How People Get Rich Now • Hacker News Board

Re: How People Get Rich Now

#531

Post by jjav » Mon, Apr 12, 2021, 7:47 PM UTC

missedthecue wrote: post #433

greatgib wrote: post #411

Strangely, an explanation for the increased number of wealths coming from new, tech companies and investments that is ignored in his post is the disturbing fact it was taken from the average employee cut of the profits. See this: https://www.theguardian.com/business/2018/aug/16/ceo-versus-... I quote: "The 2017 CEO-to-worker compensation ratio of 312-to-1 was far greater than the 20-to-1 ratio in 1965, and more than…

I hate this comparison. Stock based compensation didn't exist in 1965. It's an oranges to apples comparison. CEO salaries today are still about 20-1, depending on the business. For instance: - Doug McMillon of Walmart makes $1.2 million in salary. - James Quincy of Coca-Cola makes $1.5 million in salary. - JPMorgan's CEO Jamie Dimon has a $1.5 million salary. - Sundar Pichai of Google makes $2 million in salary. You…

> CEO salaries today are still about 20-1

Base salaries are not significant to the discussion. Sometime high profile CEOs make $1 salary.

What matters it the total comp, just as with any employee. Some FAANG engineers might make $175K in base salary but total comp is over 1M.

Re: How People Get Rich Now

#532

Post by jessaustin » Mon, Apr 12, 2021, 7:50 PM UTC

CivBase wrote: post #177

> There were no fund managers among the 100 richest Americans in 1982. Hedge funds and private equity firms existed in 1982, but none of their founders were rich enough yet to make it into the top 100. Two things changed: fund managers discovered new ways to generate high returns, and more investors were willing to trust them with their money. PG brushes past this to talk about tech company founders, but I thought th…

Hedge funds are another group who manage to avoid just taxation. All that "carried interest deduction" crap means a hedge fund manager never pays the top marginal rate, no matter how many millions she socks away.

Re: How People Get Rich Now

#533

Post by jjav » Mon, Apr 12, 2021, 7:50 PM UTC

missedthecue wrote: post #433

greatgib wrote: post #411

Strangely, an explanation for the increased number of wealths coming from new, tech companies and investments that is ignored in his post is the disturbing fact it was taken from the average employee cut of the profits. See this: https://www.theguardian.com/business/2018/aug/16/ceo-versus-... I quote: "The 2017 CEO-to-worker compensation ratio of 312-to-1 was far greater than the 20-to-1 ratio in 1965, and more than…

I hate this comparison. Stock based compensation didn't exist in 1965. It's an oranges to apples comparison. CEO salaries today are still about 20-1, depending on the business. For instance: - Doug McMillon of Walmart makes $1.2 million in salary. - James Quincy of Coca-Cola makes $1.5 million in salary. - JPMorgan's CEO Jamie Dimon has a $1.5 million salary. - Sundar Pichai of Google makes $2 million in salary. You…

> They come from diluting Wall Street. Knowing this, the whole thing is way less of an outrage.

The outrage is why all that dilution goes to the CEO. Options can be granted to all employees more fairly than common these days.

Re: How People Get Rich Now

#534

Post by systemBuilder » Mon, Apr 12, 2021, 7:50 PM UTC

efficax wrote: post #485

missedthecue wrote: post #433

Earlier quoted context omitted.

I hate this comparison. Stock based compensation didn't exist in 1965. It's an oranges to apples comparison. CEO salaries today are still about 20-1, depending on the business. For instance: - Doug McMillon of Walmart makes $1.2 million in salary. - James Quincy of Coca-Cola makes $1.5 million in salary. - JPMorgan's CEO Jamie Dimon has a $1.5 million salary. - Sundar Pichai of Google makes $2 million in salary. You…

stock based compensation exists for C-level employees because it allows them to reduce their tax burden by taking their income via long term capital gains. It's still income!

I think that only works for ISOs (incentive stock options), and now the rules on who can get them and how many can be issued are very restrictive.

Re: How People Get Rich Now

#535

Post by heavyset_go » Mon, Apr 12, 2021, 7:50 PM UTC

missedthecue wrote: post #433

greatgib wrote: post #411

Strangely, an explanation for the increased number of wealths coming from new, tech companies and investments that is ignored in his post is the disturbing fact it was taken from the average employee cut of the profits. See this: https://www.theguardian.com/business/2018/aug/16/ceo-versus-... I quote: "The 2017 CEO-to-worker compensation ratio of 312-to-1 was far greater than the 20-to-1 ratio in 1965, and more than…

I hate this comparison. Stock based compensation didn't exist in 1965. It's an oranges to apples comparison. CEO salaries today are still about 20-1, depending on the business. For instance: - Doug McMillon of Walmart makes $1.2 million in salary. - James Quincy of Coca-Cola makes $1.5 million in salary. - JPMorgan's CEO Jamie Dimon has a $1.5 million salary. - Sundar Pichai of Google makes $2 million in salary. You…

This analysis is about as apt as saying, "Larry Ellison's salary was only $1, so what are you complaining about?"

