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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?

#161

Post by temp667 »

newobj wrote: post #151
temp667 wrote: post #109

Earlier quoted context omitted.

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.

Please don't make up stuff on HN - if you don't have something accurate to share or if it wouldn't support your point please still avoid making things up.

Walmart's profit margin is generally 2-3% and is generally $10 - $20B per year. [1]

And if Walmart were making $100B, the comp for their CEO be far from a major expense to the corp.

[1] - https://finance.yahoo.com/quote/WMT/financials/

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

#162

Post by mytailorisrich »

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?

Careful what you wish for here.

I suspect that if an AI can replace the job of a CEO then all other jobs will be gone as well.

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

#163

Post by fighterpilot »

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?

Doing this would require an AGI, which is currently out of reach.

A more useful/practical question would be: what tools can we build to assist CEOs in their decision making and make them more productive? I think the answer will come out as "not much", since the job is so high level and abstract. You'd have a better time targeting lower-skilled jobs or technical jobs like software engineering.

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

#164

Post by woah »

Traster wrote: post #48
unfamiliar wrote: post #28

Earlier quoted context omitted.

Presumably because the market dictates their salary, not a vague notion of what they should be paid. Or, to reframe the question: why don't people hire cheaper CEOs?

The simple answer is that people don't hire cheaper CEOs because the people who hire CEOs are the boards of companies and the boards of companies are mainly staffed by CEOs of other companies who unsurprisingly are incentivized to advocate for higher CEO pay.

Sounds like a board could make a killing by hiring a competent CEO on the cheap instead of their friends. Or maybe the reality is that the CEO compensation is a drop in bucket compared to the CEOs positive or negative effect on the bottom line and so it doesn’t make sense to cheap out.

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

#165

Post by throwawayboise »

newobj wrote: post #151
temp667 wrote: post #109

Earlier quoted context omitted.

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.

It's also perfectly feasible for them to pay more rent for their stores, or pay their suppliers more for their products, but why would they?

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

#166

Post by 3GuardLineups »

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 all evidence points to such an endeavor being out of reach for the foreseeable future

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

#167

Post by visarga »

fighterpilot wrote: post #163
ab111111111 wrote: post #149

Earlier quoted context omitted.

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

Doing this would require an AGI, which is currently out of reach. A more useful/practical question would be: what tools can we build to assist CEOs in their decision making and make them more productive? I think the answer will come out as "not much", since the job is so high level and abstract. You'd have a better time targeting lower-skilled jobs or technical jobs like software engineering.

> A more useful/practical question would be: what tools can we build to assist CEOs in their decision making and make them more productive?

They are called data scientists. An AI would be able to crunch numbers, but someone needs to read and interpret the results. You can't automate that part yet, humans are still the best in interpreting data into social and business context.

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

#168

Post by crazygringo »

z3t4 wrote: post #115
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…

One person cannot by her/him self return 3x or 5x profit. Its always about the team. And good team leaders are very hard to get by.

That doesn't matter, because it's generally the CEO who puts together the team, motivates it, keeps it accountable, etc.

Obviously the board has input on the rest of the C-suite, but it's still most fundamentally the CEO who is responsible for the team.

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

#169

Post by warent »

mytailorisrich wrote: post #162
ab111111111 wrote: post #149

Earlier quoted context omitted.

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

Careful what you wish for here. I suspect that if an AI can replace the job of a CEO then all other jobs will be gone as well.

The fact that the western society finds job automation to be a danger (or dystopian) is an indicator that something is severely dated at best--or dangerously corrupt at worst--with our economic system.

Such a thing would be a utopian outcome. If this kind work can be automated in a humane way, then the vast majority of work can be automated. That means people can be freed to spend every waking moment on art and play.

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

#170

Post by freeone3000 »

wrigby wrote: post #138
andromeduck wrote: post #126

Earlier quoted context omitted.

Dividends ought to not be at a tax disadvantage over capital gains for this reason.

Are they not? I thought qualified dividends (that is, dividends on stocks that have been held long enough to qualify for long-term capital gains) are taxed at the long-term capital gains rate.

You still have the one year of dividends taxed at the short-term rate, since dividends are taxed on disbursement whereas capital gains is only taxed on stock sale.
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