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CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

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Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#21

Post by tootie »

nine_zeros wrote: post #3

CEOs pay is tied to the stock price. They will do whatever it takes to boost the stock price, until they are out with a golden parachute. From their perspective, the business is all about boosting the stock price. It doesn't matter if the boost comes from innovation, or from polluting the planet, or from unscrupulous addictive practices, or from culling the employees. Employees are merely, an often undesired, side-ef…

Employees do work and that work is meant to be profitable. If it is, then great. More employees, more profit. If it isn't, they get cut. That's exactly what CEOs are responsible for determining.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#22

Post by gkoberger »

This isn't really a surprise.

We've created a society that depends on growth. CEOs sign up for a job where they're responsible for growing a company, so they're obviously the type to value growth and want more for themsleves too – there's not a lot of CEOs who do it out of the goodness of their hearts. The investors, from the board down to individual nameless shareholders, all demand more money every quarter... even the employees want growth so their equity is worth more and they can get a raise.

I don't think most people are Gordon Gekko types... it's mostly normal people who depend on a 401k or a pension or their house to appreciate in value. Even just cost-of-living salary adjustments is a form of growth. That money has to come from somewhere.

There's no limit to the growth; there's no Good Enough. Nobody at Apple or Amazon has ever said "Hey, we did it, we won capitalism! Congrats!". There's always more to grow. There's literally no incentives for anyone, from employee to investor to CEO, to do anything but maximize growth. We don't celebrate companies that don't do layoffs, and the ones who do take a quick hit followed by a WSJ article the following quarter talking about how they hit their revenue goals.

It's a depressing treadmill that keeps speeding up. But my point is... this is a symptom of a much bigger mindset we have, mainly in America. We all read this and are upset, but we are propping it up indirectly... via stock portfolios, 401ks, pensions, salary, equity, etc. Growth is good! But unbridled, never-ending growth is exhausting.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#23

Post by sjs7007 »

ChuckMcM wrote: post #14
nine_zeros wrote: post #3

CEOs pay is tied to the stock price. They will do whatever it takes to boost the stock price, until they are out with a golden parachute. From their perspective, the business is all about boosting the stock price. It doesn't matter if the boost comes from innovation, or from polluting the planet, or from unscrupulous addictive practices, or from culling the employees. Employees are merely, an often undesired, side-ef…

And if you make them subject to "alternative minimum tax" where their stock based compensation is considered regular income for the year it is awarded based on the difference between the strike price and the market price, you "moderate" that process somewhat. But if you're a politician and your donors are all rich elites who really hated that aspect of AMT you get repeal it for them: https://www.bowlesrice.com/tax-cu…

> compensation is considered regular income for the year it is awarded based on the difference between the strike price and the market price

Isn't that exactly how it works? Your grant price just determines your number of your shares. When your shares vest they get taxed as regular income for the entirety of the vest amount.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#24

Post by mertd »

henry2023 wrote: post #9
kccqzy wrote: post #8

Earlier quoted context omitted.

And frankly layoffs had almost no effect on their stock prices. Announcing new products, even if quite half-baked AI efforts, had much bigger impact on stock prices than layoffs.

Ask facebook

Meta stock performance is not really attributable to layoffs.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#25

Post by nine_zeros »

madballster wrote: post #10
nine_zeros wrote: post #3

CEOs pay is tied to the stock price. They will do whatever it takes to boost the stock price, until they are out with a golden parachute. From their perspective, the business is all about boosting the stock price. It doesn't matter if the boost comes from innovation, or from polluting the planet, or from unscrupulous addictive practices, or from culling the employees. Employees are merely, an often undesired, side-ef…

That is a very narrow and frankly sweepingly incorrect description of "CEOs" or "companies". They're not all the same. I for one (alongside many other investors) carefully study incentive programs and compensation oversight executed by the board of directors. There are many thoughtful companies (and CEOs) who e.g. align over very long-term targets, such as '5 year return on capital". Investors have found out a long t…

Concurred but...

