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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?

#181

Post by fighterpilot »

quickthrowman wrote: post #175
warent wrote: post #169

Earlier quoted context omitted.

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.

How are resources allocated in this utopia?

My personal guess is - assuming that democracy is in tact, redistribution will be voted in with landslide support.

In a hypothetical future where almost nobody can compete with an AGI and 90% of voters find themselves completely useless in the economy, the proportion of voters who are against redistribution will drop precipitously.

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

#182

Post by eloff »

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?

If one could automate that job, one could automate every job. That's AGI territory.

Very creative jobs involving leading people will be the last jobs to fall to automation - assuming that's even possible.

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

#183

Post by dfxm12 »

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…

This more likely shows poor planning (by the CEO). If your firm is so reliant on one person, even if it is the CEO, it is poorly run. I believe it is a function of a CEO to enact that type of strategy, whether it be succession planning, proper delegation, identifying backups, instilling self reliance, etc.

This probably shows some perverse incentives. A CEO can clearly prove their worth by otherwise sabotaging the firm when they're out.

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

#184

Post by rybosworld »

makapuf wrote: post #93
kaczordon wrote: post #77

Earlier quoted context omitted.

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…

To be honest, this shows that a dysfunctional CEO (for completely understandable reasons) leads to a nonprofitable firm, not that value is added. You could say that people with no or defective keyboard have a hard time programming, but the best keyboard does not add significant value to a developer.

Agreed. If anything, this study makes the case that one person with sweeping decision power is at best a liability.

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

#185

Post by enos_feedler »

hammock wrote: post #137
MattGaiser wrote: post #118

Earlier quoted context omitted.

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

>You need profits for stock buybacks. You merely need capital. Lots of buybacks are funded by debt

This is pretty insane actually. Is there a common metric that captures which companies are funding buybacks with debt? or is it easy to figure out? I am not a finance person.

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

#186

Post by corpMaverick »

watwut wrote: post #49
nix23 wrote: post #13

Earlier quoted context omitted.

Ha!! My miniskirt says true ;)

The high level paid positions dont seem to be filled with women in miniskirts. They are more likely to be filled by men according to pretty much all studies I have seen. If anyone is exploiting CEOs for personal benefit, miniskirts are not that.

Someone in the position of exploiting the miniskirt loop-hole. Is probably smart enough not to become a high level executive. And rather become the ex-trophy-wife and enjoy half the money with none of the responsibilities.

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

#187

Post by fpig »

shuntress wrote: post #177
temp667 wrote: post #161

Earlier quoted context omitted.

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/

I think you might be missing the part that says "All numbers in thousands" on that table you've linked.

No he isn't.

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

#188

Post by indymike »

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.

The truth is that some CEOs are over-valued, and some are under-valued. And the same CEO one year may be overpaid, and perhaps dramatically underpaid in other years. It's complicated.

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

#189

Post by zaychikk »

The value of a CEO is in the soft value that they produce. Be it within the organization as a leader, or externally when dealing with gov't or a counterparty. In the best case, this soft value is translated into hard value for the shareholders, when someone like Tim Apple does what he's done for the past ten years.

If you consider an outlier like Elon Musk, the reason many CEOs can't be automated is even clearer: his cult of personality has added at least $100B to TSLA's market cap alone, and I say that while thinking that he's generally a pretty bad leader.

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

#190

Post by bigwavedave »

mottosso wrote: post #141
nataz wrote: post #132

Earlier quoted context omitted.

I'll second this comment. Armchair evaluation of CEOs suffers from survivorship bias. Decent/good CEO keeps the business moving. A bad CEO can sink a company. Boards/owners (dependant on corporate structure) can mitigate results.

> 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. Which interestingly is the same effect as swapping out somebody who does nothing for someone else who does nothing.

> 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.

>> Which interestingly is the same effect as swapping out somebody who does nothing for someone else who does nothing.

I disagree. Swapping out a decent senior dev for a decent senior dev doesn't have a net negative effect like swapping out a senior dev who does nothing for another senior dev who does nothing. In scenario one, you have a senior dev who ramps up in a decent amount of time, does the work they're paid for, and isn't a waste of time and money like a bad hire. In the second scenario, you have a senior dev who's just as damaging as their predecessor, but you've lost the time and money you've invested in onboarding them while also paying the ongoing opportunity cost you could have avoided with a decent hire and any technical debt they accrue gets tossed on the pile with the rest of the debt their predecessor accrued. It would have been better to have just kept the first guy instead of wasting time, money, and morale on someone new.

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