“ Netflix shareholders voted on Thursday to reject the lucrative pay packages of the company’s leaders, including the co-chief executives Ted Sarandos and Greg Peters. The vote is nonbinding and can be overruled by the company’s board of directors the next time it meets.”
A move to appease the public and writers, but room to backtrack if desired?
Most votes are non-binding in these matters across most corporations. Heck, most corporate votes are non-binding except for ones like board membership, mergers and (in some cases) issuing new shares.
In theory, it should scare the board away from this compensation level (and provide justification the board can use to offer a lower compensation). If they fail to do so, it might be used by an outside group to try to take over the board. After all, it's like most elections. The counterbalance is you vote on the board and can get them out.
The vote was nonbinding, and will make a cosmetic difference at best. It baffles me that the owners of a company are unable to block the company's managers from paying themselves whatever they like.
For all the talk about the Deep State, the truly unaccountable power holders are the C-suite class.
Its almost like we need to have an organization of investors who think about corporate governance issues. Maybe we can call these "G" investors.
But G investors won't be very strong as a block on their own. There's a large block of environmentalists (maybe call them "E" investors), and another block of people who care about social issues (call them "S" investors?).
Then people can get together in one big, ESG, block, to try to make sure that modern companies think about environmental, societal, and corporate governance issues.
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ESG has plenty of faults mind you. But the methodology to organize our money into blocks that focus on these issues is sound. We just need to come up with a better governance issue for ESG itself.
This doesn't really address the point. A block of organized investors puts pressure, but if stock owners can only cast non-binding votes, companies can just ignore the ESG votes and pay the execs whatever the execs want.
When Blackrock makes an ESG fund, they'll look at governance issues like "Oh, Netflix has crappy governance", and then refuse to give them any money. ESG-funds focus on funds that have good environmental/social/governance records.
If anyone wants ESG-money, they have to match the baseline requirements of ESG-investors and what ESG-funds will offer. Otherwise, you don't get our money.
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The other reason why ESG works, is this "G" issue. Companies that care about shareholders will, on the average, return more money back to shareholders over the long run.
Companies like Netflix who hoard power to themselves and overpay their C-suite are obviously wasting money anyway, and therefore make for crappy investments. "G", theoretically, is just a good idea for investors to think about _anyway_.
AKA: If Netflix are a bunch of assholes, no biggie. I can invest into Disney instead, who has a much better G/Governance structure. And Disney+ is kinda kicking Netflix's ass right now anyway, so I think there's a good chance I'd make more money.
If Netflix wants my investment money (or the investment money of anyone else in the ESG group/fund I'm part of), they'll need to fix their G/Governance issues. If for nothing else, for more fair compensation of their C-suite.
Ah, I see how it applies. It does make me wonder why non-esg large fund investors wouldn't care about this type of control as well?
I also think there's some inherent conflict in the S part of ESG investing. i.e. a truly socially responsible company would be returning most of its earning to the workers who actually did the work that earned that money, rather than funneling it to shareholders. Which makes those companies a bad investment, which means ESG funds that extended their S goals that far will fail and ESG funds that don't will get good returns for their investors and continue on - so by definition the S goal is limited.
> It does make me wonder why non-esg large fund investors wouldn't care about this type of control as well?
The main thing investors have been focused on in the last 30 to 40 years has been lowering fees, in particular "passive" investing which is based on very obvious metrics ahead-of-time.
"Active" investors may have cared about these governance issues before, but their fees were just too high in practice. But I think we're seeing the blowback now as more-and-more companies come out with crap governance structures, knowing that they can take advantage of the easy-money from passive investors.
I don't know if things will swing the other way. But ESG seems like a way to keep fees low but still have a degree of thought put into corporate politics.
I'm not "bullish" on ESG btw. But I think its a step in the right direction, and I think that its a good thing that people are thinking about how to solve the issues that arose from this era of passive investing. Whether or not ESG truly solves the problem remains to be seen however.
I think ESG will actually shift the balance of power towards CEO's and away from shareholders.
If the CEO only has one job and that is to make profits for shareholders that is a single measurable benchmark the shareholders can hold him accountable to. But now the CEO can make whatever decision he would like and use nebulous and hard to track ESG goals to justify it.
> If the CEO only has one job and that is to make profits for shareholders that is a single measurable benchmark
That's never been true, though, and arguably for good reason. The CEO is supposed to act in the best interests of the company, which may not be ideal for short term profit. Trying to simplify to that metric is likely to make the bad behavior even worse.
The goal of a company is to listen to its shareholders. And shareholders _usually_ care about long term profits.
But a group of investors, calling themselves ESG, are now caring about ESG issues. If ESG investors grab hold of your company's shares and become the owner of the company, it becomes the company's responsibility to listen to the (now ESG-aligned) shareholders.
Its mutually beneficial. ESG has enough money that its worth pursuing their money. And ESG is a vague enough political concept that the pool of investors is rather large in practice. Yeah, people like to make fun of how stupid the metrics are and all that, but... vagueness is kinda the point. They're trying to be as large as possible so that ESG issues can even come up in board meetings.
Well, that's where ESG is going by the wayside. But that's the nature of working as a block, there's so many constituents here our voices get watered down. But "as a block", our money is much larger together.
ESG has proven that it is possible to create these pools of money that tries to think about these issues. Moving forward, ESG investors (and ESG managers) need to be more clear on what those goals are and who to reward, and how to balance profits vs social good.
Besides the fact that they're completely different concepts, one applies to corporations, which are not people, and one applies to people, which are not corporations.
As an investor, you can choose to buy an ESG fund, or a normal fund.
The normal fund won't care about ESG at all and your money will go to all kinds of different companies.
The ESG fund will market itself as ESG. You probably should read up on the benchmarks that the fund cares about.
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Ex: iShares ESG Aware MSCI USA ETF (ESGU) fund. You can buy it, or not buy it. ESG isn't about getting "all" the investors involved. Its just about collecting enough investors together that the pool of money becomes a feasible corporate-politics entity.
Or better yet have corporate governance in place that doesn't allow a few board members to completely override the will of the people who own the company.
What are you thinking specifically? A board member who agrees to advocate for shareholder referendum results outside the annual meetings? Or just a larger board?
Liquid democracy. If shareholders feel strongly about something, they should be able to proportionally strip the board of their voting power on those issues.
The "people who own the company" are mostly institutional investors, not individual shareholders. Something like 80+% of the outstanding stock is held by institutions.
That would require getting passive index funds to change how they vote. Honestly, if their was an index fund that consistently voted for better corporate governance I'd move my money there.
Engine No. 1 (the activist group who "won" against Exxon) has an S&P 500 ETF that they use the funds for shareholder activism like this. You can read more about it here: https://etf.engine1.com/vote/
There are at least two classes of Netflix common stock with different voting rights. The reason why this resolution is non binding is likely because a majority of shares voted in favor but those shares had negligible voting power.
Other companies such as Google, Meta and Berkshire Hathaway have similar arrangements.
To me this is a good example of why if I ever became mega rich I'd still probalby just invest in index funds rather than trying to sit on some board and play power games.
Back around a decade ago, it seemed like everyone on HN loved it when the tech founders could maintain control even when they only had a minority of shares.
They could finally unleash innovation without the constraints of dumb Wall Street and institutional investors who just "didn't get it"! They wouldn't be at the supposedly short-term whims of the fickle stock market!
I'm happy to see the opinion here finally shifting. It seems people are finally realizing there is something to be said for actual corporate accountability to shareholders.
Private companies are dictatorships. Every private company starts out as one. The amount of power that the founders abdicate to shareholders via shareholder voting arraignments is entirely up to them. And make no mistake, Netflix is a private company. The "public" means "publicly traded" not "publicly owned" like the Bank of China.
Massive corporations are built on providing value to consumers. Netflix and its ilk have unquestionably done so. Why do we need to dive into the internals of how they work and what they pay their executives? What does it matter? They provide a service that millions (billions?) of people are happy to consume. Isn't that enough of a public good?
I understand that. If it's publicly traded, then it should be accountable to all the shareholders. Setting up multiple classes of shares with uneven distributions of control is just a means of concentrating power. If you want to run the corporation by fiat, stay private. If you want to trade ownership for access to deeper capital pools, then you have to govern through merit rather than clever structures.
Why do we need to dive into the internals of how they work and what they pay their executives? What does it matter? They provide a service that millions (billions?) of people are happy to consume. Isn't that enough of a public good?
