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CEOs are hugely expensive – why not automate them?

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Re: CEOs are hugely expensive – why not automate them?

#151

Post by newobj »

temp667 wrote: post #109
ARandomerDude wrote: post #42

CEOs aren't paid for the day-to-day value they provide to the company. They're paid for the long-term, strategic value the owners think they might provide the company in comparison to other candidates. So if you think CEO Candidate X will make you a 3x return on your investment, but CEO Candidate Y will make you a 5x return, it's almost certainly worth it to pay him/her the extra $200K to get you there, if that's the…

And you have only one CEO - so their comp is expensive, but not hugely expensive relative to total org costs. Apple has Tim Cook. In terms of investors evaluation of his ability to generate profits - let's say apple is going to do $400B in sales, and you think Tim's approach over time will yield a 3% improved margin. Is he then worth $12B/year? CEO's have enormous influence on a companies direction. Investors will au…

Walmart's annual profit is ~$130B so what I'm seeing is that yes in fact it's perfectly feasible for 1.6M Walmart employees to get a $40K/yr raise.

Re: CEOs are hugely expensive – why not automate them?

#152

Post by hctaw »

MattGaiser wrote: post #118
sn41 wrote: post #104

Earlier quoted context omitted.

And so they go for stock buyback strategies. Reduce the supply, the stock skyrockets, cash in, leave.

You need profits for stock buybacks. Buybacks are just superior to dividends as a way to return capital.

I think most criticism of buybacks would go away if we eliminated the capital gains tax and treated income equally regardless of where it comes from.

Re: CEOs are hugely expensive – why not automate them?

#154

Post by BuyMyBitcoins »

woeirua wrote: post #116

I too used to think that CEOs were a waste of resources, and that they had minimal if any impact on most companies. But I think people grossly underestimate how important CEOs are, because the vast majority of them do a decent job. When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. That said, you'll come to appreciate those "decent…

Indeed, and the majority of a CEO’s direction and decisions are fundamentally different from those that the other employees make. As a software engineer I’m simply not privy to the kinds of choices the CEO is making and “no news is good news” is often the case with C-Suite decisions. But, if they are making some bad choices it really shows.

Re: CEOs are hugely expensive – why not automate them?

#155

Post by ab111111111 »

smoldesu wrote: post #8

The reason we don't automate CEOs is liability: the board of directors/shareholders want someone to hold accountable when bad decisions start getting made. If you pay $4000 for a brand new iCEO that lays off your entire staff, you can really only scream at whoever minted the software making that decision, which often comes with limited liability licenses. Remember, corporate structure is about minimizing your own wor…

There's a whole world of outsourcing shouting angrily at people over the phone. That's what call centres are. And their workers normally cost a lot less than CEOs.

Re: CEOs are hugely expensive – why not automate them?

#156

Post by SerLava »

hervature wrote: post #74
harperlee wrote: post #60

Earlier quoted context omitted.

They should then be compensated with a leveraged long-term derivative product that pays based on the stock difference between their company and the industry, 5 to 10 years apart. "You want to be insanely rich? Here's a huge company that's not yours as a resource, now make it so it is the best one in 10 years!"

I find it funny that people throw out decades of history. Options contracts, as you propose, introduce the incentive for extreme risk taking because doing "normal boring" things literally doesn't pay. It's one of the main arguments for stock compensation because if the company does poorly, the CEO directly feels it where it hurts (the wallet).

I mean

Just make a contract to pay them a decent amount of the company doesnt go tits up

Re: CEOs are hugely expensive – why not automate them?

#157

Post by mellosouls »

ARandomerDude wrote: post #42

CEOs aren't paid for the day-to-day value they provide to the company. They're paid for the long-term, strategic value the owners think they might provide the company in comparison to other candidates. So if you think CEO Candidate X will make you a 3x return on your investment, but CEO Candidate Y will make you a 5x return, it's almost certainly worth it to pay him/her the extra $200K to get you there, if that's the…

This seems to miss one of the main points of the article that they are happy to dish out automation to other roles but can't quite bring it to bear on themselves...

Re: CEOs are hugely expensive – why not automate them?

#158

Post by spamizbad »

anotheryou wrote: post #52
spamizbad wrote: post #20

At the very least, you could do a hybrid model: An AI that makes 80% of the decisions and routes 20% to a human to help guide the decision making process.

Touches on an interesting point. I think the data input is highly unstructured and the output not very regular.

Sounds like the first step is figuring out a new standard to structure executive information.

Re: CEOs are hugely expensive – why not automate them?

#159

Post by rightbyte »

kaczordon wrote: post #77
alexgmcm wrote: post #27

I can't help but feel that CEO's are over-valued and it's fundamentally an attribution problem as it's hard to know how much value they actually add. A comparison would be to fund managers and how the rise of index funds showed they actually added very little value in many cases, and weren't worth their fees.

There was a Danish study that showed that a death in the family of a Danish CEO led, on average, to a 9 percent decline in the profitability of the corporation. If it was the death of a spouse, the decline was 15 percent and, if it was a child who died, 21 percent. From the study: “Interestingly, similar deaths experienced by individual members of the board of directors do not significantly affect firms’ outcomes. Ou…

There is probably a bias in that study for small companies, where the CEO do grunt work.

Re: CEOs are hugely expensive – why not automate them?

#160

Post by runeks »

ab111111111 wrote: post #149
ARandomerDude wrote: post #42

CEOs aren't paid for the day-to-day value they provide to the company. They're paid for the long-term, strategic value the owners think they might provide the company in comparison to other candidates. So if you think CEO Candidate X will make you a 3x return on your investment, but CEO Candidate Y will make you a 5x return, it's almost certainly worth it to pay him/her the extra $200K to get you there, if that's the…

Sure. Quite. But why not try developing an AI to replace them that can make you a >5x return?

Because they may be so expensive precisely because it’s difficult to automate them.
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