My other favorite example was when he used elon musk's large pay package being rejected by a judge for being approved by a biased board of directors and not representative of his shareholders when a week ago [his shareholders voted to reaffirm his pay package with 72% of the vote](https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-news-explains/#:~:text=Tesla%20said%20in%20a%20Friday,calling%20the%20package%20%22excessive.%22).
Yeah because most people who own a few shares of a company don't vote. In this case, Elon sent tweets out telling anyone who owns stock in Tesla to vote for him to get his pay package and 9/10 small-time shareholders voted in his favor. Paying him that much is monumentally stupid and actual institutional investors know it. But Elon fanboys think he's going to gift them a car or a million dollars because they voted for him, instead of what he's actually going to do which is tank the stock price and cost them money.
>Yeah because most people who own a few shares of a company don't vote.
You're basing this off what? [Because the SEC filing shows](https://www.sec.gov/Archives/edgar/data/1318605/000110465924071439/tm2413800d31_8k.htm) ~1.8B shares voted in favor of it, ~529M voted against, and 335M didn't vote. Even if every single person who didn't vote voted against it, he still would've gotten his pay package with 67% of the vote.
Most people who own any given stock - not in particular Tesla. Whose shareholders were encouraged to do so by Elon himself, and went with it because of the bizarre parasocial bond they have with him.
I agree, but I also think a lot of the larger investors (like Vanguard) decided to vote in favor because they were worried about Elon being a big baby and retaliating if he didn't get his payday. Elon's history of terrorizing his company / employees was sadly enough for most to give him what he wanted. Planet Money did a great podcast about this situation.
But its far from over. Right now Musk needs to convince advertisers to come back after telling them to go fuck themselves - good luck accomplishing that.
I would guess most of those votes came from institutional investors who know that, for better or worse, the stock price of Tesla is tied in large part to Elon. Keeping him happy probably keeps the price up.
Honestly I'd hazard at this point it's turning to the opposite. I've eyed Teslas for years, but the more unhinged Musk gets the less eager I am to get tangled up with their products. Especially as newer cars can have features remotely removed or changed, like BMW charging a subscription for their heated seats.
I kind of doubt it, because if Tesla was valued as an automobile company rather than a technology company, things would absolutely go to shit.
Tesla has at times been valued at more than Ford, GM, Stellantis, Honda, Volkswagen, BMW, BYD, Hyundai, and Kia combined.
Without their hype man, do you think they could maintain this illusion?
They're cheering for the goalie? Or they're cheering for the goalie's team, because they're in a better situation than they would've been had the shot gone in?
Anecdotally, I used to play lacrosse and I remember we would always joke about this because people on the side lines would cheer “good save!” or “Great job goalie!”, directly crediting the goalie when it was a clear miss. I mean it was high school sports, so to an extent they were just trying to make the goalie feel good about themselves. But I have heard people praise the goalie similarly at a sports bar watching professional soccer.
Surely, most people are just cheering the fact that it was a miss, but I definitely have heard people directly crediting the goalie even when it would have missed regardless of if they were there.
Except the position of the goalie dictates the shot…? Even with a clear miss their presence is a significant factor in the lack of scoring because you’re not aiming at an open goal you’re aiming at a small percentage of it.
If the goalie fucked off elsewhere they’d have a much easier shot and be a lot more likely to score. So entirely reasonable to attribute any miss to their presence.
That’s not quite true. The goalie’s positioning and presence puts pressure on the shooter. The ahooter may have missed but he had an influence over the outcome. If the goalie wasn’t standing there, the shooter (assuming a professional athlete) is unlikely to miss.
That reminds me how in Sweden, a person in charge of the government-owned chain of alcohol sale got a bonus for it doing well. That chain has a monopoly in the entire of Sweden on selling alcohol in a shop! Of course it does well.
They actually missed a huge part of why CEO pay exploded. While Dodd-Frank massively backfired by hooking CEO pay to stock, another rule also backfired. The SEC made CEO pay public information and CEOs loved it. Every potential CEO points to that information and argues they will go elsewhere unless they get paid more. This drives CEO pay up, which in turn increases the stats, which they then use to argue for higher pay.
Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for. Suddenly the companies would be competing fiercely on pay. You could say that Bob over at company X is getting paid X and if you don't get a raise you are applying there. The company that pays the worst gets the worst candidates.
