Comment by protocolture 12 hours ago
>No one’s networking is worth hundreds of millions.
I was with you until here. Honestly, some networking is actually just that good. I dont believe this to be the case universally, but some people can connect people so efficiently that its mind blowing.
>A reasonable approach is to cap CEO salaries at $2-5M
Why is this reasonable?
>The real question is whether their networking has a value of hundreds of millions to the company, or to the CEO
And this is an important consideration for the board of directors/shareholders to consider.
>Why not? It's enough to live a very comfortable life. If you want to, you can retire after a single-digit number of years. Anyone who needs more money clearly has a serious spending problem and shouldn't be anywhere near your company's finances.
If someone is good enough to attract a higher salary, then the salary cap will send them to somewhere without the cap. You would likely keep the people simply able to talk their way into higher salaries, but guarantee that any actual talent goes offshore.
>And the whole "but look how much money they are making/saving the company" argument you usually hear is bullshit as well.
Arguable. CEO isnt meant to be peak sales guy, but it often is peak sales guy. The issue with this line of thinking is that it ends with "Well lets just pay them performance/sales bonuses" which is actually how a lot of them are getting big payments, but people are also already mad about those for some reason.
If you land a 20 million dollar recurring revenue contract, and you had a previous commitment to 5% of that as a bonus, your previous commitment should be honored. If you get an offer to come do that for someone else for 10 million per year, that's reasonable.
> I bet there are plenty of mid-level FAANG engineers who have saved their company literally tens of millions of dollars a year by optimizing some code, but they don't get those obscene salaries either.
If an engineer negotiated a contract that included such a provision it would be great. I imagine most engineers aren't as capable as a CEO to negotiate such a contract. Its not impossible I am aware of an engineer that resolved a technical issue for a stock exchange nabbing a few mil in bonuses that year. Mostly these things exist in the contract/consultancy space.
>It gets even worse once you take into account the bottom rungs on the ladder: paying the CEO tens or hundreds of millions a year would be a lot less problematic if that very same company didn't have workers literally peeing in bottles, having to work around the body of their dead coworker, or having the building literally collapse on their head.
Ok, is that a fixed goalpost or is it on wheels? Mike Cannon-Brookes is worth a few billion. Is anyone peeing in bottles or wrangling dead bodies at Atlassian?
I always thought a cap of 100x the lowest paid employee as a raise all boats kind of thing. That said, I think stretch goals with generous monetary incentives should always be possible. If someone increases the value of a company by $10b, I'm not going to be upset if they make $100m, assuming they aren't doing anything shady, immoral or illegal.
What would that cap do then? It's almost like that right now, most executive compensation comes from stock packages.
Distribute that across all employees as well, relative to their position, just like any profit-sharing system should work: all workers were part of increasing value, without them no CEO/C-level would generate any value.
Doesn't management always want loyal people? That's how you make people loyal, paying them for what they achieved, having a stake in the company's future.
> but some people can connect people so efficiently that its mind blowing.
People don't connect people, money do. It's the golden rule and more...
> Why is this reasonable?
Because that's where work stops and corruption starts. Anyone who's seen companies prepared for acquisitions by board-installed, "connected" outsiders, knows that side of the story. Or companies sank on purpose by the same method.
>Because that's where work stops and corruption starts. Anyone who's seen companies prepared for acquisitions by board-installed, "connected" outsiders, knows that side of the story. Or companies sank on purpose by the same method.
Corruption starts at 2-5 million? How so?
> Corruption starts at 2-5 million? How so?
You're right, it starts way before that but let's cut them some slack until we figure out a better working system.
How do you figure?
Like theres plenty of information thats not public, but isnt confidential either. Accessing that information can be exceptionally lucrative. Now if that information is used to trade publicly traded shares, that can be criminal (the ethics of the situation are another matter) but if you were to instead, provide product or service on that basis, you are in fact just a well connected salesman. Not everything that doesn't go to a public tender is corruption.
To get to the level of hundreds of millions in value over the standard process, would indicate a breech of shareholder responsibility to make the best returns instead of cutting a deal for someone you know. This can potentially undermine market integrity. Even on a smaller scale, most people disapprove of nepotism and chronyism.
>To get to the level of hundreds of millions in value over the standard process, would indicate a breech of shareholder responsibility to make the best returns
That doesn't make sense? Like if I know someone who can make your product, and you are happy with the price per unit, connecting you to that someone isnt a breech of shareholder responsibility to either party.
right, I would say more people could be compensated more directly with the company’s performance, revenue, and market tolerance of the shares
as opposed to saying CEO’s should be compensated less
a muuuuch greater amount of dilution would come with that though, I’m for it
It also could probably incentivize some unintended behaviors like clever financial engineering for short term stock gains at the cost of long term company health.
It could (??) also lead to comp going up for CEOs, as I imagine (??) they would demand more in stock because stock is riskier than cash.
The real question is whether their networking has a value of hundreds of millions to the company, or to the CEO: are they getting hired because those networking skills are genuinely providing a huge value to the company, or are they getting hired because they are so good at networking that they can fool a company into hiring them instead of someone else capable of providing virtually the same value at a far lower salary?
> Why is [a CEO salary cap at $2-5M] reasonable?
Why not? It's enough to live a very comfortable life. If you want to, you can retire after a single-digit number of years. Anyone who needs more money clearly has a serious spending problem and shouldn't be anywhere near your company's finances.
And the whole "but look how much money they are making/saving the company" argument you usually hear is bullshit as well. I bet there are plenty of mid-level FAANG engineers who have saved their company literally tens of millions of dollars a year by optimizing some code, but they don't get those obscene salaries either.
It gets even worse once you take into account the bottom rungs on the ladder: paying the CEO tens or hundreds of millions a year would be a lot less problematic if that very same company didn't have workers literally peeing in bottles, having to work around the body of their dead coworker, or having the building literally collapse on their head.