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Comment by Shank | Hacker News Reader

> But what would that even look like?

> Iwata ran the Kyoto, Japan-based video game company [Nintendo] from 2002 until his death in 2015. To avoid layoffs, Iwata took a 50% pay cut to help pay for employee salaries, saying a fully-staffed Nintendo would have a better chance of rebounding. [0]

[0]: https://www.cnbc.com/2024/02/13/nintendo-ceo-once-halved-sal...

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By taking that pay cut, how many employees could Nintendo keep that would otherwise have been fired? 5? 20? Certainly not in the hundreds or thousands. This just seems like virtue signalling.

Edit: to expand on my point re virtue signalling: the article states the CEO took a salary cut, not total compensation (and it doesn’t elaborate on the value of the cut). Salary is a small fraction of CEO total compensation - the bulk of which is stock based, and even in the event that stock grants were also cut, the CEO surely already had significant stock. Cutting a relatively small component of compensation in order to boost the stock price which disproportionately adds to the CEO’s personal wealth seems like virtue signalling to me. If the CEO said “shareholders be damned, morale and culture are all that matters in the long run, no layoffs etc etc” that would seem more meaningful.

I feel like this would be the few times where virtue signaling is probably a benefit. It can make all the people in the company feel like the leader is on their side, and maybe make the employees less resentful and be more productive.

It shows the rest of the staff that you actually are taking responsibility.

Optics matter. When a CEO approves mass layoffs, and ALSO approves a 60% salary increase, I can only conclude that the CEO is nothing but self-interested. Rewarding yourself for firing a statistically significant percentage of your company SHOULD indicate failure, not success.

It may signal virtue, but it has direct, practical, beneficial impacts on the company. I don’t see why that would be virtue signaling.

What would someone need to do in order to avoid being reduced to a virtue signaller?

5 or 20 workers (and their families) who don't get jerked around for stuff way outside their control is an absolute win.

Right now, there is no actual downside for executives. Just less upside. Did they earn XX Million this year or XXX Million. Some tangible downside would be nice.

I mean, heck, why aren't they fired? And really, it's more then middle management where that'd make a huge difference. If bad performance led to actual shakeups in the entrenched middle management, we might actually see business practices change rather than continue on through the established fiefdoms and petty corporate politics.

Taking a massive pay cut isn't "virtue", it's a direct and measurable sacrifice. Just because you don't agree with the position or outcome doesn't make it "virtue", I'd wish people stop using that word for things they disagree with.

In this specific case, don't we exactly want the CEO to signal virtue to the company and employees ?

Virtue signaling actually works, people wouldn’t do it otherwise. ;P

In 2021, the average S&P 500 CEO made 324 times what their company's average worker made [0]. The widest gap was at Amazon, with Bezos making over six thousand times as much as the average worker at his company. The report is from a few years ago, since then the gap has increased further. So yes, many companies could trivially retain hundreds if not thousands of workers simply by cutting the CEO's pay.

[0] https://www.businessinsider.com/these-20-companies-have-bigg...

This is probably the best answer in terms of what people want to see, that would also still give the company the best leadership going forward.

If the CEO taking a paycut materially reduces the size of what would otherwise be a large layoff on the basis if reduced cost savings, the CEO was way overpaid to start with. (And it probably doesn't change the number of people the firm can usefully employ under changed conditions, even if it provides cost savings, because the latter is based on whether employing them makes more money than it costs, to which external cost savings are probably mostly irrelevant.)

It should be added that layoffs are not commonplace in Japan. What you'll see instead are bonus cuts and salary reductions (at most 20 percent). To do US style layoffs you would need to show that the affected department was directly involved in a line of business the company has abandoned. If this isn't the case the employees stand a good chance of successfully suing the company in court. And then there's the reputational damage which would be considerable in a country where lifetime employment is valued.

In other words this kind of behavior wouldn't be viewed as all that surprising locally.

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