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Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

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Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#91

Post by thwayunion »

next_xibalba wrote: post #65
toomuchtodo wrote: post #22

Earlier quoted context omitted.

> The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. This is a poor take. The function of the CEO of a publicly traded company is to execute on major objectives of the firm. This might be optimizing for max profit, but it might not, depending on what your majority shareholders communicate to the board and management (as well as how they vote their shares). A…

This is a poor, uninformed take. The incentive structure of public companies is only to maximize share price. If a CEO fails to do this, an activist investor will spot the opportunity, buy up shares, and agitate for strategy or leadership change until share price maximization is once again the top priority.

> maximize share price

This is obviously not true.

Even in the most extreme version of the "shareholder value" philosophy, the goal is not to maximize share price alone. The goal is to maximize total return way that is sustainable within the timeframe that the major of (voting) shareholders consider relevant.

The simplest counter-example is the existence of dividends. Any time a company issues a dividend, they could often instead buy back shares and achieve a higher share price at some instantaneous point in time. But in many cases that would come at the expense of total shareholder return, which shareholders obviously care more about than price alone.

There are also all sorts of hilariously destructive financial engineering tricks that a company could do to make their share price shoot to the moon just before cratering to zero. Eg: take on as much debt as possible, sell all of your assets, layoff all of your employees, buy back all shares at any price, and declare bankruptcy. There might even be legal ways of doing this. Firms never do those things except on long enough time-frames with big enough personalities; GE is the poster-child here.

Most firms, especially large ones, have a complex set of strategic considerations. Short term share price plays an outsized role in decision making, imo, but it's almost never the entire objective function of a firm.

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#92

Post by hello_moto »

mabbo wrote: post #20

The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. Blaming the CEO for doing the job they were hired to do seems short-sighted. Blame the broken system that incentivizes this, that makes doing it profitable. And then, let's change the system.

> And then, let's change the system.

How about ... get ready for a taboo word in hi-tech: unionized? at a certain size, a hi-tech company must face labour union?

Before anyone suggests that Union protect low performer and penalized high performer, keep in mind that right now, at this moment, high performers are culled left and right in FAANG because their salary is too high.

High performers also gravitated towards "cool new projects" that are getting wiped out as well. "High performers" know that if they performed well, they will get paid more, simple. They know the game so they will choose greenfield/moonshot projects (zero maintenance, more output regardless the biz-ROI).

Also on the topic of Union pushes Offshore/Outsource => already happened for some of these FAANGs anyway. Amazon India salary is going up up up up up up to a point where it is close to US salary.

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#93

Post by manuelabeledo »

jaywalk wrote: post #55
manuelabeledo wrote: post #35

Earlier quoted context omitted.

If their job is to make money for the shareholders, and quarterly reports show that they are either making less money, or incurring in losses, then they aren't doing their job. They laid off people who had little to zero influence in defining the company mission, trying to cut spending. This suggests that the C-suite over-spent. > Blaming the CEO for doing the job they were hired to do seems short-sighted. Blame the…

> A CEO would not need to lay off people if their long term plans worked accordingly, which means that they suck at their job. So any CEO who is not a psychic will most likely end up sucking at their job.

Let me put it this way. If I were to hire an engineer that writes 10x more code than the next, but all the code needs to be rewritten after a year because he made some very questionable decisions, I would definitely fire that guy.

Similarly, if I hire a CEO who hires 20,000 people, then lays 12,000 off after a year, I would have to question his ability as the head of the company.

It is not about being able to predict the future, at all.

Also, have I mentioned that most of these companies aren't posting losses? Or even problematic trends in their revenue reports?

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#94

Post by textech »

I'm always surprised to see how many CEOs walk away with millions while running their companies to the ground. The vast majority of the S&P 500 corps are mostly monopolies (Telecommunication, Airlines, Insurance...etc.) and for the most part run themselves yet the CEOs are paid exorbitantly.

How much did the CEOs of Circuit City, Blockbuster and so many others made while being completely oblivious to what was happening around them? Even low-level employees probably saw the shift to online/Amazon yet CEOs still walked away with millions. The Corp structure/model seems to be completely broken and most of them can only survive as monopolies.

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#95

Post by LeifCarrotson »

rcme wrote: post #61
mabbo wrote: post #20

The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. Blaming the CEO for doing the job they were hired to do seems short-sighted. Blame the broken system that incentivizes this, that makes doing it profitable. And then, let's change the system.

> The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. How is failing to predict market conditions a few months into the future and over hiring part of making a publicly traded company money? If anything, these layoffs are an admission from management that they're wasting money.

It depends on whether those few months or years were enough time to earn back the value invested in training newly hired employees.

If an additional employee in a busy year can make more money for the company than it costs to hire, train, and employ that person, then the company can be expected to hire them and fire them when it's no longer as busy. That's not wasting money, that's making money.

