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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

#341

Post by ztrww »

empyrrhicist wrote: post #338
ztrww wrote: post #327

Earlier quoted context omitted.

I don’t think “skillset” is the right word either. It’s the financial outcome of the decisions the CEO makes which is the only thing that really matters. Which is notoriously hard to measure and impossible to do in advance. So companies tend to use various proxies when hiring like past experience and less useful ones like skills, education, character, personal connections, work ethic etc. Obviously this system is ver…

> Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid. There's nothing obvious about this to me - how would you distinguish that from survivorship bias? Why then do shareholders and boards often come into conflict on this issue? Claiming that someone is…

> There's nothing obvious about this to me - how would you distinguish that from survivorship bias?

So success of companies is entirely random? That seems statistically unlikely…

I mean are you really saying that there are no decisions that CEOs regularly take due to which a company might lose/gains up to millions to billions of dollars? Why wouldn’t you pay a CEO whose actions can bring the company billions a 100m or so? Seems like a good deal..

e.g. if you put a random highly competent, educated and very hardworking person in charge of Apple back in 1997 is it more or less likely that he would have done better than Jobs?

I mean, yeah I agree with you in part. In most cases it’s hard to distinguish real impact (even after a few years) from survivorship bias which is why this whole process is so inefficient. I’m sure that quite a few companies are just as likely (if not more likely) to hire a 100+ mil CEO who’ll be a net negative on as one who’s action will bring 10x+ in additional revenue compared to what most other candidates would have.

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

#342

Post by baby »

bambataa wrote: post #63
baby wrote: post #37

I know for a fact that people in the Csuite of medium size companies can easily make 400k/month total comp (specifically if they’re public companies, but private companies have outrageous paychecks also). Not even talking about the CEO, and not even talking about FAANGs and similar companies. Chances are that the leadership team of your company is making an absurd amount of money.

That’s $5m/y. Nick Clegg makes not much more for being Facebook’s global punching bag. Not doubting your sources but why are they so generous?

That one is about employees that were vesting before the company went public, but other outrageous paychecks: because this is how leadership teams are paid, and their contracts often include a year of salary if they leave the company.

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

#343

Post by empyrrhicist »

ztrww wrote: post #341
empyrrhicist wrote: post #338

Earlier quoted context omitted.

> Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid. There's nothing obvious about this to me - how would you distinguish that from survivorship bias? Why then do shareholders and boards often come into conflict on this issue? Claiming that someone is…

> There's nothing obvious about this to me - how would you distinguish that from survivorship bias? So success of companies is entirely random? That seems statistically unlikely… I mean are you really saying that there are no decisions that CEOs regularly take due to which a company might lose/gains up to millions to billions of dollars? Why wouldn’t you pay a CEO whose actions can bring the company billions a 100m o…

> So success of companies is entirely random? That seems statistically unlikely…

You're claiming that it's worth paying CEOs 100M+, and my point is that whatever level of competence/skills/judgement/character you desire for performance should be achievable at an order of magnitude lower salary offering. My point is that this astronomical compensations represents a really outrageously strong market claim about someone's performance, but the only evidence you're offering is that some companies do better than others. That is exactly what we'd expect in a market with many companies trying different things - aka, survivorship bias.

This is super common in tech, where people assume that successful entrepreneurs (for example) are visionaries, when in fact they had to be BOTH visionaries and ALSO incredibly lucky, and any structural advantages they had to acquire capital also help a lot.

> I mean are you really saying that there are no decisions that CEOs regularly take due to which a company might lose/gains up to millions to billions of dollars? Why wouldn’t you pay a CEO whose actions can bring the company billions a 100m or so? Seems like a good deal..

This is disconnected - that does indeed happen, and it's been interesting to watch e.g. Elon Musk set fire to several billion dollars along with his reputation over the past few years. My argument though isn't about whether or not CEOs are important, but whether or not their compensation is actually tied to their real value, or whether it reflects their membership in an oligarch class and their skill/luck in navigating that socioeconomic environment. This is a question about opportunity cost. Note - I would also be willing to believe that the perception of having a genius CEO who is "appropriately" compensated on a cosmological pay scale is valuable as a social signal in and of itself, and I would also object that this is irrational. In an economic system that capped CEO pay, that social signal could still exist unmodified at much lower absolute levels of compensation.

> e.g. if you put a random highly competent, educated and very hardworking person in charge of Apple back in 1997 is it more or less likely that he would have done better than Jobs?

Weird example, since Jobs took a salary of $1 during that time.

> I mean, yeah I agree with you in part. In most cases it’s hard to distinguish real impact (even after a few years) from survivorship bias which is why this whole process is so inefficient.

Couple that problem with ANY reasonable prior on the distribution of abilities in human populations and the distribution of salaries, and you end up with exactly what I'm proposing - CEO salaries are easier to explain by looking at human societies than any possible collection of individual attributes that such a CEO could possess.

