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Overpaid CEOs 2019

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Re: Overpaid CEOs 2019

#11

Post by slap_shot »

Traster wrote: post #2

I feel like CEO pay is one of these emergent problems with our current system. We have this group of people whose salaries are just astronomical compared to the average person in the company, and whilst it's true their job could technically make more of a difference these payouts are totally asymmetrical and completely independent of how effective a CEO is.

I wonder if it really is asymmetrical to value they bring.

I've worked in companies where the market and the stage of the company put the pool of possible CEO candidates at a number that could be counted on one hand.

I don't know anything about the video game industry or these CEOs, but I can't immediately assume they are overpaid. There are a lot of questions I'd need answered.

Re: Overpaid CEOs 2019

#12

Post by donavanm »

munk-a wrote: post #4

The CEO (and upper management in general) pay scale is total BS when viewed through normal compensation lenses, unlike normal people who are paid for their time, upper management is usually compensated on performance -but- they are compensated on the performance of their company (or division) and they get all the pie. Since nobody else's pay is scaling with performance (outside of bonuses which in my experience usual…

> upper management is usually compensated on performance -but- they are compensated on the performance of their company

No? Thats one of the problems. Over the larger industry pool, and controlling for volatility, executive pay doesnt actually reflect company performance. Theyre closer fund managers hyping beta and past hits, but underperforming the averages.

Re: Overpaid CEOs 2019

#13

Post by simplecomplex »

Everyone is free to be a CEO. If salaries are really too high it should be easy to get a CEO position by undercutting everyone else.

It’s easy to sit on the sidelines and complain other people are making too much money. Remember that CEOs making less wont result in employees making more.

Maybe it’s just me, but HN lately seems dominated by whiny/complaining articles that don’t really contribute any knowledge or enhance our lives.

Wouldn’t it be better to focus on how one could become a CEO rather than knee jerk reactions to people making lots of money?

Re: Overpaid CEOs 2019

#14

Post by will_pseudonym »

ahelwer wrote: post #5

Software engineer unions are coming, and it will start with the games industry. Attitudes within our field are changing! Used to be you couldn't mention the U-word without a dozen engineers jumping down your throat bellowing about "efficiency" (for whom and what?) but engineers are smart and you can only fool them with the same old anti-union propaganda for so long.

I think that if unions actually do make inroads into the software development world, the gaming industry will likely be the last to unionize. The reason that the gaming industry is worse off for developers is not because the game development shops are inherently greedy. They have horrible conditions for those workers because they can. So many people want to develop games rather than do any other kind of software development, and so the game dev shops know that most/all inhumane treatment will be accepted by the next person who will gladly endure it to be working in the industry.

Fields that have cachet like show business and gaming will always be the last to have workplace issues of all sorts.

Re: Overpaid CEOs 2019

#15

Post by CyberDildonics »

Reed Hastings founded Netflix and built it into what it is now, a dominant player in the entertainment industry. He did it through a long history of crafty, well planned technology and entertainment decisions. Not only this but he was able to build it up from so little and in such a small amount of time.

Re: Overpaid CEOs 2019

#16

Post by zdragnar »

munk-a wrote: post #4

The CEO (and upper management in general) pay scale is total BS when viewed through normal compensation lenses, unlike normal people who are paid for their time, upper management is usually compensated on performance -but- they are compensated on the performance of their company (or division) and they get all the pie. Since nobody else's pay is scaling with performance (outside of bonuses which in my experience usual…

And yet, if you took Blizzard CEO's total pay (from the article, I think around $28 mil) and spread that over the nearly 10k employees, everyone gets an extra $3k, which wouldn't do diddly squat for retention.

Also, losing 40% of growth would be pretty awful for anyone who has company stock (employees, 401ks, investors) especially if that's year over year.