Don't think, just consume product and get excited for next product.
It's a means of retaining power that was already concentrated in the hands of the founders. You've failed to explain why the are obligated to give it up simply by listing on a public exchange (hint: they're not).
"publicly traded" doesn't mean anything besides the fact that shares are available on public exchanges. The fact that they're available on a public exchange is no guarantee that you'll be able to use them to influence the way the company is managed, or that the company owes you any accountability at all beyond what is strictly legally required.
> If you want to trade ownership for access to deeper capital pools, then you have to govern through merit rather than clever structures
What if you want to trade a share of future profits for capital? Why is that "wrong"? It seems like in your world non-voting shares are immoral.
> Don't think
Laypeople are poorly equipped to speculate about highly specialized work (such as executive management). Dunning Kruger applies here. You didn't actually answer my question though: assuming you're not a Netflix shareholder, why does it matter to you what Netflix pays their executives? Haven't Netflix earned their money? Doesn't that give them the right to distribute it as they see fit? What is the basis for your claim otherwise?
They're not obligated to give up that control under existing securities laws. I'm saying they should be.
It seems like in your world non-voting shares are immoral.
Yes. It promotes unaccountable rentier capitalism, and I do not consider market price signals alone a sufficient check on human greed to yield optimal outcomes. The oft-stated benefits of price theory depend on a market in which perfect competition obtains (total transparency, zero cost to entry or exit of the market, completely fungible commodities), and most markets are not that simple.
Laypeople are poorly equipped to speculate about highly specialized work (such as executive management). Dunning Kruger applies here. You didn't actually answer my question though: assuming you're not a Netflix shareholder, why does it matter to you what Netflix pays their executives? Haven't Netflix earned their money? Doesn't that give them the right to distribute it as they see fit? What is the basis for your claim otherwise?
I don't owe you an answer, especially not with this rude hectoring behavior. Work on your manners.
It matters because corporations enjoy great legal protections by being able to operate within a wealthy and highly developed polity, and by accumulating wealth are also able to shape that polity by lobbying for favorable tax, regulatory treatment and so on. So in that sense, executive compensation is a topic of general public interest because executives have an outside impact on social norms and future policy. As far as Netflix is concerned, the company has earned its money but some of that money has been earned on the backs of writers, who have offered a good argument for why they are underpaid relative to historical standards. As a writer and WGA member myself, I'm in favor of Netflix giving writers a better deal rather than merely exploiting their market dominance. And while the shareholder resolution is not binding, apparently a majority of the owners of Netflix also feel that writers' contributions to the firm's success has been undervalued and expressing their opinion on how that wealth should be distributed.
As I said earlier, if you don't want to be accountable to a large group of owners, don't become a publicly traded company. Stay private, govern the corporation by fiat, and and do what you want within the law. It might take a little longer to achieve market dominance in your industrial sector, but if the world is truly meritocratic then success is presumably assured.
Optimal for who? By whose measure? Your position seems to be based on an assumption that you know what's optimal for all of us, and that you're willing to impose that on others. Pardon my disagreement. "Rentier" capitalism also assumes that you can distinguish which economic activity contributes to society and which does not. What criteria or principles do you use to make that distinction? Honest question.
> corporations enjoy great legal protections by being able to operate within a wealthy and highly developed polity
It is the liberal economic policy that birthed the wealthy and highly developed polity, not the other way around. Corporations enjoy great legal protections because otherwise we would not benefit from their existence. And benefit tremendously we do. My whole point is that we should leave them well enough alone because we all reap incalculable wealth from their marketable innovations. We already have a golden goose, and you seem to be suggesting that we smother it with governance.
> executives have an outside impact on social norms and future policy
How would this impact be curtailed by a more stingy compensation package? Executives wield their influence via the corporations they control, not their private bank accounts.
> the company has earned its money but some of that money has been earned on the backs of writers
On the backs of writers who were compensated for their services at a rate agreed by both parties? Seems like a pretty fair deal to me. I don't see why anyone should be paid more than they can freely negotiate for their services from people who are interested in retaining them. In a free society, people are inescapably paid according to how expensive they are to hire, train, and replace. It's the same reason why writers are paid more than agricultural labourers, and executives are paid more than writers. If you can devise a scheme to hire 10 people at $10/hour and generate $1,000 in value, I'm having a hard time understanding why the remaining $900 isn't entirely yours. I see this sentiment a lot and honestly hope you'd be so kind as to explain the calculus here.
> For all the talk about the Deep State, the truly unaccountable power holders are the C-suite class.
Most billionaires realized that they do not need to be in the news or do any work, they can let the CEOs of this world take a small part of the profits and all the blame for what companies do. That is why we know nothing about the super-rich but many CEOs are always on TV. Smaller shareholders do not have power to change things.
That's what I mean; he's hated because he runs/ran Amazon and Amazon is a shitty company. Maybe I should have said, "via the transitive property of hate" instead.
This is in contrast to Musk, who is hated for being a POS person, despite running companies that are somewhat respected.
Part of the top-shelf PR is working for the billionaire and not the company.
Gates had a pretty good one somewhere, as he quietly slipped into the night. Bezos, Zuckerberg? They're too involved and don't seem to deeply care (though I suspect Zuckerberg's is doing better, what with that race they had him run).
That's not right in my estimation. The correction would be that there are lots of famous people that you don't hate, but that plenty of other people do. Your simple bias is that you assume that your hatreds and who you give passes to are a type of common sense. The truth is that your hatreds are as nonsensical to a wide variety of others as those of others seem to you (when they aren't being ignored by you, again via bias).
There are a lot of irrational people on the Internet very quick to lump anything into an incoherent conspiracy and start flooding you with hate; for example, nearly every song on Youtube has a comment saying the song has Satanic or Illuminati references, or whatever flavor of conspiracy you like.
A PR team would help Musk because he is an asshole and they would cover that. Conversely, Bezos is so wealthy that he cannot just stand out of the spotlight and let other people ignore his obscene wealth - the sheer enormity of the dragon's horde attracts attention.
Edit: Hi folks. Please remember I’m responding to a comment about public perception, not some ground truth idea of absolute wealth. These lists reflect what regular people are being told, and are probably a good indicator of public perception.
I’m replying to a comment about public perception of Musk and Bezos’s wealth, which says Musk could benefit from a PR team but Bezos cannot because Bezos is so damn wealthy. But from a public perception standpoint, Musk is wealthier than Bezos. Us regular folks genuinely can’t really understand the ins and outs of wealth at this level.
He can't borrow 200 billion against his shares though. If he were to do that the gravity of that action would upset the value of those shares themselves.
As someone who is 100% indifferent to Bezos I can offer some objectivity. I suspect most people are indifferent to Bezos and most other ultra-wealthy men. No matter who you are and what you do, if you are in the limelight and/or have money there will always be a subset of churlish human who will hate on virtually anyone who is not in their social class. And I suspect who saves their most acidic vitriol for those who are.
>subset of churlish human who will hate on virtually anyone
This is true, but there will also be a set of just regular normal people who see what these powerful people are saying and doing and hate on them because what they are saying and doing is bad and hateful.
He is transparently glib, but he often says one thing and does another. And his reputation for "telling it like it is" is doing the leg work of obscuring the fact that he's a massive hypocrite and can't be trusted.
I dont know why people should care that much about him tho. I love musk but mostly like i love conor mv gregor or any other entertainer. Not to save my life or the human race.
I think you're spot-on here. He has (also) casually left unchallenged all the haughty & exaggerated stories of his personal record, be they about the degrees he does/doesn't hold or the businesses he did/didn't found.
I suppose he gets all the credit for being authentic due to his telling the public not to buy TLSA shares, and the way he tries to work the number 420 into share purchase prices? Its all just theatrics, just as how he (and was photographed as he) carried a sink into the lobby of Twitter last year on the day he bought it. You'd think a heavily-burdened business leader would have things of greater import on his mind than cheap imagery.
I am not entirely convinced. Not that long ago Musk was very positively portrayed in the media and elsewhere. I personally compared it to Gates' coverage given how they both seemed to aim to make his persona known as 'philantropist', 'visionary' or something along those lines.
Naturally, some of it could have been organic. I sure remember having a more positive opinion on Musk based on what he was able to accomplish with Tesla and SpaceX. It is only later as he was gaining more spotlight that the eventual reports of his work practices became more commonly known. OTOH, Gates remain that old guy that talks about sustainability, saving the world and stuff.