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

#344

Post by cscurmudgeon »

cudgy wrote: post #238
cscurmudgeon wrote: post #214

Earlier quoted context omitted.

Why should there be a justification? The only argument should be between Google and Pichai. Strangely, why aren't we doing the same for actors and sports stars?

Poor example. How many people bought or used a tech product solely based on the CEO of the company? Virtually none How many movies do people attend solely based on the actors in the movie? Or sporting events due to a player on a team? Many

Poor logic. Why should that matter? The initial argument was that no one should need that much money.

The sporting events can't take place soley due to the star. Do you think the star built the stadium or did all the background work for a movie? By this logic, movies with novice actors should always do bad.

> How many people bought or used a tech product solely based on the CEO of the company?

Not explicitly.

What about founder CEOs who built v1 on their own?

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

#345

Post by cudgy »

ztrww wrote: post #333
cudgy wrote: post #238

Earlier quoted context omitted.

Poor example. How many people bought or used a tech product solely based on the CEO of the company? Virtually none How many movies do people attend solely based on the actors in the movie? Or sporting events due to a player on a team? Many

> How many people bought or used a tech product solely based on the CEO of the company? Virtually none A lot bought it because of some decisions made by the CEO. They likely wouldn’t have bought it if he hadn’t made them (of course it varies a lot between industries). By how much would you say a famous actor/athlete increases the revenue 10/20/50/100/1000%? A CEO can do that too.

How do you measure what affect the CEO had? CEOs (like Jack Welch for example) get great acclaim for years according to short term benchmarks only to be proven to have made disastrous decisions for the business. Appraisal of CEOs is more witchcraft than science.

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

#346

Post by cudgy »

cscurmudgeon wrote: post #344
cudgy wrote: post #238

Earlier quoted context omitted.

Poor example. How many people bought or used a tech product solely based on the CEO of the company? Virtually none How many movies do people attend solely based on the actors in the movie? Or sporting events due to a player on a team? Many

Poor logic. Why should that matter? The initial argument was that no one should need that much money. The sporting events can't take place soley due to the star. Do you think the star built the stadium or did all the background work for a movie? By this logic, movies with novice actors should always do bad. > How many people bought or used a tech product solely based on the CEO of the company? Not explicitly. What ab…

A CEO cannot be a CEO (unless they are a founder which is a different matter altogether) without an existing enterprise with equipment and real estate to manage, so I don’t see the point there.

Founder CEOs are founders of the company and of course they will receive large payouts. The gripe is with non-founder executive vp sliding into CEO jobs and going from making $1 million a year to tens or hundreds of millions of dollars a year practically guaranteed with all sorts of golden parachutes attached.

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

#347

Post by cudgy »

ztrww wrote: post #331
cudgy wrote: post #235

Earlier quoted context omitted.

Any moron knew it was time to invest in da Cloud once AWS was successful. I’d expect more interesting ideas than the old tried and true “get some lucrative government and enterprise contracts”, “guess we better dust off our AI tech and react to OpenAI”, etc. He seems to be a reactionary not a visionary.

> Any moron knew it was time to invest in da Cloud once AWS was successful. Yet Google doesn’t seem to be doing all that well at all in this area. At least relatively…

Yes, he was late and executed poorly. Generally Google is operationally deficient, but technically rich. That is a management problem. The best thing for Google is to split up into parts so they can become more focused and lean within each business category: social media, ads, search, cloud services, etc

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

#348

Post by WalterBright »

ztrww wrote: post #332
sojournerc wrote: post #280

Earlier quoted context omitted.

All by himself?

Would Apple have become one if not the most successful companies of all time if they had all the other people who helped Jobs accomplish this but not him? Probably not.

There was a parade of CEOs before Jobs that could not fix Apple.

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

#349

Post by refurb »

Fatnino wrote: post #340
refurb wrote: post #334

Earlier quoted context omitted.

Ok, then make the maximum wealth you can accrue $3M. You can live a very nice life on that.

That barely gets you into a normal house in the bay area.

Just like nobody needs more than $5M, nobody needs to live in the Bay Area.

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

#350

Post by Klinky »

WalterBright wrote: post #221
Klinky wrote: post #156

Earlier quoted context omitted.

How? Jobs did have some original ideas, but it's not like NeXT was a resounding success on its own that toppled Apple & Microsoft. Being the ideas guy is different than the implementation guy, and in some cases he was neither.

Jobs turned 90-days-bankruptcy Apple into the wealthiest company in the world.

Why couldn't he just turn NeXT into the wealthiest company in the world? Perhaps you could say that's what he did by getting bought out by Apple, but Ives was an Amelio hire, and hard to say Ives wasn't as pivotal to Apple's future success as Jobs.

Jobs takes a lot of the credit, and some of it is due, but there were many other people involved in bringing him back on board & the transition back to profitability/dominance.

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