CEOs are hugely expensive – why not automate them? • Hacker News Board

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

#101

Post by CPLX » Mon, Apr 26, 2021, 4:09 PM UTC

cdirkx wrote: post #30

smoldesu wrote: post #8

The reason we don't automate CEOs is liability: the board of directors/shareholders want someone to hold accountable when bad decisions start getting made. If you pay $4000 for a brand new iCEO that lays off your entire staff, you can really only scream at whoever minted the software making that decision, which often comes with limited liability licenses. Remember, corporate structure is about minimizing your own wor…

My new SAAS startup idea; scapegoat as a service. For a few million dollars you can hire me, put all the blame on me, I say "I take full responsibility" and resign my position.

This exists and is called management consulting.

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

#102

Post by spullara » Mon, Apr 26, 2021, 4:10 PM UTC

The comments in here are hilarious. If you think the CEO doesn't matter in a company you have never been on a board of a company and had the responsibility to hire and fire them.

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

#103

Post by SavantIdiot » Mon, Apr 26, 2021, 4:11 PM UTC

Taek wrote: post #69

harperlee wrote: post #60

Earlier quoted context omitted.

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!"

The problem is that the best CEOs might not go for that. There are a lot of long term things that can impact a company for the negative, and you don't want your CEO bailing to a different company the moment that some macro event (semiconductor shortage, new competitor, global pandemic, etc) comes along and alters the long term upside of your company. You want a CEO who is going to stick around and make the best possi…

> The problem is that the best CEOs might not go for that.

We created that system, we can change it. CEO entitlement is part of the problem because it has become burned into our culture that they are demigods. They are not.

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

#104

Post by sn41 » Mon, Apr 26, 2021, 4:11 PM UTC

hervature wrote: post #74

harperlee wrote: post #60

Earlier quoted context omitted.

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!"

I find it funny that people throw out decades of history. Options contracts, as you propose, introduce the incentive for extreme risk taking because doing "normal boring" things literally doesn't pay. It's one of the main arguments for stock compensation because if the company does poorly, the CEO directly feels it where it hurts (the wallet).

And so they go for stock buyback strategies. Reduce the supply, the stock skyrockets, cash in, leave.

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

#105

Post by nathanappere » Mon, Apr 26, 2021, 4:12 PM UTC

mellavora wrote: post #85

harperlee wrote: post #60

Earlier quoted context omitted.

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!"

what makes you think this isn't already the case? CEO comps often include stock options.

If you prevent CEOs from selling their stock for the next X years, sure.

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

#106

Post by SavantIdiot » Mon, Apr 26, 2021, 4:13 PM UTC

spullara wrote: post #102

The comments in here are hilarious. If you think the CEO doesn't matter in a company you have never been on a board of a company and had the responsibility to hire and fire them.

> you have never been on a board of a company and had the responsibility to hire and fire them.

Think about that statement, just for 5 seconds. Please.

You do realize very, very few people meet this criteria. And their opinions still matter because they are impacted.

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

#107

Post by sn41 » Mon, Apr 26, 2021, 4:13 PM UTC

peshooo wrote: post #5

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

That's because it is illogical. A company may outsource some of its creative inputs, like graphics design or music for a game. That does not mean that creative work can be automated.

There are different reasons for outsourcing - lack of talent in-house, lack of time etc. Cost reduction may not be the only issue, and not every "cheap" task can be automated, either.

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

#108

Post by anonymouse008 » Mon, Apr 26, 2021, 4:14 PM UTC

hervature wrote: post #74

harperlee wrote: post #60

Earlier quoted context omitted.

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!"

I find it funny that people throw out decades of history. Options contracts, as you propose, introduce the incentive for extreme risk taking because doing "normal boring" things literally doesn't pay. It's one of the main arguments for stock compensation because if the company does poorly, the CEO directly feels it where it hurts (the wallet).

Replace option contracts with RSUs or a vesting cliff and see how closely that resembles the VC fiefdom

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

#109

Post by temp667 » Mon, Apr 26, 2021, 4:14 PM UTC

ARandomerDude wrote: post #42

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…

And you have only one CEO - so their comp is expensive, but not hugely expensive relative to total org costs.

Apple has Tim Cook. In terms of investors evaluation of his ability to generate profits - let's say apple is going to do $400B in sales, and you think Tim's approach over time will yield a 3% improved margin. Is he then worth $12B/year? CEO's have enormous influence on a companies direction.

Investors will automate MANY MANY things before they automotive the CEO's job.

Let's be a bit serious. What would make Walmart investors more nervous:

1) Being asked to pay all workers $35/hr, or

2) paying the CEO an extra $1M/year?

1.6M employees * 40K+ pay increase = $64 Billion per YEAR. Let's get a grip on what

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

#110

Post by MattGaiser » Mon, Apr 26, 2021, 4:15 PM UTC

whimsicalism wrote: post #99

Taek wrote: post #69

Earlier quoted context omitted.

The problem is that the best CEOs might not go for that. There are a lot of long term things that can impact a company for the negative, and you don't want your CEO bailing to a different company the moment that some macro event (semiconductor shortage, new competitor, global pandemic, etc) comes along and alters the long term upside of your company. You want a CEO who is going to stick around and make the best possi…

> the best CEOs might not go for that. There are a lot of long term things that can impact a company for the negative You could develop a financial services company selling hedges for that risk to CEOs/executives? > alters the long term upside of your company I don't see how this is worse than short-term stock compensation

> I don't see how this is worse than short-term stock compensation

The CEO has an incentive not to destroy the existing value in pursuit of large gains. With compensation based on the industry spread, they may as well risk any existing value as it is worthless to them.

Currently: A CEO who does nothing but keep the stock price where it is would get 2 million. If he performs as well as average, he might get 4 million. If he beats the industry, he gets 6 million.

With leveraged spread system: A CEO who does nothing but keeps the stock price stable gets 0. A CEO who performs as well as industry gets 0. If he beats industry, he gets 6.