Re: Overpaid CEOs 2019

#17

Post by davesque »

munk-a wrote: post #4

The CEO (and upper management in general) pay scale is total BS when viewed through normal compensation lenses, unlike normal people who are paid for their time, upper management is usually compensated on performance -but- they are compensated on the performance of their company (or division) and they get all the pie. Since nobody else's pay is scaling with performance (outside of bonuses which in my experience usual…

Part of OP's point though is that CEO pay is apparently not tied to performance because CEOs still get astronomical pay really regardless of whether or not their company/division performs well.

So CEOs just get paid more period. And there's this funny set of myths as to why that is the case. In reality, I think it just boils down to the fact that humans sort of instinctively (or maybe culturally?) like the idea of royalty. And so we're okay with some people just getting more for no good reason other than the fact that they're somehow anointed or divine.

Re: Overpaid CEOs 2019

#18

Post by jlawson »

munk-a wrote: post #4

The CEO (and upper management in general) pay scale is total BS when viewed through normal compensation lenses, unlike normal people who are paid for their time, upper management is usually compensated on performance -but- they are compensated on the performance of their company (or division) and they get all the pie. Since nobody else's pay is scaling with performance (outside of bonuses which in my experience usual…

I just want to point out a mathematical error in your post.

You said, "nobody is 100x more efficient than anyone else". This is a reasonable (though not strictly true) statement by itself. But the implication is wrong - nobody needs to be 100x more efficient/effective to justify a 100x pay differential.

Consider an example:

* Company earns 1 billion per year.

* Normal-Person will increase profits 5%.

* Super-Exec will increase profits 10%.

--> Note that Super-Exec is only 2x more effective at increasing profits than Normal-Person.

Let's imagine we can hire Normal-Person for $100k. How much does Super-Exec have to charge to no longer be economical?

The difference in company earnings between the two is $50 million. So Super-Exec can charge up to $49,899,999 and it'll still be economical for the board to hire him. They'd be throwing away money if they hired Normal-Person when Super-Exec is willing to work for only $45 million.

These numbers are made up but in the same scale as how a big company really operates. The critical fact is that when the base amount of money being managed is huge, tiny differentials in performance translate to huge dollar values and boards are willing to rationally trade a large chunk of those values to execs in exchange for that performance.

Re: Overpaid CEOs 2019

#19

Post by bit_logic »

will_pseudonym wrote: post #14
ahelwer wrote: post #5

Software engineer unions are coming, and it will start with the games industry. Attitudes within our field are changing! Used to be you couldn't mention the U-word without a dozen engineers jumping down your throat bellowing about "efficiency" (for whom and what?) but engineers are smart and you can only fool them with the same old anti-union propaganda for so long.

I think that if unions actually do make inroads into the software development world, the gaming industry will likely be the last to unionize. The reason that the gaming industry is worse off for developers is not because the game development shops are inherently greedy. They have horrible conditions for those workers because they can. So many people want to develop games rather than do any other kind of software deve…

Hollywood is not an example supporting your point (SAG - Screen Actors Guild).

Re: Overpaid CEOs 2019

#20

Post by jjoonathan »

slap_shot wrote: post #11
Traster wrote: post #2

I feel like CEO pay is one of these emergent problems with our current system. We have this group of people whose salaries are just astronomical compared to the average person in the company, and whilst it's true their job could technically make more of a difference these payouts are totally asymmetrical and completely independent of how effective a CEO is.

I wonder if it really is asymmetrical to value they bring. I've worked in companies where the market and the stage of the company put the pool of possible CEO candidates at a number that could be counted on one hand. I don't know anything about the video game industry or these CEOs, but I can't immediately assume they are overpaid. There are a lot of questions I'd need answered.

A good CEO can create massive value, but the present value of any particular choice of CEO -- which should be an upper bound to the performance-independent pay they are able to negotiate -- needs to be diminished according to the uncertainty in the evaluation. That's where the leverage excuse falls apart: uncertainty is through the roof. Everybody's throwing darts at a dart board and everybody knows it, so if the story about rational value estimation and leverage were the whole truth we would not expect to see CEOs reliably paid stratospheric salaries for mediocre or failing performance, yet that's exactly what we see. We should therefore consider alternative explanations.
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