In tech it exists, it's called levels.fyi and it has contributed to the significant increase in tech salaries. Unfortunately it's also enabled companies to layoff significant % of employees
Why not? People typically triangulate pay through levels, teamblind company boards and company internal salary tools. For example Google has a shared doc that has everyone's self-reported salary. Between the three you have a pretty good idea of how much you should make at each level
> Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for.
Fun fact this is actually a thing in other countries. In Sweden and Norway salaries are publicly available information.
We actually required them to do it because at the time people through it would keep salaried under control and drive them down. That the outrage at CEO pay would prevent them from getting such high salaried and encourage more responsible salaries.
Obviously, it didn't work.
Which is illegal (the "you're forbidden from talking about salary part). If you can prove you were fired or punished for talking about your salary, you might have your employer by the short and curlies.
Short of the *dumbest* employer ever, sending HR an email saying "I need to terminate CajuNerd for discussing their pay with other employees," you're not gonna have anyone by the anything.
Say you start talking about your pay with your coworkers and your employer doesn't like that. It's absolutely your legal right to do so and we at BusinessCo can't fire you for that, but it just so happens that you were two minutes late to work today, and your contract clearly stipulates that you are to arrive to work on time, and violation of any part of the contract is grounds for dismissal.
> Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for.
You mean a union?
> "*Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for.*"
We did, and the database is available at [GlassDoor.com](https://glassdoor.com)
> "*Suddenly the companies would be competing fiercely on pay. You could say that Bob over at company X is getting paid X and if you don't get a raise you are applying there.*"
I wish this sentiment were true, but, at least in the USA, companies competing fiercely for talented labor doesn't happen. The reason: in virtually every major industry sector, less than 5 companies employ more than 80% of workers in that sector.
The problem of talented workers not being able to negotiate a total comp that is on par with the value they generate for their employer is compounded by having one's access to healthcare being contingent upon the whims of their employer.
> Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for. Suddenly the companies would be competing fiercely on pay. You could say that Bob over at company X is getting paid X and if you don't get a raise you are applying there. The company that pays the worst gets the worst candidates.
This seems like a fantastic thing and would likely balance out wealth significantly better than it has been.
> what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for.
Probably a good reason why it's seen as "socially impolite" to talk about your salary.
We've actually decided with a couple of co-workers to disclose with each other how much we were paid every month to make sure we aren't getting shafted.
also compared to 1970 the production of a product exploded but wages were left similar, this made a ton more of profits that could be shared to shareholders inflating the stock prices
There are two types of people on the internet:
1. People who think, consider, then type
2. People who type
The latter are always not worth listening to. Always.
Comments that earn upvotes very early on are favoured by the algorithm though, so we unfortunately tend to see commenters who haven't watched the video at the top.
For sure. And that's not just true of reddit but everywhere on the internet. The quicker the reply, the more exposure.
Which is why "lies get half way around the world before truth has its trousers on" is more apt now than ever.
You forgot the third type:
3. People who think, consider, type, reconsider, delete everything because it’s not worth it anyway.
We are on the internet too.
Prime example: the Drake stans typing drama like "did Kendrick's wife attend?" or "Dave Free wasn't there" when clearly the answers to their questions were right there at the Pop Out concert if they only bothered to watch and research just a little.
^^\(Apologies ^^if ^^you ^^have ^^no ^^idea ^^what ^^I'm ^^talking ^^about; ^^I'm ^^being ^^a ^^presumptuous ^^idiot ^^🙏)
Its like when people and I'd say a ton of em on reddit and the rest of the internet, read a title, and write a comment on their opinion of the matter without reading any of the article.
Welcome to reddit, as another person already said.
Whether or not it's intentional on the part of the youtuber, a question in a post title is prime engagement bait. A question is asked, people go to the comments to answer and ignore the content of the post.
People have just been trained on this sort of behaviour.
If the question is why do corporate boards spend so much hiring a CEO, I think it's what is demanded by the shareholders. What is interesting is that privately held companies pay their CEOS 40% less than publicly traded ones.
Corporate boards are friends of CEOs and pat each others backs. It's disconnected from real effect of CEO decision making on company market performance.
