Equity is zero-sum. Once you hand it out, it's gone. You can create more, but it will dilute everyone else. Not a very good arrangement for something that should create value over a long period of time.
Every company should be owned by its employees
71–80 of 1001 posts
Re: Every company should be owned by its employees
#72[flagged]
Re: Every company should be owned by its employees
#73I think the most surprising thing about trends in modern executive class pay is just how steep it is compared to the median employee. It makes me wonder why shareholders outside the company are happy with it. For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being p…
They are ok with it because they believe there’s a correlation between how well a company is doing and how much they pay their CEO.
Re: Every company should be owned by its employees
#74Worker co-ops and ESOPs are already available as business structures. If they’re better, they will be more common, it’s as simple as that. Mandating employee ownership is ridiculous. In terms of policy I think a cap on revenue per employee for a privately held company and a cap on individual ownership is a better solution to reducing income inequality. That and eliminating involuntary unemployment so that companies h…
What is gained by preventing the company from accepting more money than your revenue cap? It would be bad for everyone. What are you trying to optimise?
Re: Every company should be owned by its employees
#75Earlier quoted context omitted.
> Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024. 26.6M of that was stock. In percentage terms it's just equity that he effectively handed out before as a founder and is getting back in return for growing the company even more. I don't see a problem with it, considering that the median employee takes almost zero risks and can leave whenever they want.
What risk does Jensen Huang take and why can't he leave whenever he wants?
Are you kidding?
Re: Every company should be owned by its employees
#76I think the most surprising thing about trends in modern executive class pay is just how steep it is compared to the median employee. It makes me wonder why shareholders outside the company are happy with it. For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being p…
Hiring a Boeing CEO must be pretty hard right now because whoever takes the job is signing up for some miserable work (like testifying to a hostile congress and dealing with criminal liability on behalf of Boeing), and is likely to be blamed for decades of mismanagement coming to the surface now. Said another way: I’d demand a lot more in compensation to be CEO of Boeing than NVIDIA (or any other role for that matter…
> because whoever takes the job is signing up for some miserable work
I'm ready to do it for a mere 5 mill/year (less than a sixth of the incumbent), and I'll happily take all the blame for all my predecessor's failings, and more.
Will I do a worse job than the incumbent? Maybe, maybe not, how the hell will anyone know?
Re: Every company should be owned by its employees
#77Earlier quoted context omitted.
It's someone who can take blame to protect branding and is easily replaced.
Exactly; is someone who is essentially a replaceable scapegoat really worth millions per year in salary?
Sure, if it allows owners to stay in control and keep profiting from the people that perform the labour in the organisation.
It's someone you can pin board and shareholder decisions on, as well as changes in market and accidents, that just goes away and lets some other people keep their power and profits instead of being accountable for their mistakes or lack of strategic performance.
Re: Every company should be owned by its employees
#78Earlier quoted context omitted.
> Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024. 26.6M of that was stock. In percentage terms it's just equity that he effectively handed out before as a founder and is getting back in return for growing the company even more. I don't see a problem with it, considering that the median employee takes almost zero risks and can leave whenever they want.
No, the risk for regular employee is higher due to downside vs upside. Once you cross some wealth threshold, it's not possible to lose everything (e.g. become homeless) unless you do something deliberately stupid like gambling or drugs. There's always plan B if you're rich. Like, rent out property or something.
Thanks for writing this. Owning a place to live and couple rental properties makes one economically independent. Leaving a toxic workplace means loosing fancy car and canceling expensive vacation. Loosing job before that wealth threshold means homelessness and poverty.
Re: Every company should be owned by its employees
#79I think the most surprising thing about trends in modern executive class pay is just how steep it is compared to the median employee. It makes me wonder why shareholders outside the company are happy with it. For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being p…
They are ok with it because they believe there’s a correlation between how well a company is doing and how much they pay their CEO.
They are OK with it because they are not paying any attention and their voting rights are managed by companies like BlackRock who has a list of priorities from here to the moon that come before profit.
Re: Every company should be owned by its employees
#80I think the most surprising thing about trends in modern executive class pay is just how steep it is compared to the median employee. It makes me wonder why shareholders outside the company are happy with it. For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being p…
"Who watches the watchers" is what it comes down to. Politicians, Executives... I once heard politicians need to earn a lot because otherwise they wouldn't be politicians but executives, who earn even more.