Come to think of it. Maybe you are right. Musk does not have PR team.
Gates is spearheading the cure of diseases all over the world - there are few better ways to purchase goodwill or a good reputation. That is: his area of work has helped (or at least not hindered) his PR team in keeping up a good reputation.
Sadly we cannot trust all billionaires to be 'enlightened despots', but at least in this case I say we lucked out - there's plenty stupid or harmful things he could've done
Like, for example, purchase Twitter and grind it into garbage. I'm joking, of course, but goes to show why Musk is considered an imbecile _despite_ having money and Gates is considered intelligent because he made money (and spends it well).
There is a deep liability tradeoff structure all up and down the joint stock corporate structure that has co-evolved with the legal apparatus that regulates it. Shareholders are in a symbiotic liability laundering relationship with executives, who are in a symbiotic liability laundering relationship with middle management who etc with actual workers who etc with customers.
The super-rich are also super-litigious and threaten to get in a money war with any publication that wants to expose their hand in any ventures the rest of society might disapprove of.
This is also how the government works too. We don’t have a direct democracy where the public can vote on every policy, we elect representatives to make the decisions. The (arguably limited) recourse if we don’t like the policies is to elect someone else.
Call it limited, but it’s a lot better than life self-appointed autocrats and “royalty.” (Yet, term limits are sorely needed. But what a difference even that makes.)
You've continued to repeatedly post unsubstantive and flamebait comments after we asked you to stop. I don't want to ban you, but if this keeps up we're going to have to.
> We don’t have a direct democracy where the public can vote on every policy, we elect representatives to make the decisions.
Which is optimal, because in a direct democracy, you get unelected de-facto leaders with zero transparency or accountability - it's simply impossible for a country of any nontrivial size to vote on every relevant issue (or draft bills through a purely democratic process), and so you'll get social media influencers and celebrities and political groups instead that sway the thoughts of millions of people, but without all of the constraints that elected leaders have.
Is this just your best guess? Just riffing? Because if you read the article, you'll see that last time it seemed to have made an actual difference:
"At that time, the company had already made changes to its 2023 compensation program for its top three executives, which in part capped each one’s salary at $3 million, required a minimum of 50 percent of compensation to be tied to stock options and introduced a performance-based cash bonus."
Explain how restricting pay packages will improve the dismal quality of Netflix programming at the time that I unsubscribed: this goal being the only defensible one from a shareholder standpoint.
The decisions made at the executive level regarding Netflix will have a much greater impact on each shareholder's value than the decisions made regarding Squid Game's creative direction. I mean it's not even a question. Now could you find someone to do as good a job as an executive for less? Maybe but when you have a 180 billion dollar company why are you going cheap here to save a few bucks? The wrong executive can be utterly disastrous, and a lot of what I think stockholders are paying for is risk reduction.
If you are able to deliver a better result than "Person X" who is paid more than you, and if you get a chance to deliver that result, won't you demand to be paid more than the "Person X"?
And for the company who is paying, who already seems to agree to pay that much for "Person X"'s result - would likely to be happy to pay you the same or more since you are delivering more
Where am I wrong? Isn't this just capitalism? Help me understand :)
If you voluntarily say I need only half the pay of "Person X" aren't you basically being charitable or just sacrificing what you could potentially get? I am not saying that doing this is wrong (probably morally right) but this is probably rare.
You don't seem to understand that there is nothing preventing mediocre applicants from asking for more money than better applicants. How much a person asks to be paid may or may not have anything to do with their actual ability to deliver results. And in fact, what has been empirically shown is that applicants who ask for and receive outsized compensation are actually worse performers on average.
Ok, probably you and I are talking about different things.
But on your point, what's the root cause of this issue? Why do people hire people with outsized compensations when the other option is empirically proven?
The problem with this is that it presumes there's significant actual skill being exercised at the top level that is unique to the very wealthy who already make up most executives.
Note, I'm not saying "being a top exec takes no skill"; I'm saying "many people have the skills required, they're just rarely given an opportunity to demonstrate them in the same way." (I'm also saying "many execs do not have any significant skill to bring to the table; all they have is connections and money".)
Essentially, you're repeating a variant of the Just World hypothesis—that people who have skills that are relevant to high-paying jobs must be highly-paid, and people who are highly paid must be skilled enough to warrant it.
Neither of those propositions holds up to actual scrutiny.
I don't think he is disputing your claim that there are many people with the skillset to run Netflix that have never had the opportunity to demonstrate it.
The problem is that if they have never had the opportunity to demonstrate it then how do you find them in the first place?
+1 to everything you say. Actual scrutiny will probably yield more optimized results that costs less.
Some of the variable factors that will make the actual scrutiny extremely hard are human emotions such as desire, ambitions, ego, time, impact to morale [employee, shareholder, customers]
Of course you can. People that get highest salary are best at one thing. Getting highest salary, that's their job and they're amazing at it. Their actual performance doesn't matter. They can destroy the company and next one will hire them for even more. There are numerous examples.
No the board is just lazy and has no real plan for if the CEO keels over.
Imagine if how long it takes the board to find a replacement CEO was how long it took to restart a failed server ... They just don't have contingency plans and so they shovel money at the CEO to ensure that the fact that they don't have a contingency isn't a problem.
If the CEO changes often the media will quickly portray that as the biggest problem - "The company that cannot find a CEO that will stick" and the shareholder value will be destroyed.
I completely agree that the whole thing is influenced heavily by how its going to "look" - perception.
But being in a Disney situation where your CEO (Iger) wanted out and choose a poor replacement for himself. (Note: Iger choose a poor replacement not the board, they're useless). And now Disney stock is at the same value in 2023 as they were in 2015.
If the Disney board actually had a plan on who a replacement CEO should be they wouldn't be in this problem.
C-level folks make huge strategic and tactical mistakes _all the time_. They are humans. Amazon has burned tens of billions of dollars on dead-end consumer electronics devices (fire phone?). Facebook is shoveling money into a burning pit trying to convince people to wear goggles for eight hours a day so that they can beam ads directly into our eyes using lasers. Huge companies fail and flounder for decades before toppling over under the weight of incompetent, highly-compensated leadership - this is the norm, not the exception.
The assertion that paying more money to the folks at the top has yielded commensurate returns is really not backed by ... anything at all, as far as I can see.
What if you examine the dead horsed mantra of “improving shareholder value”? Does their compensation reflect their ability to have improved shareholder value?
Actually another comment links to an article about:
“CEO Pay and Performance Often Don’t Match Up:
The S&P 500 CEOs who received the biggest pay increases scored middling shareholder returns”
I feel like that entire study is flawed because you can't just compare stock performances straight up.
You have to look at how the same stock would of performed with a different manager.
There are many factors outside of management's control that will dictate the return on a single stock. But don't confuse that with the fact that management decisions do have an impact and can make a large difference.
If they can't control a substantial portion of the downside risk, they shouldn't be allowed to take credit for the full upside, either.
The problem with the executive compensation ratchet of the past few decades is that it is completely divorced from any actual measure of C-level impact. If things go bad, not their fault - if things go well, it couldn't possibly have happened without these strong leaders at the helm.
Who said they don't? Who says those stocks wouldn't have performed considerably worse without good management? That's what I am getting at. Just because a stock goes down does not imply bad management or vice versa. But again that doesn't mean that management decisions don't matter, they can matter a lot.
Amazon and FB are not the norm, especially FB which is controlled by one person. These are tech companies trying to win market share in emerging sectors, and pulling the plug when they fail to get a foothold. Amazon created an entire industry (Cloud) that it's the dominant player in, totally tangential to its main business as durable goods retailer with this strategy, and it's the company's main profit center now.
I can't imagine a shareholder in either company also thinking you know...these guys at the top of both companies have been paid too much, the various right and wrong decisions they've made turned Amazon and FB into the 4th and 7th most valuable pubicly traded companies in the world in 20 years. They should have paid their c-suite half and become what? Still the 4th and 7th most valuable companies in the world? We know this why?
At the end of the day it's a very hard job, and no one has any idea who the hell is good at it. Prior performance is a good signal, but who knows really? Why would you go cheap when the potential for billions of dollars in wealth destruction/creation is at risk?
Because a few bucks compounded by the marginal next best CEO might be a major improvement for shareholder.