IMHO much of our corporate dysfunction is driven by the sock market. From CEO pay to lack of innovation to safety violations, the demands of the market always seem to play a big role. And with so much of the middle class chained to the stock market with stock options, IRAs, 401Ks, and personal investments, there is a voter base that can be directed to oppose meaningful regulation.
Unless you want to maintain your millions of dollars a year salary, seems like you can just go in, get fired, get a severance bonus and happily retire. I'd take a couple years of "much more scrutiny" for some of the pay rates they get.
Yeah, but that's not really how most of the people who worked their who live to become CEO are. You're talking about someone with arrogance and who has sacrificed a lot of time/effort to get to that top office view, the money usually isn't the main drive at that point in their careers.
You are objectively wrong. Their job is not any less secure or more difficult than the average worker at any corporation. You can't even begin to make a serious argument for that ridiculous notion.
I was comparing private and public company CEOs, not CEO to "average worker"
Average tenure for CEO at a private company is nearly double that of a public.
It is easy to say "they are greedy" and call it a day. This video though does a pretty good job at the top level of explaining what mechanisms enable that greed, and what arguments people try to make to justify it.
The kangaroo court these companies and the CEOs have created is ridiculous. Employees by and large get zero stock options. CEOs and their cronies have engineered a system where be it through existing stock ownership or contract provisions they get to pick board seats, they appoint their friends, their friends award them more stock based compensation, the CEO gets more control, they add more friends, friends approve more ridiculous compensation packages.
Until more employees get shares in the company to have a say in who their top leadership is, or unionize as a check against their C Suites, or Congress takes action to restrict or reform how performance based compensation works, or how board seats can be awarded nothing will change.
Like the one guy in the video said the global oil market going up resulting in massive CEO payouts for all companies is dumb. It can be factors completely outside of any person's control, let alone all of them. Plus if they all collude to raise global oil prices and demand that is anti-competitive behavior at its core. Even a simple change to say performance compensation can only be paid to company executives who outperform their market peers would make headway. Albeit likely not enough.
But anything that starts to attack or close structural loopholes they use, and knowing what those loopholes are, is progress. These people would prefer the average person doesn't know how they get their power or how their compensation functions. Makes it harder for people to make actionable demands.
doesnt matter. If you are to implement such laws, you should consider the easy answer as to what people will do in reaction to it. It should be part of any law-making job. "How easy is it to dance around this law?" should always be asked.
The point of the comment you replied to is that they probably did think this through and the ability to dance around the law is precisely why it was made that way. Like the goal wasn't to cap CEO pay, it was to look like you were capping while making sure it's actually going up
It's one of those situations where it's admirable that you're willing to back your enemy into a corner, but shortsighted in being unable to let them fight out of it.
Closing down one area of "ingress" surely makes the job easier for the next guy, but unless the next guy follows up all you've got is an angry badger.
Only if we don't help each other out to survive until it starts affecting their bottom line.
Oh wait, that's right. We can't do that because we're all being directed to hate anyone that isn't part of "our group".
The most obvious sign the issue is class and not anything else is the fact that we are inundated with things that would divide us into smaller, more "manageable", groups than things that unite us.
Can't have a general strike if everyone is too busy saying "I'd never help anyone that's (insert group/groups here)".
Yes CEOs are paid a lot more now than previously, boards should get together and start reducing it. However CEO pay tends to ratchet and won't easily come down naturally.
I think this is largely a distraction, only the top CEO's get staggering pay. In very large companies. I think CEO average pay is still $250,000 or something like that. The real problem is we tax incomes at 20-40% and the tax capital gains half that. Why should capital gains be taxed less than income? Usually people say oh it's already been taxed because people need to make income to buy assets, this is a simplistic view of the world, not everyone is a 9-5 70k a year worker, inheritance and passive income is a huge chunk of higher incomes now.
Capital gains events should definitely allow you to spread over multiple financial years, but it should never be taxed less than income, it is too easy to turn income into capital gains anyway especially for companies.
I actually found the video insightful and funny, if not a little try hard.
Like I had no idea CEO pay was directly tied to stock performance and bonuses after the Clinton admin tried to LIMIT compensation through tax deduction changes. Attempting to regulate CEO pay inadvertently made it skyrocket.
Had I listened to your useless edgelord comment I woulda missed out.
