hindsight grants better insight into decision making
That may be true but that's not the point.
You can't compare a company started when Nvidia did, against anything recent without involving a fair bit of hindsight.
And you can only see how it really turns out by waiting until now :)
Outside hiring can be what makes a CEO more like a "ceremonial" position or something, where if the "best of the best" is truly needed, there's still a lingering flavor that it's like hiring the very best interior decorator or landscaping gardener. It may be the best, and appearances have never been more outstanding, but tastes can change so there's an inherent perception of a temporary era stemming from this kind of thing.
A company like Boeing is going to be at its best when the top person has truly known how to build aircraft their entire life.
OTOH, a candidate CEO from a completely different industry, especially an experienced financial manipulator, could have already reached such a stratospheric salary history that it dwarfs anything achieved by anyone technically qualified. It costs a lot more than reasonable to recruit this kind of inflated ego or CV, and it wasn't always supposed to be forever. With the kind of multiple they are paying the hired CEO compared to the technically qualified leader, they expect that same multiple of financial performance to be achieved starting from that point forward, probably when they need it most or many wouldn't do it. With a bonanza like that they can justify paying the CEO exorbitantly, and they can be expected to retire in only a few years when things can be re-evaluated. When people blindly think it's actually worth it, that's where their thinking goes wrong. This can be very persuasive to shareholders who don't know anything about building aircraft themselves. Once all the Jack Welch wannabes pounced on this it's never been the same.
Hence an employee-owned company that builds aircraft, if they do decide to hire a non-aircraft-experienced CEO (even just for the expected short-term), at least that decision is being made exclusively by "aircraft-building" shareholders.
That may be even more confusing, I've been watching this dumpster fire unfold for decades due to some kind of underlying senselessness, and this is one of the things least sensible that's not well recognized any more. I'm not surprised Boeing was brought up but I wasn't expecting it when I pulled this article out of its coffin without a comment, where it had been immediately buried before it had a chance to trigger anybody else, capitalist or not.
I didn't submit the article but it's interesting to see how much it blew up and where it went. I figured if I did comment I would be adding something about an employee-owned company founded by a wizard scientist whom I had met before he founded it. It was iffy at first but now they can't be stopped, he's long retired but the company is now stronger than alternatives even though they have always had the disadvantage of competing when they are mere entrepreneurs in a capitalist-dominated market which they can never be expected to realistically dominate, just participate in.
I really don't even think every company should be employee-owned, for one thing there might not be as much of a thriving capitalist market to participate in. As that would be approached though, a worthwhile substitute might be a market where capital does not dominate, but I wouldn't be holding my breath on that.
I'm with you 100% on retiring after the first quarter too :)
If I had a strong point to make I probably would have made the initial comment, but I guess I felt it was enough to just vouch for the naked submission and let it stand on its own. And within an hour it went through the roof, sheesh, who knew?
Once again, nobody's fault but mine ;)
For example I didn’t advocate anything about retiring
Sorry, it was freilanzer whose idea it was to retire after the first quarter of a 30 million pay scale :/
This is an important point that is often ignored.
Within the past week there was a thread about "How to get paid FAANG money at non-FAANG companies", and someone mentioned starting your own business -- which folks (correctly) pointed out involved risks and time that most folks don't want to take.
(Also, it's always funny on HN when someone sarcastically talks about a CEO "only" being paid an absurd amount of money, when almost all of us are getting paid multiples of the median salary, plus whatever annual bonuses and stock.)
This is not to say I don't think CEOs do any work. They may make major contributions in terms of developing strategic plans, communicating them to staff and inspiring them to carry them out well, negotiating with allies, outmaneuvering competitors, and balancing the conflicting imperatives of operations, finance, security, legal and so on. But they're not compensated for labor so much as given (via negotiation) a commission on profits, revenue, stock price movement or suchlike. Inevitably there are conflicts of interest with shareholders, staff, and customers, and as a class CEOs and other high level executives seem to have tilted the tables more and more in their favor over recent decades.
Is it something that has been study or observed? Most company are resilient enough to handle the leaving of an individual, being a Chief or not. The opposite would be a flag for an instable company.
Far tangent exemple: Belgium without government.
It's chronically repeated as if companies are robbing salary coffers to pay exorbitant CEO compensation. But that is not true. It's Boeing shareholders forking over $34M, not Boeing inc.
If the CEO works for the shareholders because they are part of the investor class, they aren’t prioritizing workers or customers - and we all know at this point that improving service isn’t part of increasing profit
Unfortunately the voters are handcuffed to the two party system by First Past the Post voting and the spoiler effect that comes with it.
There was also a law passed in the '90s that forced executives to have more skin in the game in the form of stock - which caused companies to give executives a lot more stock.
My sense is that both (1), and the (1) && (2) combination, correlate fairly strongly with accepting a more-modest pay package. Such people seem to actually care about the organization. Or appreciate that others are doing 99.9% of the work. Or lack "the usual" pretend-to-be-emperor-while-looting-Rome sociopathy. Or something.