The real reason boards don't cheap out is because no one has ever[1] got fired or sued for paying top dollar for the best when things go to crap and everyone else is pointing fingers
My salary is decent, but our family paid $48k out-of-pocket for medical care last year, and our kids enter college soon; some colleges in the US are over $60k/year now. In Europe, my salary would be lower... but so would my medical and college costs.
If your base of comparison is Berlin, then Tier 1 metros in the US can come out to 3-4x as expensive, but Germany also has pretty bad wage stagnation so ymmv
I agree (Munich, Hamburg, Frankfurt, and Cologne-Bonn take the cake in DE economically while Berlin is a relative newcomer), but when Americans talk about Europe, the image that comes to mind is going to either be Berlin or maybe Paris (yes Ireland+UK are Europe as well, but they aren't exactly treated as European in the American zeitgeist).
That said, Berlin is definetly much cheaper than other cities due to the Cold War. It's basically Western+Central Europe's Austin.
$2400/month premiums ($2800 this year), $4k in copays (capped), uncovered compounded medications, an out-of-network provider because the in-network ones have a year's wait, dental/braces/vision, etc. (Plus mileage/parking incurred with a medically complex family.)
I know this is supposed to be a "self-awareness jab" at HN commenters, but you should really take a look at the stock market. 7 of the top 10 companies by market value are American tech companies. If anything, American IT workers are severely underpaid compared to the profits these companies are raking in.
I think you mean well. Though this comment does remind me of situation during Silicon Valley Bank collapse. Many startup founders were shocked to discover how large part of America hate these hardworking entrepreneurs for no fault of theirs.
These companies are raking record profit because they've managed to place themselves as de facto monopolies in their respective areas. The software world is a winner-take-all in nature, where the last man standing becomes a super profitable monopoly (SV prefers the term "the moat" instead of monopoly). It has little to do with the workers of these companies and everything with the lack of regulation of the tech sector.
That very well may be true, but I would rather the workers still get paid concomitant to the profits the corporation is raking in rather than even more wealth being accumulated by the capital class running these corporations.
But that means the work being done at those companies is more valuable than the work being done elsewhere, and so it makes sense that those companies would pay more (because marginally better employees will add even more value than they cost, due to the org's over-size leverage of that work). That in turn raises salaries for all workers in the same market.
The big question is why do other societies (I'm not American) not value engineering. And when I say "value", I mean "with money".
Some professions push society forward and create long-term wealth. In my mind these are professions where you make decisions with skin in the game, persuade others to do things a better way, and all of STEM. Leadership, sales, engineering, science.
Other professions exist to describe what these prime movers do, or to maintain their work, or to support the people doing it. This is also vital and every society needs this too, but it's just not as important.
So, if in the USA they pay engineers 3x better than in other countries, the question is: what the hell is the rest of the world thinking?
STEM professions are important, but I disagree that they're not valued enough. If anything, the US is overvaluing them compared to the rest of the world.
Education and health professionals are much more valuable to society, and it's criminal how little they're paid in general. Sure, they ultimately depend on STEM fields, but without them our societies would literally collapse. The "prime movers" as you put it depend much more on health and education professions than the other way around.
We only need teachers because they generate STEM grads. No science would mean 90% of the value in education is gone. There's obviously value in learning history and English, but it's nothing transformative.
Until recently, the medical profession was literally leeching people until STEM stepped in with germ theory etc. The life expectancy value of going to the doctor was negative!
The US pays salespeople, leaders, entrepreneurs, and engineers a ton of money. And it shows in the results.
> We only need teachers because they generate STEM grads.
Only? No professions would exist without teachers. Education is fundamental to our society, and has been for millenia. There's nothing more transformative than a good education.
> No science would mean 90% of the value in education is gone.
Again, I'm not saying that science is not important. It plays a critical role in driving other fields forward. But I'd argue that an average teacher and health care worker are more valuable to society than an average IT professional, while the discrepancy in pay between them is abysmal. We only care about health care workers in times of crisis, but then quickly forget about them when it's not trendy to call them "heroes" anymore.
> Until recently, the medical profession was literally leeching people until STEM stepped in with germ theory etc.
I'm not talking about scientific breakthroughs that push other fields forward. Those obviously deserve the merit and recognition they have received. I'm talking about the value of the average working class professional in these fields, and their relative salaries.
> The US pays salespeople, leaders, entrepreneurs, and engineers a ton of money. And it shows in the results.
What results? How is a software "engineer" working for an adtech or social media giant to build spyware valuable to society exactly? Or yet another startup peddling their bullshit product designed to lure in investors and make their shareholders rich? Or the sleazy sales people making all those deals happen? You're telling me that this is somehow more valuable than health workers literally saving people's lives, or teachers building future professionals?
One group lives in luxury, while the other can barely make ends meet working a much more stressful and laborious job. This shows in the results, alright.
Thinking that somehow our profession is more important is indicative of the tech bubble we're in. But I'm not surprised to see such mentality on this forum.
This belief is a big part of why we have such a crisis of culture and politics today.
Education in civics and humanities are vital for understanding our culture, other cultures, ourselves, other people, our relations to them, and how best to participate in our society and government.
Education in practical skills—the kind that used to be taught in "home ec" courses—is vital for being able to navigate this world safely and effectively—things like how to make basic foods, how to balance finances, etc.
I agree that there's a lot of value in civics as you call it. I'm not saying it should be cut out.
But if it weren't for leaders, salespeople, and STEM, we'd still be throwing rocks at sabre-tooth tigers; naked, hungry, sick, and hoping for the best.
Nearly every good thing in our world exists because we invented it, or invented a way to use a natural thing. Everything in home ec and all of bookkeeping were created and spread by prime movers.
The past few centuries of economic growth were ushered in by the industrial revolution, a staggering increase in global wealth culminating with people so rich that they have time to question the value of STEM, and with so few problems that they think what we're living through right now qualifies as a political crisis.
I love how STEM has basically just been reduced to TE (and maybe M, but it’s more of a tangential thing) colloquially. My understanding that the “S” in particular are not very valued, and that there’s way more supply than demand in most of the sciences.
> what the hell is the rest of the world thinking?
— “Who wants to work that hard for nothing?”
— “We’re a tech company? What do we actually do? Something that: atomizes social relations; enables the violation of people’s privacy and rights; or simply plays hot-potato with funny money? Yeah, pass. My friends and family would think I’m a chancer.”
— “What you’re doing goes against local laws and ethics. You can’t do that here.”
— “A business should help the country and its people; not the people that built it.”
— “Spending all my free time to become marginally more knowledgeable and skilled than my coworkers/‘competition’? I’d rather spend time with my friends and family — or a hobby.”
— “Money? What am I gonna do with money — buy a house? Then what.”
Countries like India, China, Israel, and South Korea also have tech industries that can pay EU level salaries (and in Israel's case US level) despite a cost of living comparable to Eastern Europe (excluding Israel).
The reason is those counties and the US have an oversized software+hardware industry with a very mature VC+IPO market, and are thus able to make 8-9x multiples of revenue based on a single IC.
Most of the EU doesn't have software+hardware companies with comparable revenue multipliers. That said, in certain niches (eg. Pharmaceuticals, Finance, Defense) in some regional employment markets like those in the UK, Denmark, Netherlands, and Ireland might be able to offer US comparable salaries (not SV level but a decent $70-100k base)
"it's to retain talents"... except most of these people sit on the board of each other's companies and vote each others outrageous compensations... retaining talents my ass...
It's natural to look at a $40m pay package and say that is excessive and greedy, but these numbers should be put in perspective. That's a little under 1% of Netflix's profit for the year going to the CEO, who has roughly been around since the founding of the company 20+ years ago. If anything this is a bit smaller than the percentage at other firms, it's just that the scale and success of Netflix is massive.
Why should the pay of the CEO be indexed on the total revenue of the company. The CEO is basically an employee, his pay should be indexed on the preceived market value of his talent.
If they wants a revenue shares model, they are welcome to buy some shares of netflix.
Of course CEO pay should scale with the size of the company. We expect the CEO of McDonalds to make more money than the CEO of a local diner. The market value of the CEO's talent relates to the scale and success of the business they have been leading. It would be easy for Sarandos to get an executive role at any other tech company, which is not the case for the CEO of a local business.
You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. This is just how markets work.
CEOs of similar (market cap wise) companies in Europe don't even take in 10 millions a year. I'm betting some would be happy to relocate for the 10 mil.
