351–360 of 363 posts
This article isn't actually suggesting that CEOs can be automated, it's making a modest proposal in order to point out that CEOs are overvalued and that automation is eliminating jobs for a lot of undervalued workers. Just putting that out there.
prices are set by supply and demand
Earlier quoted context omitted.
Sounds like the first step is figuring out a new standard to structure executive information.
That's certainly an interesting one. Clean, standardized Data is already often the bottleneck. And the CEO needs more than just data from inside the company.
I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…
Most responses are trying to tell you why they ‘deserve’ their pay. True or not, this is irrelevant. CEO pay is set by the board in the same vote that sets their own compensation. ‘The company’ is not a sentient being. Nobody is looking out for its best interests. 5-year-olds from most cultures would have a hard time understanding this because it breaks their understanding from adult-child stewardship.
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…
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!"
Earlier quoted context omitted.
The conversation around Mitchell Baker's compensation was particularly illuminating, I think. Why do nonprofits pay CEOs millions a year? Because executives expect to be paid that much, and it would be demeaning to pay less.
In other words, normal market forces. The same reason you're paid whatever you're paid.
I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…
That is simple: because CEO's need to be the best of the best. Most professions require an average performer. Building my house didn't require the best of the best. Programming software doesn't require the best of the best. But there are other professions where you need (to be) the best of the best: athletes, musicians, authors, ... . Coincidentally also the professions where the top performers make a crazy amount of…
I don't think this is the case at all. The prime criteria are: 1) Have you been a CEO before of at least a medium sized-company? If so you'll probably be able to handle lots of CEO-type situations. 2) (Not crucial.) Have you done it in this sector already? If so we can talk to others in the sector and figure out a bit about you and your relationships.
I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) becaus…
> Lots of jobs are hard and require extremely smart, gifted people. And yet somehow only executives get huge "compensation." Someone please break it down for me Barney-style because it seems like bullshit to me. The higher your position in leadership, the higher responsibility of your decisions. Higher responsibilities are associated with higher financial risk. Higher financial risk yields higher financial returns. I…
However, while I understand the idea of de-risking to minimize financial and legal risk by hiring certain executives and consultants, it still doesn't help me understand why that translates to paying certain individuals so much money.
No matter how this is presented, it seems to always boil down to 2 possibilities. One, these people are really so talented (in the sense of rare athletes) that they are worth O(100M). I think this theory is patent nonsense, because I simply don't agree that what they do is difficult in the same way that, say, theoretical particle physics is hard.
Or two, various synthetic legal and historical forces have gradually driven the compensations of these people astronomically high in such a way that the economy depends on it, and people believe that it makes sense, like some kind of religion. This is hand-waving and conspiracy-sounding, I know. But it is the only way I can make sense of it.
Earlier quoted context omitted.
> Lots of jobs are hard and require extremely smart, gifted people. And yet somehow only executives get huge "compensation." Someone please break it down for me Barney-style because it seems like bullshit to me. The higher your position in leadership, the higher responsibility of your decisions. Higher responsibilities are associated with higher financial risk. Higher financial risk yields higher financial returns. I…
Thank you for positing something other than the brilliance and talent of executives! :) However, while I understand the idea of de-risking to minimize financial and legal risk by hiring certain executives and consultants, it still doesn't help me understand why that translates to paying certain individuals so much money. No matter how this is presented, it seems to always boil down to 2 possibilities. One, these peop…
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…
Earlier quoted context omitted.
Thank you for positing something other than the brilliance and talent of executives! :) However, while I understand the idea of de-risking to minimize financial and legal risk by hiring certain executives and consultants, it still doesn't help me understand why that translates to paying certain individuals so much money. No matter how this is presented, it seems to always boil down to 2 possibilities. One, these peop…
Well, to us, it obviously looks like too much money. But do you agree that CEO's decision making could take a company stock to anywhere between -5% and +5% its current value in the next year? That's a lot of value at risk. It's orders of magnitude higher compared to the risk related to decision making of regular top management (who already earns in excess of millions).
If we think of executives as machines or devices, then it makes some kind of sense, from the standpoint of a balance sheet. If there's a $5M risk, you might buy a $3M device to mitigate it and still clear $2M.
To this I would observe that executives are unlike machines in several important ways. There is no guarantee that they will perform the way they are advertised, or as well. They are generally guaranteed to be lavishly paid, whether they succeed or not.
Most importantly, if, as I believe, the compensations are synthetically high and there is no genuine supply and demand basis for these compensations, then there is no economic need to pay them so much. Those same jobs could be done by those same people for less. There is nothing particularly special about these people other than their ability to be identified as a magic, oh-so-wise business executive.
My central premise (that I assert without evidence) is that the astronomically high compensations of these people is a social construct. It is shored up by years of legal and corporate machinations that have worked a bit too well. Not any sort of basic economic force. And now it is fait accompli.