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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?

#251

Post by Isthatablackgsd »

xmprt wrote: post #237
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…

The problem I have with CEOs is when they're doing a good job they make $$$ but when they're doing a bad job they still make $$. When a company goes down, they have golden parachutes to ensure that they're safe. Meanwhile, workers get shafted.

That and I have a problem with CEOs that demands to increase their pay by double, triple, quadruple amounts without increasing their employees pays. Not only CEOs, K-12 Boards did the same thing, increasing the superintendent pay without increasing the pay for teachers and school employees. Non-profits did the same, look at Mozilla. This is one reason why the ratio (employer:employee) is so obtusely off. American employees don't have such protection against this.

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

#253

Post by clairity »

hammock wrote: post #230
enos_feedler wrote: post #185

Earlier quoted context omitted.

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.

No. But it's generally common knowledge. Here are some articles https://fortune.com/2019/08/20/stock-buybacks-debt-financed/ https://www.cnbc.com/2019/07/29/buybacks-companies-increasin... https://crsreports.congress.gov/product/pdf/IF/IF11393 From the last one: "Data on the percentage of buybacks that are leveraged are inconsistent. For example, the bank J.P. Morgan Chase reported that leveraged buybacks accounted f…

this is another one of those things you learn in business school, a commonly disdained yet imminently useful education, particularly for engineers.

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

#255

Post by villasv »

jordanpg wrote: post #207

I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…

> Lots of jobs are hard and require extremely smart, gifted people. And yet somehow only executives get huge "compensation." Someone please break it down for me Barney-style because it seems like bullshit to me.

The higher your position in leadership, the higher responsibility of your decisions. Higher responsibilities are associated with higher financial risk. Higher financial risk yields higher financial returns.

It's the same reason consultants get paid so much for delivering mediocre projects. They are paid well not because they're great, but because they de-risk whoever is above.

A board of directors want a CEO that de-risk their fiduciary obligations and they will pay for it in excess.

I know a few companies that are not paying CEOs that much, because they're stable businesses. Little risk, less need for top-notch smooth-talking and cold blooded decisions.

Most big companies are facing more risk than you imagine, though, because those risks are measured possibly in decades of strategic decisions and impact in future shareholder value.

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

#256

Post by chrisseaton »

klyrs wrote: post #248
chrisseaton wrote: post #236

Earlier quoted context omitted.

In other words, normal market forces. The same reason you're paid whatever you're paid.

The "invisible hand" of plutocrats isn't the traditional meaning of "market forces", is it?

Rich people's evil plan to give other people money and drive wages up. Got it.

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

#257

Post by anigbrowl »

jordanpg wrote: post #207

I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…

Read this book (or its more academic cousin if you want a quantitative treatment): https://en.wikipedia.org/wiki/The_Dictator%27s_Handbook

CEOs are basically dictators with mercenary/conscript armies (depending on market and market conditions) which engage in economic rather than military competition. There are two parts to the job: expanding the size of the profit pie, and slicing it up in such a way as to keep stakeholders happy.

founder-CEOs are in a special position, eg Mark Zuckerberg structured FB so that a large chunk of the stock has no voting rights; if shareholders want to remove him they have to resort to the courts (obviously, the reality is more complex than this thumbnail sketch).

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

#258

Post by aerosmile »

nemetroid wrote: post #225
aerosmile wrote: post #200

So much "interesting stuff" both in the article and in the comments (my favorite is the guy claiming he knows of multiple startups where the startup CEOs are making 7 figures). I was initially perplexed when I saw this article doing well on the HN homepage, but I assumed that it's just some kind of an engagement metric that the HN algorithm is picking up on. Really disheartened to see that the article itself and so m…

> Most of us here on HN are hunting for disruptable opportunities so that we can either build startups or at least inform other people who will hopefully go after them. Maybe that was the case several years ago, but I believe most people on HN are regular salaried employees without any particular startup ambitions.

Fair enough - I agree that the sentiment towards certain topics has changed over the years.

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

#259

Post by ridethebike »

peshooo wrote: post #5

"If a role can be outsourced, it can be automated." I really don't see the logic in this statement.

Same as with this one: >> If a single role is as expensive as thousands of workers, it is surely the prime candidate for robot-induced redundancy.

There's no logic, it's just catchy sound bite that when said makes some people feel smart and forward looking.

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

#260

Post by koonsolo »

jordanpg wrote: post #207

I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…

That is simple: because CEO's need to be the best of the best.

Most professions require an average performer. Building my house didn't require the best of the best. Programming software doesn't require the best of the best.

But there are other professions where you need (to be) the best of the best: athletes, musicians, authors, ... . Coincidentally also the professions where the top performers make a crazy amount of money, and the average ones starve.

If you invest your money into a company, and hire an average CEO, you company will be crushed by a competitor that hired the top of the top CEO.

That is why shareholders are willing to pay so much money, because they are fishing in the same pond as their competitors, and will be crushed when picking the average performer.

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