I'm sure there are thousands of people already working at netflix who'd take the job for $500k/year, and hundreds of thousands more outside the company. They won't have the current ceo's "proven track-record" but I'm quite certain a few of them would do a better job than the current ceo has.
> Of course CEO pay should scale with the size of the company.
Not trying to be pedantic, but genuinely curious.The size of a company is not directly correlated to how hard is it to managed. MacDonalds for exemple is a well oiled machine whith a well defined market, well defined business model. I am gonna assume that the role of the CEO is more about "dont't ** stuff up" as opposed to improve/innovate. Compare that with say openai... which is in a crazy competive market operating at the apex of human knowledge.
> We expect the CEO of McDonalds to make more money than the CEO of a local diner.
We should compare the CEO of McDonalds to something more realistic than a CEO of a local diner.
> It would be easy for Sarandos to get an executive role at any other tech company, which is not the case for the CEO of a local business.
Then let him...
> You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. This is just how markets work.
The is a large difference between 40 millions dollars and 500K. Nobody is trying to pay CEO 500K, the fundamental question is why not 20 millions or 10 millions.
I think the general sentiment is that the usual market forces do not apply to CEO and the way their salary is computed, and that's an issue.
> assume that the role of the CEO is more about "dont't * stuff up" as opposed to improve/innovate
This is exactly wrong though, and demonstrates why laypeople undervalue executive leadership. Staying still in an evolving market is a doomed strategy. McDonalds has transformed its image to stay relevant many times in the last few decades. McCafe is a great example of this.
Also, the size of a company is a huge factor in the complexity of managing it. The more people you need to have pulling in the same direction the harder it's going to be. Leading tens of thousands of people without creating an obstructive bureaucracy that stifles innovation is very very hard.
> Staying still in an evolving market is a doomed strategy.
And yet that's exactly what a lot of CEO have done in the passed and still have had great compensation packages. Like intel before Patt for example.
> Staying still in an evolving market is a doomed strategy. McDonalds has transformed its image to stay relevant many times in the last few decades
Sure, the "specific CEO" doing this evolving strategizing should/could be compensated "out of bound".The main point i am making is the life of a company is usually cyclical : Some crisis, some coasting... But CEO pays never reflect that.
> The size of a company is a huge factor in the complexity of managing it.
This is the logic that creates "empire building" inside company. I am not sure there is any evidence that this is correct. Again, i am skeptical that the size in term of number of employee is a "huge factor". Again we talking about companies which already have precesse, departement etc...etc... well defined
Have you ever observed that poorly performing employees are paid similarly to high performers? Sure there's sometimes a discrepancy, but it's generally within the same order of magnitude. The same applies for executives. Poorly performing execs are still remunerated appropriately for their position. You can't usually tell how well an exec has performed for at least a year or two, especially if they're coming into a chaotic (read: poorly managed) organization.
Hopefully the organization is capable of weeding-out poor performers, but it's no easy thing. Again, the same goes for executives. Poor performers (should) get fired by the board. If they're not, the board is failing. In this case we're talking about an exec who has been at Netflix for 20 years and was one of the people who built the company from nothing. I don't think anyone is suggesting he is a poor performer.
You seem to be labouring under the assumption that leadership is easy. It's anything but. Well defined processes, high-functioning departments, all of that is fragile as hell. A few key people turn over, formerly-respected processes start being ignored, things go to shit. This has happened time and again. One of the jobs of leadership is to keep people accountable. Why would anyone follow a process that no one is checking on? Especially if the person is new or they feel the process gets in their way (which it often does!).
It's not about difficulty (though for the record, I would say that the restaurant industry is much more competitive than the AI industry and the management problems are likely just as hard).
The size of a company is very correlated with the value add between a good CEO and a bad CEO, or between a good CEO and a great CEO. It's the same reason why basketball players make more money than ping pong players. It's not that basketball is harder than ping pong, it's that way more people watch basketball so there is more money to be made by the team that has the best players. Because the CEO's decisions are leveraged by the scale of the business, big businesses are willing to pay top dollar for whoever they think has the best shot at running the company well. Of course, this judgement might be incorrect, because the world is hard to predict.
Just because performance differences are less visible in CEOs than they are in basketball players doesn't mean the differences don't exist, or are less valuable.
> The size of a company is very correlated with the value add between a good CEO and a bad CEO, or between a good CEO and a great CEO.
This is true for any other employee. If a dev optimize a code base by 1%, that 1% value add is correlated to the size of company : could 10$ for a small company or 1Mill for a large company.
A company is a collective of individual working together to preduce (in general) more than just the the sum of the output of each individual. So it's normal that any individual output value would be a function of the collective output.
However, the current social contract is that "regular" employee trade some of the upside of the synergy for less risk and more predictable compensation. The question is, why are we so comfortable treating the CEO any differently.
When a software company gets 1000x bigger, there are 1000x more engineers. But there is still one CEO. The scaling of responsibility and impact is very different.
At the scale of Netflix, as long as keeping this guy around for $40m improves the value of the business by 0.02%, it would be irresponsible as a fiduciary to replace him with a cheaper CEO. Given that Sarandos has been in charge of content at Netflix for 23 years and likely had something to do with the business's past success, this does not seem like a big stretch.
> At the scale of Netflix, as long as keeping this guy around for $40m improves the value of the business by 0.02%,
The question is also, would he quit if they cut his compensation in half? If not, it's free money for the business. The companies nickle and dime every one of its business relations, why shouldn't they do it to the CEO? He's one of the bigger expense lines.
This has been the policy at every boring non-tech company I've ever worked at. You get hired with a certain amount of PTO, and that number starts to grow after some initial waiting period (e.g. 3 years). It's not uncommon for company lifers who have been there for 20+ years to have doubled or tripled the PTO they had when they started.
That being said, I've never heard of a place that _literally_ ties PTO to tenure -- if you join the company in a senior position, you can always negotiate to start with a similar amount of PTO as someone who worked their way into that position internally.
Literally nearly all of them. PTO accrual is the most common form of PTO granted; you accrue a certain number of PTO hours for every week you work, and your maximum PTO per year changes with your tenure, starting at, say, 10 days per year and maxing out at, say, 25 days per year, for example.
You can usually also roll them over to the next year up to some amount.
I'm not sure why people are so obsessed with executive compensation. Just because it's lower doesn't mean that the savings will be passed to the workers. That money is more likely to go to the shareholders.
We get world class high definition entertainment 24/7 for $10/month. We all have access to entertainment that kings could not dream of 200 years ago. If the small set of people in the world who were able to make this happen get rich, is that really a bad thing?
Capitalism is imperfect, but it works pretty darn well -- even for the people who don't do any work.
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[ 4.1 ms ] story [ 247 ms ] threadA move to appease the public and writers, but room to backtrack if desired?
In theory, it should scare the board away from this compensation level (and provide justification the board can use to offer a lower compensation). If they fail to do so, it might be used by an outside group to try to take over the board. After all, it's like most elections. The counterbalance is you vote on the board and can get them out.
For all the talk about the Deep State, the truly unaccountable power holders are the C-suite class.
But G investors won't be very strong as a block on their own. There's a large block of environmentalists (maybe call them "E" investors), and another block of people who care about social issues (call them "S" investors?).
Then people can get together in one big, ESG, block, to try to make sure that modern companies think about environmental, societal, and corporate governance issues.
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ESG has plenty of faults mind you. But the methodology to organize our money into blocks that focus on these issues is sound. We just need to come up with a better governance issue for ESG itself.
When Blackrock makes an ESG fund, they'll look at governance issues like "Oh, Netflix has crappy governance", and then refuse to give them any money. ESG-funds focus on funds that have good environmental/social/governance records.
If anyone wants ESG-money, they have to match the baseline requirements of ESG-investors and what ESG-funds will offer. Otherwise, you don't get our money.
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The other reason why ESG works, is this "G" issue. Companies that care about shareholders will, on the average, return more money back to shareholders over the long run.
Companies like Netflix who hoard power to themselves and overpay their C-suite are obviously wasting money anyway, and therefore make for crappy investments. "G", theoretically, is just a good idea for investors to think about _anyway_.
AKA: If Netflix are a bunch of assholes, no biggie. I can invest into Disney instead, who has a much better G/Governance structure. And Disney+ is kinda kicking Netflix's ass right now anyway, so I think there's a good chance I'd make more money.
If Netflix wants my investment money (or the investment money of anyone else in the ESG group/fund I'm part of), they'll need to fix their G/Governance issues. If for nothing else, for more fair compensation of their C-suite.