Let's imagine that shareholders agree on a 5 year return on capital plan. Now let's say some missteps/economic circumstances make revenue go down in the 4th year. The CEO will get heat from the investors. This is especially true if the board contains an investor representative who can vote the CEO out.

What choice does the CEO have at that time but to boost short term?

Look at the same story from an employee perspective. Imagine that employee worked for 4 years and the downturn arrives. They invested a lot of time of their precious life, much like the shareholders invested their precious money.

In the downturn, the CEO gets to make a choice and the choice ALWAYS is to boost the stock price for shareholders (and for themselves). Often, at the expense of employees.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#26

Post by melenaboija »

> Alphabet CEO Sundar Pichai was awarded compensation worth more than $225 million in 2022

I know this has been discussed here and 225MM is like the salary of 1000 employees making 200K for only one year, it is stock which is volatoile, that the salary of a CEO is impossible to measure, bla bla bla. But holy guacamole, whatever is the angle I look at it 225MM pear year does not make any f_ing sense to me and it is simply obscene for the 99.99% of the world population as would be enough to retire 5 or 6 generations of regular people.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#27

Post by power »

behringer wrote: post #12

I'm reminded of the song by Christy Moore about being laid off: It seems to me such a cruel irony / He's richer now then he ever was before / And now my cheque is spent, I can't afford the rent / There's one law for the rich, one law for the poor /

I love that song and found out recently it was actually written by Peter Hames.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#28

Post by mistrial9 »

s1artibartfast wrote: post #20
nine_zeros wrote: post #3

CEOs pay is tied to the stock price. They will do whatever it takes to boost the stock price, until they are out with a golden parachute. From their perspective, the business is all about boosting the stock price. It doesn't matter if the boost comes from innovation, or from polluting the planet, or from unscrupulous addictive practices, or from culling the employees. Employees are merely, an often undesired, side-ef…

I disagree with pretty much everything you say except this. >Employees are merely, an often undesired, side-effect in the business of boosting stock prices. Employees are worse than a side effect, they're a cost center to be avoided if possible. You want to achieve your goals with as few employees as possible.

it is truly a product of the computer age, to come up with self-centered ego BS like this.

You do not acknowledge different industries or business models, distribution of physical goods or market brand activity, let along "things that take more that one person to do" .. This is a rote recital of an inner dialog of an ill "investor" CEO who might as soon throw his secretary off of a bridge than give a bonus for winter holidays.

There are not enough words to scourge this infantile, Ayn Randian nonesense from the page.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#29

Post by bradleyjg »

Alphabet CEO Sundar Pichai was awarded compensation worth more than $225 million in 2022, which marked a staggering 3,474% increase from the previous year, making him the nation’s highest-paid CEO, according to Equilar data.

There’s a whole rabbit hole to go down, but CEO compensation is not well defined. In this case it’s likely that Pichai was granted options with a multiyear vesting schedule, plus perhaps performance targets, and the entire net present value is being counted for 2022. Meanwhile he likely vested substantial options in 2021, but since it was granted in a prior year it’s not counted as compensation in that year.

This kind of accounting makes for extremely lumpy numbers and the evergreen opportunity to write articles about 3400% increases!!1! I don’t think it’s a particularly useful way to think about executive compensation and we shouldn’t pay attention to such articles.

Re: CEOs’ pay climbed before layoffs at tech giants like Alphabet and Microsoft

#30

Post by tyingq »

silverkiwi wrote: post #2

Deciding to layoff or not is a complex decision. Here the article only looks at Companies that did layoff. Although more difficult, would be interesting to also look at companies that also made this decision and decided not to layoff. Essentially widening the group of Companies evaluated to one step before the layoffs/no layoffs decision is made.

Or to look at companies that were more conversative about ramping up, used natural attrition more effectively to avoid the need for layoffs, used early retirement or separation incentives before layoffs, etc. Of course, that's difficult to research since it's not as newsworthy to do the right thing :)
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