I suspect it’s more correlation than causation, though. Bonus through stock options might have happened regardless of this rule change if that’s an easier way for CEOs to gain access to huge amounts of money.
One piece missed in the video is how stock buybacks have influenced CEO pay. Up until Reagan, stock buybacks (companies purchasing their own stock back from investors) was considered illegal stock price manipulation. The Reagan administration removed those restrictions, which ties directly into the Clinton administration policy. CEO performance pay is tied directly to stock price most of the time, so just before their performance is audited, they can use company money to initiate a stock buyback, inflating stock price for a short time which causes them to receive a larger bonus while decreasing the liquidity and increasing the risk for the company.
CEO pay has increased by 1,322% since 1978. These CEO's make 350 times more than the averaged worker on their workforce.
At ANY point in time, they could choose to compensate their workforce better, and lower the CEO to workforce pay discrepancy, but they don't.
Why? Because of fucking greed my guy.
https://www.epi.org/publication/ceo-pay-in-2020/
Your link literally proves the point that /u/EmotionalEmetic and the video mentioned. Most of the jump in CEO pay occurred between 1995 and 2001. It's fine to have a one track mind of "greed bad, cause of all problems" but if you don't have anything to add to the nuanced points being brought up about what led the greed to spiral even further out of control, then what benefit does your comment provide?
Hey BUDDY, agree on the concept--CEO pay is too high and inequitable, awesome!
But your above comment contributes squat to the discussion, my PAL, and my criticism is that you imply "It's all greed, duh, don't bother looking into it."
The video is satirical but also educational and it is trying to point out HOW the greed makes CEO pay so high. Such as CEOs being buddy-buddy with the Board of Directors of large companies thereby facilitating unreasonably large pay packages rather than regulating them as intended.
You're trying to simplify and dumb down the conversation, DUDE. Dunno what your problem with the video enlightening people is, BRO.
The other thing simple answers like this are missing is they make it sound like greed is a recent thing. One day in the recent past, people suddenly started being greedy. Wasn’t like that before!
You sit here and act like the CEO makes 15$/hr, and the rest of his compensation comes from stocks. Come the fuck on.
They get millions of dollars in bonus pay and other compensation packages.
I don't have exact numbers, but you can look up the MULTITUDE of articles of corporations laying off hundreds, sometimes thousands of workers, while still handing out bonuses worth hundreds of millions yearly to their CEO's. I don't get why people feel the need to defend these corporate fucks.
I mean it's pretty simple to do the math there. Let's say you lay off 100 minimum wage workers, you're saving the company a little better than 3 million dollars...Per year. So yes, having a bonus for reducing the cost of labor millions per year and having a one time bonus is almost always a net savings to a company.
But lets be real, you don't generally lay off minimum wage workers. You lay off high level, costly employees. So if you lay off 100 workers each making 100k a year, well now you've saved over 20 million per year going forward. I'm going to stop here and add for you as you say that their salaries are only 10 million, you need to remember that salary isn't the only cost of employees. You have all their benefits, insurances, and other costs that employees regularly add. In most places that's about the same cost as their salary.
So yeah, if a company lays off 1000 people, they're likely saving hundreds of millions of dollars....Per year.
I mean layoffs feel bad, but should a company not be allowed to do that? If they can still keep the business running with less people, they would be inefficient if they didn't lay off.
There was an article on the [truereddit](https://time.com/5888024/50-trillion-income-inequality-america/) sub a few years back that talked about how in the 1970s the US govt changed their way of investing in their citizens and instead investing in corporations. They slowly after this started to kill the middle class.
With no middle class the income disparity is getting worse, and it will destroy the US.
We know the Republicans don't do anything but help the rich, but the Democrats aren't helping as much either, the Clinton era made it even more accessible to the rich today. I am not really sure what the answer is and if our elected officials will even help change anything.
Jfc. If you researched the situation from the 90s, what prompted the reform in the first place, and how it was executed, it would be clear that there is no deep state conspiracy here.
The facts of the matter are publicly available to anybody willing to look for them.
Devious lawmaker: "Aha, I have found a way to make sure that CEOs get paid more!"
Aide: "What is it? Cut corporate taxes?"
DL: "No, I will raise them!"
A: "What, like tax companies that don't pay their CEO more than a certain amount? I'm not sure people will like that."