I also think there's some inherent conflict in the S part of ESG investing. i.e. a truly socially responsible company would be returning most of its earning to the workers who actually did the work that earned that money, rather than funneling it to shareholders. Which makes those companies a bad investment, which means ESG funds that extended their S goals that far will fail and ESG funds that don't will get good returns for their investors and continue on - so by definition the S goal is limited.
The main thing investors have been focused on in the last 30 to 40 years has been lowering fees, in particular "passive" investing which is based on very obvious metrics ahead-of-time.
"Active" investors may have cared about these governance issues before, but their fees were just too high in practice. But I think we're seeing the blowback now as more-and-more companies come out with crap governance structures, knowing that they can take advantage of the easy-money from passive investors.
I don't know if things will swing the other way. But ESG seems like a way to keep fees low but still have a degree of thought put into corporate politics.
I'm not "bullish" on ESG btw. But I think its a step in the right direction, and I think that its a good thing that people are thinking about how to solve the issues that arose from this era of passive investing. Whether or not ESG truly solves the problem remains to be seen however.
If the CEO only has one job and that is to make profits for shareholders that is a single measurable benchmark the shareholders can hold him accountable to. But now the CEO can make whatever decision he would like and use nebulous and hard to track ESG goals to justify it.
That's never been true, though, and arguably for good reason. The CEO is supposed to act in the best interests of the company, which may not be ideal for short term profit. Trying to simplify to that metric is likely to make the bad behavior even worse.
You're the one who added "short term" to profit.
The CEO is supposed to maximize the discounted future earnings of the company.
But a group of investors, calling themselves ESG, are now caring about ESG issues. If ESG investors grab hold of your company's shares and become the owner of the company, it becomes the company's responsibility to listen to the (now ESG-aligned) shareholders.
Its mutually beneficial. ESG has enough money that its worth pursuing their money. And ESG is a vague enough political concept that the pool of investors is rather large in practice. Yeah, people like to make fun of how stupid the metrics are and all that, but... vagueness is kinda the point. They're trying to be as large as possible so that ESG issues can even come up in board meetings.
For example, you could say "we need to beat climate change, otherwise there won't be any profits on a dead earth".
That's why the metric is discounted future earnings. So that you can't "justify almost anything".
Well, that's where ESG is going by the wayside. But that's the nature of working as a block, there's so many constituents here our voices get watered down. But "as a block", our money is much larger together.
ESG has proven that it is possible to create these pools of money that tries to think about these issues. Moving forward, ESG investors (and ESG managers) need to be more clear on what those goals are and who to reward, and how to balance profits vs social good.
The normal fund won't care about ESG at all and your money will go to all kinds of different companies.
The ESG fund will market itself as ESG. You probably should read up on the benchmarks that the fund cares about.
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Ex: iShares ESG Aware MSCI USA ETF (ESGU) fund. You can buy it, or not buy it. ESG isn't about getting "all" the investors involved. Its just about collecting enough investors together that the pool of money becomes a feasible corporate-politics entity.
Other companies such as Google, Meta and Berkshire Hathaway have similar arrangements.
They could finally unleash innovation without the constraints of dumb Wall Street and institutional investors who just "didn't get it"! They wouldn't be at the supposedly short-term whims of the fickle stock market!
I'm happy to see the opinion here finally shifting. It seems people are finally realizing there is something to be said for actual corporate accountability to shareholders.
Massive corporations are built on providing value to consumers. Netflix and its ilk have unquestionably done so. Why do we need to dive into the internals of how they work and what they pay their executives? What does it matter? They provide a service that millions (billions?) of people are happy to consume. Isn't that enough of a public good?
Why do we need to dive into the internals of how they work and what they pay their executives? What does it matter? They provide a service that millions (billions?) of people are happy to consume. Isn't that enough of a public good?
Don't think, just consume product and get excited for next product.
It's a means of retaining power that was already concentrated in the hands of the founders. You've failed to explain why the are obligated to give it up simply by listing on a public exchange (hint: they're not).
"publicly traded" doesn't mean anything besides the fact that shares are available on public exchanges. The fact that they're available on a public exchange is no guarantee that you'll be able to use them to influence the way the company is managed, or that the company owes you any accountability at all beyond what is strictly legally required.
> If you want to trade ownership for access to deeper capital pools, then you have to govern through merit rather than clever structures
What if you want to trade a share of future profits for capital? Why is that "wrong"? It seems like in your world non-voting shares are immoral.
> Don't think
Laypeople are poorly equipped to speculate about highly specialized work (such as executive management). Dunning Kruger applies here. You didn't actually answer my question though: assuming you're not a Netflix shareholder, why does it matter to you what Netflix pays their executives? Haven't Netflix earned their money? Doesn't that give them the right to distribute it as they see fit? What is the basis for your claim otherwise?
It seems like in your world non-voting shares are immoral.
Yes. It promotes unaccountable rentier capitalism, and I do not consider market price signals alone a sufficient check on human greed to yield optimal outcomes. The oft-stated benefits of price theory depend on a market in which perfect competition obtains (total transparency, zero cost to entry or exit of the market, completely fungible commodities), and most markets are not that simple.
Laypeople are poorly equipped to speculate about highly specialized work (such as executive management). Dunning Kruger applies here. You didn't actually answer my question though: assuming you're not a Netflix shareholder, why does it matter to you what Netflix pays their executives? Haven't Netflix earned their money? Doesn't that give them the right to distribute it as they see fit? What is the basis for your claim otherwise?
I don't owe you an answer, especially not with this rude hectoring behavior. Work on your manners.
It matters because corporations enjoy great legal protections by being able to operate within a wealthy and highly developed polity, and by accumulating wealth are also able to shape that polity by lobbying for favorable tax, regulatory treatment and so on. So in that sense, executive compensation is a topic of general public interest because executives have an outside impact on social norms and future policy. As far as Netflix is concerned, the company has earned its money but some of that money has been earned on the backs of writers, who have offered a good argument for why they are underpaid relative to historical standards. As a writer and WGA member myself, I'm in favor of Netflix giving writers a better deal rather than merely exploiting their market dominance. And while the shareholder resolution is not binding, apparently a majority of the owners of Netflix also feel that writers' contributions to the firm's success has been undervalued and expressing their opinion on how that wealth should be distributed.
As I said earlier, if you don't want to be accountable to a large group of owners, don't become a publicly traded company. Stay private, govern the corporation by fiat, and and do what you want within the law. It might take a little longer to achieve market dominance in your industrial sector, but if the world is truly meritocratic then success is presumably assured.
Optimal for who? By whose measure? Your position seems to be based on an assumption that you know what's optimal for all of us, and that you're willing to impose that on others. Pardon my disagreement. "Rentier" capitalism also assumes that you can distinguish which economic activity contributes to society and which does not. What criteria or principles do you use to make that distinction? Honest question.
> corporations enjoy great legal protections by being able to operate within a wealthy and highly developed polity
It is the liberal economic policy that birthed the wealthy and highly developed polity, not the other way around. Corporations enjoy great legal protections because otherwise we would not benefit from their existence. And benefit tremendously we do. My whole point is that we should leave them well enough alone because we all reap incalculable wealth from their marketable innovations. We already have a golden goose, and you seem to be suggesting that we smother it with governance.
> executives have an outside impact on social norms and future policy
How would this impact be curtailed by a more stingy compensation package? Executives wield their influence via the corporations they control, not their private bank accounts.
> the company has earned its money but some of that money has been earned on the backs of writers
On the backs of writers who were compensated for their services at a rate agreed by both parties? Seems like a pretty fair deal to me. I don't see why anyone should be paid more than they can freely negotiate for their services from people who are interested in retaining them. In a free society, people are inescapably paid according to how expensive they are to hire, train, and replace. It's the same reason why writers are paid more than agricultural labourers, and executives are paid more than writers. If you can devise a scheme to hire 10 people at $10/hour and generate $1,000 in value, I'm having a hard time understanding why the remaining $900 isn't entirely yours. I see this sentiment a lot and honestly hope you'd be so kind as to explain the calculus here.
Most billionaires realized that they do not need to be in the news or do any work, they can let the CEOs of this world take a small part of the profits and all the blame for what companies do. That is why we know nothing about the super-rich but many CEOs are always on TV. Smaller shareholders do not have power to change things.