I'm fortunate to work for a small shop with business values that include metrics like retention that aren't tied to making shareholders money, including a goal of "never have to lay people off". And we haven't, in 35 years of operation, through major upswings and downturns. We're aware that this makes us less financially competitive for sure in the short term and arguably in the long term, but we're OK with this compromise and others, because we'd rather take care of our people than win the rat race. But we're the exception, not the rule.

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#96

Post by Spooky23 »

mabbo wrote: post #20

The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. Blaming the CEO for doing the job they were hired to do seems short-sighted. Blame the broken system that incentivizes this, that makes doing it profitable. And then, let's change the system.

That’s a position held by Wall St types as it benefits them.

The orgy of tech hiring with the objective of denying candidates to other companies is evidence that the large tech CEOs no longer feel beholden to that. Automotive CEOs do, hence the COVID “we love you, remember us” ads, followed by shooting themselves in the head by breaking their supply chains.

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#97

Post by charles_f »

sokoloff wrote: post #7
SketchySeaBeast wrote: post #3

This is based upon the assumption that layoffs are a failure rather than a feature which, while I find it distasteful using people's livelihoods in such a way, doesn't actually seem to be the reckoning for a lot of people. When times are good why wouldn't you hire to maximize profits and then cut people loose when times are getting bad? If you can ignore the human factor it makes sense.

It's not even clear to me that tech employees (as a whole) would be better off if such an overall system were in place for the last decade. Instead of (highly-visible) layoffs now, you'd have seen substantially less hiring across the last decade (invisibly) and probably much lower market-clearing compensation levels as a result. You can't have the benefits of go-go-gang-busters hiring sprees without sometimes having…

Two things

1) you mostly need your money now, to pay rent or mortgage, food, activities. In that cyclic markets like this are bad for devs. In choosing between a higher salary that comes with a non negligible chance that you won't have a salary at all for a sustained period, or lesser compensation but higher stability, I choose the latter.

2) The crazy increase of salaries was the result of the raise of demand, and got matched by a raise of offer. Offer is by nature much less elastic than demand: it takes years to make a good dev, but we turned from the hottest market ever to layoffs in under 6 months. The problem is that the offer creation machine (education) is not elastic as well. You can't recycle your CS degree into a construction degree very easily. This means that while the market is slow over the next few years, we will see waves of devs freshly minted out of college, in proportions that correspond to a hot market. Assuming that the demand was generated by actual value creation, and that it restarts in a frw years, it will be a long time until we get back to job safety and prosperity

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#98

Post by WJW »

SketchySeaBeast wrote: post #38
nightski wrote: post #32

Earlier quoted context omitted.

There are lots of examples of CEOs making decisions for the future health of the company that are rewarded by Wall Street. The trope that investors only care about the current quarter profits is just bs. In fact in my experience future growth potential is rewarded a lot more by Wall Street than consistent profits.

I think this point would be helped with some examples.

- Any form of R&D spending. Biotech companies are an extreme case of this, many making no money at all for years until they get FDA approval or go bankrupt. A lot of companies will invest in new development of new machines in order to gain an edge in the long run.

- Any form of expansion into new markets. Will take a lot of cash to get started and may take years before it becomes successful.

- Most marketing for brands that you already know, to keep them "top of mind". Nobody needs ads to know that Coca Cola exists, but they still spend a ton on marketing to maintain their brand image and make sure that people hear about them regularly.

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#99

Post by epylar »

colinmorelli wrote: post #86

Regardless of individual opinions on whether CEOs should be terminated for layoffs or not - there's a surprising amount of comments here that seem to not understand that growing companies don't hire for today, but for where they want to be tomorrow. Where you want to be tomorrow is based on where you and your investors believe the world is going. If the world materially changes enough to shift your expectations about…

Was it rational given the information we had at the time to think we would sustain that kind of rapid growth, the public health emergency wouldn't end, we wouldn't get inflation from the supply chain issues and the money printing?

Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

#100

Post by hello_moto »

hackernewds wrote: post #78
rcme wrote: post #61

Earlier quoted context omitted.

> The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. How is failing to predict market conditions a few months into the future and over hiring part of making a publicly traded company money? If anything, these layoffs are an admission from management that they're wasting money.

It's not wasted money. They hired people at peak, and fired them when peak reverted. If they'd ceded market share to competitors who were aggressive when peaking then these CEOs should have been fired.

> They hired people at peak, and fired them when peak reverted

They fired people because they're getting pushed by Investors asking for better Return via stock price just keep that in mind.

META culled 11k and stated that they save $1Bn last year. Fast forward to last week: they somehow have $40Bn to buyback their stock, rewarding investors for a decent gain: 44% within a month. There's a good possibility that other companies will follow suite and execute stock buyback.

Stock Based Compensation just got wiped out from the book as well: typical RSU is 4 years, if some of these folks are on their first and second year (or have refresher), those future expenses are gone too, back to the pocket of Corps.

Salesforce is surrounded by vultures (activist investor) right now.

Juuust... keep that in mind: the mob wants their money back and they set aim at the CEOs.

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