Pfizer CEO gets 61% pay raise–to $27.9M–as drug prices continue to climb • Hacker News Board

Re: Pfizer CEO gets 61% pay raise–to $27.9M–as drug prices continue to climb

#11

Post by danbruc » Sun, Mar 18, 2018, 7:38 PM UTC

ams6110 wrote: post #10

danbruc wrote: post #8

Would there be an article talking about Pfizer raising drug prices if they increased the hourly salary of every employee by $0.06? I seriously doubt it, but that amounts to the same $10.3 million [1]. The amount is insignificant when compared to the revenue of the company. The real story is how a certainly class of people managed to convince all the relevant parties that their work is a hundred times more valuable to…

> how a certainly class of people managed to convince all the relevant parties that their work is a hundred times more valuable to the company than that of everyone else Well, because that is the case. A line worker in a Pfizer manufacturing plant, can (within reasonable limits) be just about anyone, given necessary training. The CEO can't be just anyone. Therefore he/she gets paid more.

That is the point that I doubt. Sure, it is certainly easier to find someone for the production floor, but I see no evidence that CEOs have such exceptional skill sets that there wouldn't still be millions of people who could do the job.

But even if that would be the case and people with CEO skill sets would be extremely rare, I would still have a problem with CEO compensation because then their compensation would be, so I argue, based on demand and not value provided for the company. The success of a company depends on all the people working together, without CEO the people on the factory floor don't know what to do, without the people on the factory floor the CEO doesn't get any product out. Neither party gets to claim that they are a hundred times more important than the other one.

Even if you agree that the compensation is mostly driven by scarcity, you will of course tell me that that is just how markets work, if good CEOs are rare and in high demand, then I will obviously have to offer a lot of money to get a good one. And I agree with that insofar, that this is how it currently works, but I consider it flawed. I would like to see, at least in some situations, prices not influenced by scarcity. If you now want to point out that this would ruin market mechanisms, that without scarcity increasing prices we would lose an important signal hopefully increasing supply, I also agree with this.

If I had a finished solution, I would have written it up and collected my Nobel prize in economics years ago. But that doesn't change the fact, at least in my opinion and at least in some situations, that prices are used for both, to measure the value something provides as well as how scarce something is, and that this link is sometimes desirable and sometimes not.

Re: Pfizer CEO gets 61% pay raise–to $27.9M–as drug prices continue to climb

#12

Post by mercer » Mon, Mar 19, 2018, 9:39 AM UTC

ams6110 wrote: post #10

danbruc wrote: post #8

Would there be an article talking about Pfizer raising drug prices if they increased the hourly salary of every employee by $0.06? I seriously doubt it, but that amounts to the same $10.3 million [1]. The amount is insignificant when compared to the revenue of the company. The real story is how a certainly class of people managed to convince all the relevant parties that their work is a hundred times more valuable to…

> how a certainly class of people managed to convince all the relevant parties that their work is a hundred times more valuable to the company than that of everyone else Well, because that is the case. A line worker in a Pfizer manufacturing plant, can (within reasonable limits) be just about anyone, given necessary training. The CEO can't be just anyone. Therefore he/she gets paid more.

I have no reason to believe that there aren't tons of people that are qualified to be CEO of Pfizer. Enough of them, at least, that if 'the markets' actually worked efficiently, their pay would be significantly lower.

On the other hand, I have plenty of reason to believe that CEO's, and others who get paid ridiculous amounts, have a lot of incentive to make sure people think that what they do is worth the money they get paid, and to make sure that people think their position is merit-based rather than a big super-rich circle-jerk.

I'm open to evidence to the contrary, but I can't help but feel that a lot of people defending this situation are suffering from the 'I am just a temporarily embarrassed millionaire' mindset. Or perhaps it's the just world fallacy?

EDIT: I'm not joking when I say I'm open to evidence. It's just that even just my personal experience with powerful/rich people has overwhelmingly been negative when it comes to their competence at almost anything other than manipulation, in-crowd dynamics (knowing/being the right people) and other things that I truly feel do not benefit the world much.

Re: Pfizer CEO gets 61% pay raise–to $27.9M–as drug prices continue to climb

#13

Post by aries1980 » Mon, Mar 19, 2018, 10:25 AM UTC

danbruc wrote: post #11

ams6110 wrote: post #10

Earlier quoted context omitted.

> how a certainly class of people managed to convince all the relevant parties that their work is a hundred times more valuable to the company than that of everyone else Well, because that is the case. A line worker in a Pfizer manufacturing plant, can (within reasonable limits) be just about anyone, given necessary training. The CEO can't be just anyone. Therefore he/she gets paid more.

That is the point that I doubt. Sure, it is certainly easier to find someone for the production floor, but I see no evidence that CEOs have such exceptional skill sets that there wouldn't still be millions of people who could do the job. But even if that would be the case and people with CEO skill sets would be extremely rare, I would still have a problem with CEO compensation because then their compensation would be…

It is hard to see what is happening behind the scenes. Such a mega corp needs top officials with good political connections around the globe and wide range of network with corporations at such size. Such relationship is the scarcity, not the character business or industry vision.