In some sense I respect him for at least being transparent. Most other billionaires are only visible through heavily refracted PR lenses.
This is in contrast to Musk, who is hated for being a POS person, despite running companies that are somewhat respected.
Gates had a pretty good one somewhere, as he quietly slipped into the night. Bezos, Zuckerberg? They're too involved and don't seem to deeply care (though I suspect Zuckerberg's is doing better, what with that race they had him run).
There are a lot of irrational people on the Internet very quick to lump anything into an incoherent conspiracy and start flooding you with hate; for example, nearly every song on Youtube has a comment saying the song has Satanic or Illuminati references, or whatever flavor of conspiracy you like.
https://en.m.wikipedia.org/wiki/Bloomberg_Billionaires_Index
Edit: Hi folks. Please remember I’m responding to a comment about public perception, not some ground truth idea of absolute wealth. These lists reflect what regular people are being told, and are probably a good indicator of public perception.
What is real disposable wealth?
This is true, but there will also be a set of just regular normal people who see what these powerful people are saying and doing and hate on them because what they are saying and doing is bad and hateful.
I suppose he gets all the credit for being authentic due to his telling the public not to buy TLSA shares, and the way he tries to work the number 420 into share purchase prices? Its all just theatrics, just as how he (and was photographed as he) carried a sink into the lobby of Twitter last year on the day he bought it. You'd think a heavily-burdened business leader would have things of greater import on his mind than cheap imagery.
Naturally, some of it could have been organic. I sure remember having a more positive opinion on Musk based on what he was able to accomplish with Tesla and SpaceX. It is only later as he was gaining more spotlight that the eventual reports of his work practices became more commonly known. OTOH, Gates remain that old guy that talks about sustainability, saving the world and stuff.
Come to think of it. Maybe you are right. Musk does not have PR team.
Sadly we cannot trust all billionaires to be 'enlightened despots', but at least in this case I say we lucked out - there's plenty stupid or harmful things he could've done
Like, for example, purchase Twitter and grind it into garbage. I'm joking, of course, but goes to show why Musk is considered an imbecile _despite_ having money and Gates is considered intelligent because he made money (and spends it well).
I'd point you to the relative popularity of the Media that is down on Musk and instructs others to be so.
We (in the US) should all worry as they move to private islands/beaches/New Zealand.
If you'd please review https://news.ycombinator.com/newsguidelines.html and make your substantive points thoughtfully—and avoid flamebait and name-calling—we'd appreciate it.
Which is optimal, because in a direct democracy, you get unelected de-facto leaders with zero transparency or accountability - it's simply impossible for a country of any nontrivial size to vote on every relevant issue (or draft bills through a purely democratic process), and so you'll get social media influencers and celebrities and political groups instead that sway the thoughts of millions of people, but without all of the constraints that elected leaders have.
Is this just your best guess? Just riffing? Because if you read the article, you'll see that last time it seemed to have made an actual difference:
"At that time, the company had already made changes to its 2023 compensation program for its top three executives, which in part capped each one’s salary at $3 million, required a minimum of 50 percent of compensation to be tied to stock options and introduced a performance-based cash bonus."
This is because the stock owners are not legally the owners of a company, they are just another stakeholder.
* https://hbr.org/2012/07/what-good-are-shareholders
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2277141
* https://www.ft.com/content/7bd1b20a-879b-11e5-90de-f44762bf9...
* https://www.forbes.com/sites/petergeorgescu/2021/07/21/the-s...
Yes, 100% absolutely, yes.
If you are able to deliver a better result than "Person X" who is paid more than you, and if you get a chance to deliver that result, won't you demand to be paid more than the "Person X"?
And for the company who is paying, who already seems to agree to pay that much for "Person X"'s result - would likely to be happy to pay you the same or more since you are delivering more
Where am I wrong? Isn't this just capitalism? Help me understand :)
If you voluntarily say I need only half the pay of "Person X" aren't you basically being charitable or just sacrificing what you could potentially get? I am not saying that doing this is wrong (probably morally right) but this is probably rare.
But on your point, what's the root cause of this issue? Why do people hire people with outsized compensations when the other option is empirically proven?
You can use archive.is to read it if you don't have a WSJ subscription: https://archive.is/bkDCO
Note, I'm not saying "being a top exec takes no skill"; I'm saying "many people have the skills required, they're just rarely given an opportunity to demonstrate them in the same way." (I'm also saying "many execs do not have any significant skill to bring to the table; all they have is connections and money".)
Essentially, you're repeating a variant of the Just World hypothesis—that people who have skills that are relevant to high-paying jobs must be highly-paid, and people who are highly paid must be skilled enough to warrant it.
Neither of those propositions holds up to actual scrutiny.
The problem is that if they have never had the opportunity to demonstrate it then how do you find them in the first place?
Some of the variable factors that will make the actual scrutiny extremely hard are human emotions such as desire, ambitions, ego, time, impact to morale [employee, shareholder, customers]
Imagine if how long it takes the board to find a replacement CEO was how long it took to restart a failed server ... They just don't have contingency plans and so they shovel money at the CEO to ensure that the fact that they don't have a contingency isn't a problem.
I completely agree that the whole thing is influenced heavily by how its going to "look" - perception.
But being in a Disney situation where your CEO (Iger) wanted out and choose a poor replacement for himself. (Note: Iger choose a poor replacement not the board, they're useless). And now Disney stock is at the same value in 2023 as they were in 2015.
If the Disney board actually had a plan on who a replacement CEO should be they wouldn't be in this problem.
Most CEOs are doing it for other reasons besides money (personal enjoyment, thrill, respectability, “duty,” etc.).
The assertion that paying more money to the folks at the top has yielded commensurate returns is really not backed by ... anything at all, as far as I can see.
Actually another comment links to an article about:
“CEO Pay and Performance Often Don’t Match Up: The S&P 500 CEOs who received the biggest pay increases scored middling shareholder returns”
- comment link: https://news.ycombinator.com/item?id=36168067
You have to look at how the same stock would of performed with a different manager.
There are many factors outside of management's control that will dictate the return on a single stock. But don't confuse that with the fact that management decisions do have an impact and can make a large difference.
The problem with the executive compensation ratchet of the past few decades is that it is completely divorced from any actual measure of C-level impact. If things go bad, not their fault - if things go well, it couldn't possibly have happened without these strong leaders at the helm.
I can't imagine a shareholder in either company also thinking you know...these guys at the top of both companies have been paid too much, the various right and wrong decisions they've made turned Amazon and FB into the 4th and 7th most valuable pubicly traded companies in the world in 20 years. They should have paid their c-suite half and become what? Still the 4th and 7th most valuable companies in the world? We know this why?
At the end of the day it's a very hard job, and no one has any idea who the hell is good at it. Prior performance is a good signal, but who knows really? Why would you go cheap when the potential for billions of dollars in wealth destruction/creation is at risk?
Because a few bucks compounded by the marginal next best CEO might be a major improvement for shareholder.
The real reason boards don't cheap out is because no one has ever[1] got fired or sued for paying top dollar for the best when things go to crap and everyone else is pointing fingers
[1]: don't get pedantic about this common phrase
That said, Berlin is definetly much cheaper than other cities due to the Cold War. It's basically Western+Central Europe's Austin.
Some professions push society forward and create long-term wealth. In my mind these are professions where you make decisions with skin in the game, persuade others to do things a better way, and all of STEM. Leadership, sales, engineering, science.
Other professions exist to describe what these prime movers do, or to maintain their work, or to support the people doing it. This is also vital and every society needs this too, but it's just not as important.
So, if in the USA they pay engineers 3x better than in other countries, the question is: what the hell is the rest of the world thinking?
Education and health professionals are much more valuable to society, and it's criminal how little they're paid in general. Sure, they ultimately depend on STEM fields, but without them our societies would literally collapse. The "prime movers" as you put it depend much more on health and education professions than the other way around.
Until recently, the medical profession was literally leeching people until STEM stepped in with germ theory etc. The life expectancy value of going to the doctor was negative!
The US pays salespeople, leaders, entrepreneurs, and engineers a ton of money. And it shows in the results.
Only? No professions would exist without teachers. Education is fundamental to our society, and has been for millenia. There's nothing more transformative than a good education.
> No science would mean 90% of the value in education is gone.
Again, I'm not saying that science is not important. It plays a critical role in driving other fields forward. But I'd argue that an average teacher and health care worker are more valuable to society than an average IT professional, while the discrepancy in pay between them is abysmal. We only care about health care workers in times of crisis, but then quickly forget about them when it's not trendy to call them "heroes" anymore.
