Overpaid CEOs 2019 • Hacker News Board

Re: Overpaid CEOs 2019

#161

Post by mgleason_3 » Sat, Feb 23, 2019, 7:27 AM UTC

blattimwind wrote: post #82

CountSessine wrote: post #68

Earlier quoted context omitted.

In fact, they often get upside when the company fails (what was Marissa Mayer’s exit package?) Marissa Mayer got a nice compensation package because she did well by Yahoo investors: she managed to trick Verizon into paying real money to buy the hulking wreck of Yahoo. If you start out thinking that Yahoo could ever possibly have been saved in any alternate universe, you can get all-kinds of angry or disappointed in M…

A better example might be Carly Fiorina.

I was at HP during the Platt, Fiorina and part of Hurd years. Prior to that experience I was as skeptical as anyone about CEO compensation, impact and contribution. How much difference can one person make?

Well, clearly a huge difference. Under Platt HP had good consistent growth, and we enjoyed record profit sharing and bonuses. Fiorina joined and managed to cut the company's value by 50% in three years. Hurd joined and the company's value went right back up. The difference in execution and competence was startling.

IDK, but the real story must surely be the board of directors (which hires, fires and sets the salary for the CEO). How can a board be so incompetent that it negotiates a severance package whereby Fiorina receives $42 Million to leave after loosing half of the company's value.

When you look at the following graph, keep in mind the Great Recession in 2008.

https://commons.wikimedia.org/wiki/File:HPQ_Stock_Price_Sinc...

Re: Overpaid CEOs 2019

#162

Post by salty_biscuits » Sat, Feb 23, 2019, 7:46 AM UTC

heydonovan wrote: post #77

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…

You share the company's wealth by offering stock as part of compensation. This works well for the high earning tech employees, who can pay their bills with their first 100k and save the rest or invest it. It doesn't work as well for middle/lower class employees who need immediate cash instead of stocks that they can't always hold until it's worth more. Imagine working for Amazon back in the day for $30k, and come tim…

This is how pay on whaling ships worked, so you have historical precedent

https://www.whalingmuseum.org/learn/research-topics/overview...

Re: Overpaid CEOs 2019

#163

Post by system2 » Sat, Feb 23, 2019, 7:54 AM UTC

scarejunba wrote: post #123

system2 wrote: post #116

Why would anyone care about how much CEOs make? It is private industry, if the board or owner wants to pay, CEOs get paid. It is not like they are stealing tax payer's money to pay these people. When the CEOs expire, they are also replaced. It is called business.

They're not private. They're public companies and we care because we're shareholders.

Public doesn't mean they don't own the company.

Re: Overpaid CEOs 2019

#164

Post by dandare » Sat, Feb 23, 2019, 8:05 AM UTC

Technical comment: the table in the article is not scrollable nor zoomable on my Galaxy s6, I can see only the leftmost digit of the CEO salary. Quite a bummer in 2019.

Re: Overpaid CEOs 2019

#165

Post by pishpash » Sat, Feb 23, 2019, 8:37 AM UTC

briandear wrote: post #152

dade_ wrote: post #132

Earlier quoted context omitted.

Correct. They get paid what they do because they set their own compensation. Performance has nothing to do with it, unless things get so bad they are removed.

CEOs of publicly traded companies don’t set their comp, the board does.

The board and the CEO are people who have known each other for years.

On the other hand, I don't think that is the only source of problem. Companies have gotten way too big and the experience of running global conglomerates is simply not common. Add risk aversion to it and the same people, whether succeeding or failing, end up getting hired over and over. It's a lack of supply and lack of competition.

Re: Overpaid CEOs 2019

#166

Post by lordnacho » Sat, Feb 23, 2019, 8:46 AM UTC

briandear wrote: post #152

dade_ wrote: post #132

Earlier quoted context omitted.

Correct. They get paid what they do because they set their own compensation. Performance has nothing to do with it, unless things get so bad they are removed.

CEOs of publicly traded companies don’t set their comp, the board does.

Board members have a portfolio of firms they are on, so they are less exposed to any single firm than staff. They are also part of the group that might be named CEO if a new one is needed, so it's in their interest to keep compensation high.

