301–310 of 363 posts
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They why do people who own the companies not oust board members who are wasting their money?
Because the people who own companies are either a) disinterested index funds, or b) members of the same plutocrat class as the board members and CEOs.
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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?
> Presumably because the market dictates their salary Ahh yes, when the "market" is primarily made up of other CEOs (i.e. who sit on corporate boards), whose primary vested interested is to ensure CEO salaries stay astronomically high.
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Rich people's evil plan to give other people money and drive wages up. Got it.
People are always talking about the free market as if it was some kind of self regulating physical law of nature that could never be wrong. What's so absurd to think that people from one class (CEOs/VC/etc) want to help people from that same class even if it's against the laws of the free market? If I help someone who kinda identfies with me, it raises the chance that they will help me/my friends/my family in the fut…
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Kyle's dad is the coach of your soccer team, right? Kyle's dad gets really really excited when you do well. He makes it fun, and you love going to practice! And you guys seem to win a lot! Do you remember last year, when Mike's dad was the coach? He yelled a lot, you hated going to practice, he made you cry? And you never seemed to win? Because Kyle's dad is a better coach, you win more. He's worth more to the team.…
Right, lots of wins are good, but why does the coach need to get paid $100M? Why is $1M not good enough? Let me guess: because being a coach is so hard, and requires so incredibly much smarts and talent that only a precious few people have?
Their response was that the computer did it. (This was a common explanation you got from bureaucracies in the 70s)
This did not satisfy my mother so she wrote a letter to the bank president, explaining to him that she didn't but that explanation. "Computers are not stupid and arrogant."
If what my mother says is true, you will never be able to replace a CEO with a computer.
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I don't agree that they are the "best of the best." Or at least it's not obvious to me that they are, in the same way a talented musician or athlete is. The supply/demand theory only explains the high cost of CEOs if there is an extremely limited pool of them. Because I reject the premise that they are just so incredibly talented , there shouldn't be a limited pool of them. I suspect the pool is limited, but not beca…
Let's say you invest $10M in your company, and I also have a competing $10M company. I go the traditional route and hire a top CEO with a big chunk of money. The rest of the workforce gets what they get elsewhere. You hire a CEO that is "fairly" compensated. You will basically need to make a bet on someone non-established, and hope they can perform. With the extra money, you can either hire better talent or hire more…
I'm saying I doubt that that's actually true. I think higher-paid CEOs bring something to the table, but it isn't talent. It's something more connected to an entrenched, corrupt system that has--incredibly--achieved buy-in from global capital markets. I suspect it has more to do with access, background, friends, networks, gumption, dedication, and luck. But not talent.
My point is that anyone could have those things. To the extent there is a true supply and demand aspect to this, it is mostly just simple luck.
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…
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!"
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…
Mostly I think they are paid according to a compensation committee made up of board members and other executives. It's not a surprise that these people have voted for huge wage rises for each other.
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People are always talking about the free market as if it was some kind of self regulating physical law of nature that could never be wrong. What's so absurd to think that people from one class (CEOs/VC/etc) want to help people from that same class even if it's against the laws of the free market? If I help someone who kinda identfies with me, it raises the chance that they will help me/my friends/my family in the fut…
You think investors pay money out of their own pocket to CEOs out of altruism?