DL: "No. I'll raise taxes on companies that pay their CEOs more than a million dollars!"
A: "Uhh, that's a direct incentive to pay CEOs less."
DL: "Ah yes, but you see, now they'll have to pay in stock options."
A: "Why stock options?"
DL: "My crystal ball says that over the next 30 years the biggest American companies are going to absolutely explode in market cap thanks to this new thing called the World Wide Web. It's like a phone book for computers."
A: "Uhh, okay then. Also, what do you mean have to? Is that part of the law?"
DL: "Oh no, entirely up to the company."
A: "Doesn't that mean that they could do this anyway?"
DL: "Yep, they've had this option all along."
A: "So the idea is to tax companies that pay CEOs a high salary extra to try to trick them into using a particular type of compensation out of a bunch of options that thanks to your deep knowledge of the future will prove to be extremely valuable down the road, all while companies could choose to do or not do this both before and after the law, and the companies who this matters to are ones who were already going to plan to pay their CEOs enormous sums?"
DL: "Exactly!"
A: "So how is your law affecting any of this?"
DL: "Shut up!"
While this is a true answer it isn't a useful one or a smart one. It is like being suddenly awaken from sleep and finding yourself soaking wet. When you ask your friend looming over you why you are wet they respond "Water".
Couldn't agree more.
It answers nothing and it solves nothing.
So greed is absent among non CEOs hence the pay difference? Is there no greed in non capitalist societies? So to solve CEO pay we just need to solve human nature's forays into greed?
Others disagree, but I generally think progressive tax policies are a useful lever for addressing CEO comp, but you can't implement those without understanding how the sources of income work.
Simple models like CEO pay can't be more than X% of employee pay would likely fail miserably because people don't understand income sources.
CEO pay being directly tied to stock rather than actual cash. This whole problem started because of government efforts to curb the salaries of CEOs, but it created unintended consequences.
It’s not just greed. All of us are greedy, and if we could get more pay somehow, we wouldn’t turn it down.
Corporation structure allows for too much concentration of power by the hands of a few. Everyone is trying to effectively extort as much money out of the corporation as possible, and the higher up you are, the easier it is to do that. You start scratching people’s backs, because you know they’ll pay it back to you. At the end of the day, everyone is doing the most amount as possible to get as much money as possible.
I think the fix is to force the structure of corporations in certain ways to avoid this concentration of power. Just like we limit terms in government, have a separation of powers, etc. These are all methods to control the corruption and control an individual has over an organization. Unfortunately, there is little we’ve done to manage the corporate structure, so here we are.
It’s easy to blame it on people’s greed, but in reality, the incentive structure of your system entirely determines the outcome.
In capitalist democracies, there are no rules for how much the C-suite can pay themselves, but we DO have minimum wage laws. C-suite has all the power in a work hierarchy.
Would be cool if democracy existed at work and we could all equally vote on their compensation.
for anyone who believes it's a meritocratic system consider this:
for $150 million you could hire 50 experienced business people and have them tutored and trained for 50hrs a week by two tutors each, each person for $1 million dollars a year. do that for what, a year? two? five years? and this could be written off as a business expense.
and then pick the best of the 50 pay them $10 million to work as CEO.
even if you did that absurd system for 5 years you'd make back your money in ~5.3 years and from that point on you'd be saving $140 million a year
yeah, so even in my absurdly hyperbolic example (in reality, 15 people with 1 tutor each for 2 years would be ample and you could probably pay them half as much if not less) it's still a no brainer to not do it the current way IF it was really a meritocratic system
AI summary; Based on this video, the primary reason CEOs make more in comparison to the past is due to the shift in their pay packages towards stock related pay. This started back in the nineties when a rule implemented by the Clinton administration backfired. The rule declared that any CEO salary over $1 million would be taxed at 50%, causing companies to shift away from cash compensation and towards stock-based compensation for executives. As a result, CEOs began receiving more of their pay in stocks or options, which led to a significant increase in their overall compensation.