Re: Overpaid CEOs 2019

#167

Post by pishpash » Sat, Feb 23, 2019, 8:47 AM UTC

Mirioron wrote: post #142

maxxxxx wrote: post #84

Earlier quoted context omitted.

"I've always wondered what it would look like if were were paid in multipliers instead of salaries. The lowest would get 1x, middle folks 5x, and CEO maybe 20x. The usual "a rising tide lifts all boats" mindset." I like that idea!

Then you would get small companies and lose a lot of economies of scale. Would you rather be a CEO of a retailer of 100 employees or 1000000 employees? Your pay is going to be the same because cashiers in both companies will be paid roughly the same, meaning that maximum CEO pay will be the same. I guess it would be neat to see an immense amount of small companies though.

I think that's exactly the problem today. Companies have gotten too large and too centralized. It's not clear whether they are still getting economies of scale (they're usually highly inefficient -- lots of places to hide), or rather "succeeding" as monopolies.

Re: Overpaid CEOs 2019

#168

Post by lordnacho » Sat, Feb 23, 2019, 9:09 AM UTC

tirumaraiselvan wrote: post #141

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…

> Take an arbitrary dude off the street and give them the experience of a CEO and I bet you that substituting him in would at most lose the company 40% of growth/whatever. Most arbitrary people will crumble under pressure if they are given the experience of a CEO.

This is perhaps the central point of contention in the CEO pay debate.

Let's take a scientific perspective of performance, ie using evidence to decide which hypotheses to believe.

If we have a situation that's repeatable, say in professional sports, we have a pretty useful basis for deciding who is better. For example a pro soccer player has his entire career recorded by the second. Every touch, tackle, sprint, shot, and so forth is recorded. On top of that the conditions are similar across matches: the point is to win. This is highly repeatable, noise can be removed by having many experiments.

What does a CEO do? Well they mostly do things that aren't replicable. If your company launches the iPhone, they aren't going to do it more than once. If they miss the boat, catching up is a different condition to leading. If the economic cycles turn, the CEO's time at the helm will certainly not last enough cycles to tell whether they are good at weathering such storms. In fact decisions that CEOs make tend to be rare and unrepeatable. Did Marissa Mayer have to be skilled to sell Yahoo? Well nobody else has been allowed to try, so we don't have a lot to compare with. Did she get a good price? Well she only did it once, so we don't know.

In fact it is a lot easier to ascertain that LeBron James and Cristiano Ronaldo are at the tops of their games than any CEO. Do they score a lot? Yes, and many other dudes have tried. Are they effective compared to opportunities? Yes, and the stats say so.

Coming back to the CEO vs man on the street, I get the feeling a lot of CEOs are quite replaceable. Their firm is in some business, and there's a few strategic decisions to make. If you have multiple parallel universes, it's possible the CEOs would make the best choice more than the man on the street. But you'd certainly find men on the street who'd also launch the iPhone if given the chance. Now consider people who are reasonably close to senior management but not yet there. Would they make similar decisions? They certainly cost less.

By contrast it is glaringly obvious when a man on the street tries to play a sport. It's even obvious when a pro who is less good tries to play against a superstar.

Re: Overpaid CEOs 2019

#169

Post by lordnacho » Sat, Feb 23, 2019, 9:27 AM UTC

jlawson wrote: post #18

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 wil…

This is true, but it misses a very important problem.

Noise.

Super exec might increase profits by more than normal exec, sure. How are you going to identify them? There's actually no way. All the ordinary selection criteria cannot be sensitive enough to sort the wheat from the chaff. Prior experience? They probably only had the job once. Recommendations? Passing the buck. Whiteboarding? LOL.

Chances are you will end up randomly picking out of a group that's mixed super and normal, and chances are you will end up with normal.

If you pay for super you will almost surely be overpaying.

Re: Overpaid CEOs 2019

#170

Post by hiisukun » Sat, Feb 23, 2019, 10:01 AM UTC

zdragnar wrote: post #16

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.

Consider the inverse.

Imagine trying to convince your employees you should appoint a boss, at the top of the company. Everyone will give up $3k, and this one person will make $28 milion a year.

I think losing $3k and gaining $3k are the same - but obviously the perception is different for something you 'have' vs something you might get.