> Until recently, the medical profession was literally leeching people until STEM stepped in with germ theory etc.
I'm not talking about scientific breakthroughs that push other fields forward. Those obviously deserve the merit and recognition they have received. I'm talking about the value of the average working class professional in these fields, and their relative salaries.
> The US pays salespeople, leaders, entrepreneurs, and engineers a ton of money. And it shows in the results.
What results? How is a software "engineer" working for an adtech or social media giant to build spyware valuable to society exactly? Or yet another startup peddling their bullshit product designed to lure in investors and make their shareholders rich? Or the sleazy sales people making all those deals happen? You're telling me that this is somehow more valuable than health workers literally saving people's lives, or teachers building future professionals?
One group lives in luxury, while the other can barely make ends meet working a much more stressful and laborious job. This shows in the results, alright.
Thinking that somehow our profession is more important is indicative of the tech bubble we're in. But I'm not surprised to see such mentality on this forum.
If we had no tech, education would consist of learning history and poetry. It would still be useful, but would not transform our world.
This belief is a big part of why we have such a crisis of culture and politics today.
Education in civics and humanities are vital for understanding our culture, other cultures, ourselves, other people, our relations to them, and how best to participate in our society and government.
Education in practical skills—the kind that used to be taught in "home ec" courses—is vital for being able to navigate this world safely and effectively—things like how to make basic foods, how to balance finances, etc.
But if it weren't for leaders, salespeople, and STEM, we'd still be throwing rocks at sabre-tooth tigers; naked, hungry, sick, and hoping for the best.
Nearly every good thing in our world exists because we invented it, or invented a way to use a natural thing. Everything in home ec and all of bookkeeping were created and spread by prime movers.
The past few centuries of economic growth were ushered in by the industrial revolution, a staggering increase in global wealth culminating with people so rich that they have time to question the value of STEM, and with so few problems that they think what we're living through right now qualifies as a political crisis.
— “Who wants to work that hard for nothing?”
— “We’re a tech company? What do we actually do? Something that: atomizes social relations; enables the violation of people’s privacy and rights; or simply plays hot-potato with funny money? Yeah, pass. My friends and family would think I’m a chancer.”
— “What you’re doing goes against local laws and ethics. You can’t do that here.”
— “A business should help the country and its people; not the people that built it.”
— “Spending all my free time to become marginally more knowledgeable and skilled than my coworkers/‘competition’? I’d rather spend time with my friends and family — or a hobby.”
— “Money? What am I gonna do with money — buy a house? Then what.”
Countries like India, China, Israel, and South Korea also have tech industries that can pay EU level salaries (and in Israel's case US level) despite a cost of living comparable to Eastern Europe (excluding Israel).
The reason is those counties and the US have an oversized software+hardware industry with a very mature VC+IPO market, and are thus able to make 8-9x multiples of revenue based on a single IC.
Most of the EU doesn't have software+hardware companies with comparable revenue multipliers. That said, in certain niches (eg. Pharmaceuticals, Finance, Defense) in some regional employment markets like those in the UK, Denmark, Netherlands, and Ireland might be able to offer US comparable salaries (not SV level but a decent $70-100k base)
You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. This is just how markets work.
We expect the CEO of McDonalds to earn hundreds of millions even if he destroys McDonalds as a functioning entity.
It's a kind of Stockholm syndrome.
We should really think about performance based incentives - e.g. average pay + shares that start to vest 7-9 years later.
CEO is a job like any other.
Maybe we should index all employees comp to company performance with a base comp floor...
Not trying to be pedantic, but genuinely curious.The size of a company is not directly correlated to how hard is it to managed. MacDonalds for exemple is a well oiled machine whith a well defined market, well defined business model. I am gonna assume that the role of the CEO is more about "dont't ** stuff up" as opposed to improve/innovate. Compare that with say openai... which is in a crazy competive market operating at the apex of human knowledge.
> We expect the CEO of McDonalds to make more money than the CEO of a local diner.
We should compare the CEO of McDonalds to something more realistic than a CEO of a local diner.
> It would be easy for Sarandos to get an executive role at any other tech company, which is not the case for the CEO of a local business.
Then let him...
> You could try to pay the CEO of Netflix $500k, but you're going to be out a CEO pretty quick. This is just how markets work.
The is a large difference between 40 millions dollars and 500K. Nobody is trying to pay CEO 500K, the fundamental question is why not 20 millions or 10 millions.
I think the general sentiment is that the usual market forces do not apply to CEO and the way their salary is computed, and that's an issue.
This is exactly wrong though, and demonstrates why laypeople undervalue executive leadership. Staying still in an evolving market is a doomed strategy. McDonalds has transformed its image to stay relevant many times in the last few decades. McCafe is a great example of this.
Also, the size of a company is a huge factor in the complexity of managing it. The more people you need to have pulling in the same direction the harder it's going to be. Leading tens of thousands of people without creating an obstructive bureaucracy that stifles innovation is very very hard.
And yet that's exactly what a lot of CEO have done in the passed and still have had great compensation packages. Like intel before Patt for example.
> Staying still in an evolving market is a doomed strategy. McDonalds has transformed its image to stay relevant many times in the last few decades
Sure, the "specific CEO" doing this evolving strategizing should/could be compensated "out of bound".The main point i am making is the life of a company is usually cyclical : Some crisis, some coasting... But CEO pays never reflect that.
> The size of a company is a huge factor in the complexity of managing it.
This is the logic that creates "empire building" inside company. I am not sure there is any evidence that this is correct. Again, i am skeptical that the size in term of number of employee is a "huge factor". Again we talking about companies which already have precesse, departement etc...etc... well defined
Hopefully the organization is capable of weeding-out poor performers, but it's no easy thing. Again, the same goes for executives. Poor performers (should) get fired by the board. If they're not, the board is failing. In this case we're talking about an exec who has been at Netflix for 20 years and was one of the people who built the company from nothing. I don't think anyone is suggesting he is a poor performer.
You seem to be labouring under the assumption that leadership is easy. It's anything but. Well defined processes, high-functioning departments, all of that is fragile as hell. A few key people turn over, formerly-respected processes start being ignored, things go to shit. This has happened time and again. One of the jobs of leadership is to keep people accountable. Why would anyone follow a process that no one is checking on? Especially if the person is new or they feel the process gets in their way (which it often does!).
The size of a company is very correlated with the value add between a good CEO and a bad CEO, or between a good CEO and a great CEO. It's the same reason why basketball players make more money than ping pong players. It's not that basketball is harder than ping pong, it's that way more people watch basketball so there is more money to be made by the team that has the best players. Because the CEO's decisions are leveraged by the scale of the business, big businesses are willing to pay top dollar for whoever they think has the best shot at running the company well. Of course, this judgement might be incorrect, because the world is hard to predict.
Just because performance differences are less visible in CEOs than they are in basketball players doesn't mean the differences don't exist, or are less valuable.
This is true for any other employee. If a dev optimize a code base by 1%, that 1% value add is correlated to the size of company : could 10$ for a small company or 1Mill for a large company.
A company is a collective of individual working together to preduce (in general) more than just the the sum of the output of each individual. So it's normal that any individual output value would be a function of the collective output.
However, the current social contract is that "regular" employee trade some of the upside of the synergy for less risk and more predictable compensation. The question is, why are we so comfortable treating the CEO any differently.
Let's go one step further and replace that one CEO with 3 employees in some part of the world with lower wages, for 50k/year each.
Ask them if they will expect the CEO pay to be zero if the company doesn't show a profit?
We’re not even pretending to care about “fiduciary duty” anymore.
It is not. Most places I have worked, longer term employees are given recognition, extra bonus, more vacation days and so on.
The question is also, would he quit if they cut his compensation in half? If not, it's free money for the business. The companies nickle and dime every one of its business relations, why shouldn't they do it to the CEO? He's one of the bigger expense lines.
It’s absolutely not. It is used for all sorts of things, including PTO accrual, bonuses, multi-year tenure benefits, etc.
That being said, I've never heard of a place that _literally_ ties PTO to tenure -- if you join the company in a senior position, you can always negotiate to start with a similar amount of PTO as someone who worked their way into that position internally.
You can usually also roll them over to the next year up to some amount.
Capitalism is imperfect, but it works pretty darn well -- even for the people who don't do any work.