Re: How People Get Rich Now

#536

Post by m___ » Mon, Apr 12, 2021, 7:50 PM UTC

the_local_host wrote: post #297

nindalf wrote: post #71

It's a classic PG article. Many true facts in there, lots of good analysis with just a few questionable claims thrown in here and there. At the end, there's a massive claim that isn't fully stated but implied. "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem". Firstly, Gini coefficient is based on income, not wealth. That isn't stated clearly. Secondly, there's absol…

It definitely takes a bias toward "wealth accumulation is good" to present the following as good news: > "The reason the percentage of heirs has decreased is not that fewer people are inheriting great fortunes, but that more people are making them." It's likely that many of the inheritances of 1982 were the echo of the corrupt and monopolistic industrialism in the 19th century. Is it a bad thing that the great indivi…

--"I'm inclined to think we're entering a new oligopolistic era. Just because these companies were recently start-ups doesn't mean they aren't entrenched"

Your comment is on start to end, just to add, these "companies", are nothing more then dystopian mirrors to the public, their fronts(all individuals in the public eye, greatest example of a nobody(Leon Musk)) are just second rate actors. The virtualization of "finance", it's moral justification, nothing more is at stake.

Real power, ...dwells in the shadows. This goes from the White House, to Hollywood, over Silicon Valley to Mar o Lago in the Swamp State.

The measure of a dollar between a billionaire, and a homeless dweller as to the price of a loaf of bread is meaningless. What counts is the grab for the hard assets, power, control, that probably starts at multiple billions. A second measure of any meaning is the time line power and influence can be stretched. A professional politician is seriously handicapped there, hence the proof of the above as to what is "wealth".

Re: How People Get Rich Now

#537

Post by true_religion » Mon, Apr 12, 2021, 7:51 PM UTC

lupire wrote: post #526

true_religion wrote: post #432

Earlier quoted context omitted.

Oh, I had thought he stepped down from the day to day role but still had significant investment and control. There are many firms where the owner is never present, but all employees know not to cross them. (E.g. Washington Post & Jeff Bezos).

WaPo is very critical of Amazon

That wasn’t my impression 3 years ago when I worked there.

Re: How People Get Rich Now

#538

Post by WalterBright » Mon, Apr 12, 2021, 7:53 PM UTC

alpha_squared wrote: post #454

missedthecue wrote: post #433

Earlier quoted context omitted.

I hate this comparison. Stock based compensation didn't exist in 1965. It's an oranges to apples comparison. CEO salaries today are still about 20-1, depending on the business. For instance: - Doug McMillon of Walmart makes $1.2 million in salary. - James Quincy of Coca-Cola makes $1.5 million in salary. - JPMorgan's CEO Jamie Dimon has a $1.5 million salary. - Sundar Pichai of Google makes $2 million in salary. You…

You're not wrong, but the perspective feels like missing the forest for the trees. So what if stock-based compensation was uncommon in 1965? The average employee doesn't get to benefit from the very real contributions they've made to the company, while the CEO does benefit. Why didn't employee profit-sharing increase at the same rate as non-salary compensation did for CEOs? That's still relevant. Additionally, your c…

You can't get a CEO without offering a golden parachute. This is because you're not hire a loser CEO, you're going to hire a winner, and you'll need to attract him away from his current lucrative position.

It's the same thing as top athletes getting contracts paying them millions of dollars whether or not they continue to win games.

Re: How People Get Rich Now

#539

Post by fshbbdssbbgdd » Mon, Apr 12, 2021, 7:53 PM UTC

missedthecue wrote: post #433

greatgib wrote: post #411

Strangely, an explanation for the increased number of wealths coming from new, tech companies and investments that is ignored in his post is the disturbing fact it was taken from the average employee cut of the profits. See this: https://www.theguardian.com/business/2018/aug/16/ceo-versus-... I quote: "The 2017 CEO-to-worker compensation ratio of 312-to-1 was far greater than the 20-to-1 ratio in 1965, and more than…

I hate this comparison. Stock based compensation didn't exist in 1965. It's an oranges to apples comparison. CEO salaries today are still about 20-1, depending on the business. For instance: - Doug McMillon of Walmart makes $1.2 million in salary. - James Quincy of Coca-Cola makes $1.5 million in salary. - JPMorgan's CEO Jamie Dimon has a $1.5 million salary. - Sundar Pichai of Google makes $2 million in salary. You…

> But these don't come from the cashflow of the business like wages and salary. They come from diluting Wall Street.

This distinction doesn’t make sense. Cash and stock are fungible for a public company.

Re: How People Get Rich Now

#540

Post by jjav » Mon, Apr 12, 2021, 7:53 PM UTC

alpha_squared wrote: post #465

missedthecue wrote: post #452

Earlier quoted context omitted.

Performance and incentive alignment. John Doe stacking pallets at the Coca Cola factory really won't produce much better top or bottom line results for the business if you offer him a stock bonus. His forklift only drives so fast, and he plays a very minute part in the direction of the business. The CEO on the other hand can have a huge impact, and it's why shareholders choose and vote on certain incentives and bonus…

> John Doe stacking pallets at the Coca Cola factory really won't produce much better top or bottom line results for the business if you offer him a stock bonus. His forklift only drives so fast. A counter-perspective would be that John Doe becomes incentivized to improve efficiency and innovate in the process. People are not machines or primitive animals. Humans are capable of creative problem-solving. Note: stock o…

> Note: stock options are not stocks. You're not given a share in the company, you're given the opportunity to invest in the company. You have to put money in to _potentially_ get money back.

As a technicality that's true, but irrelevant in practice. Employees receiving options are nearly always going to do a same day sale where the option is excercised and immediately sold and you get the difference. No need to put any money in.