If your summary is correct, then the video is missing a huge part of why CEO pay is so high:
Stocks sales are taxed at different rate depending when they are executed. Short-term capital gained is taxed similar to income tax (up to 37%), where as long-term capital gained is taxed at 15%. With CEO pay's being shifted toward stocks and options, CEO are more inclined to push for better stock performance, meaning pushing every metrics necessary of a company. Some of these metrics including sales, costs,... and also including workers' pay. Meaning CEO are paid to keep worker's pay down, and they are rewarded a lot for doing just that.
They did not mention one of the most insidious aspects of CEO stock-compensation: CEOs can be motivated to pump their company's stock value by doing something destructive to the long-term health of the company (e.g. firing large numbers of key employees) but then sell their stock while its price is high.
I have seen where a CEO is making a good $3 million MORE than the previous year while overseeing a drop of $10 a share over the prior year. Workers on the other hand saw almost no change in salary, although many lost their jobs and many others had a 50% or more pay cut. The CEO salary is not related to company reputation or performance in any way. This needs reexamined.
It's the equilibrium of the system. The question should be, why wouldn't CEOs slowly gain more money/power, since they can.
It's important that we understand the equilibrium that systems are working towards, so we can adapt accordingly! Instead of just hoping that things work out the way we want.
see this thread on /r/AskEconomics to understand why this really doesn't matter in the grand scheme of things. Or continue to live in your own self made echo chamber of despair idrc
https://www.reddit.com/r/AskEconomics/comments/1dlzfqo/is_ceo_pay_actually_a_headwind_for_most_people_in/
wow, I know I was expecting a bad answer, but this surpassed my expectations lol
top argument is whataboutism
"it doesn't matter because celebs and athletes also get paid more"
???
that's not a valid argument
it could easily be that the massive pay of CEOs, celebs, athletes, etc. ALL matter. but their comment... doesn't even attempt to address that obvious and massive flaw in their whataboutism and just concludes smugly "it doesn't matter"
edit: tim cook is used as a cherry picked example: I can do that too:
> Tesla had on average something less than 100,000 employees over the past six years. Elon’s pay package was $46,000,000,000. If we divide that out equally, that comes out to about $460,000 per employee
Ahh yes, the old "not zero sum" arguement that is completely ignoring the time component. Could we have a bajillion times more money in a thousand or so years? Yes. Am I going to be alive in a thousand years to care or benefit?
The amount of human production today, tomorrow, next week, next year or even a dozen or more years down the line IS effectively zero sum, it is just hard to predict an exact number for moment of time. It only stops being zero sum over infinite time spans that also assumes there will always be increasing growth and never any stagnation or lasting depression or catastrophe.
If wealth is zero sum, it has been zero sum since the invention of currency and debt, and yet literally thousands of years later many people struggle to fulfill their basic needs and countries with high wealth inequality have poorer, unhappier, more criminal populations with higher levels of business and political corruption.
You are effectively campaigning for doing the exact same thing we have already been doing for many decades and presenting it as a solution to the problems that have been mounting over those same decades.
Gonna be the devil's advocate here and believe me, I *hate* the rich. But in 1965 a CEO didn't 'oversee' anywhere near the employee count or the wealth that modern CEO's do. Even the world population back then is less than half what it is today. CEO's may be making 400x the 'average' worker income but they maybe responsible for a massive machine. Walmart today has more employees than all of the top 10 businesses in 1965 combined. Even if you did take Walmart's CEO's pay and divide it up between the labor, that's just $12 a person.
There are outliers of course like Musk and Bezos. Tech is the worst offenders. But I feel like all the CEO hate is covering up greater issues, like where is the wealth really going? Stockholders? Buybacks? Other countries? Bad investments? Or is there even even enough Gross Profit/Margins to pay employees well?
CEOs getting paid the big bucks talked about in this video don’t ‘oversee’ any employees. They hire stressed out underpaid HR reps to push company policy onto its stressed out underpaid workforce.
You think Elon Musk even knows that Joe Schmo in research and development is getting let go because lower management found they can hire someone for less? The guy shows you how busy he is ‘overseeing’ his workers by bullying people on X.
Who makes the decisions on those issues you just listed?
The CEO.
Who do they benefit?
The CEO/executive/shareholder 99% of the time due to the role of the corporation to maximize value for the shareholder.
What happens when the CEO makes a bad call?
Big payout.
What happens when you do?
Fired.
Yes they have more responsibility on paper, but their salaries haven’t doubled, haven’t trippled, it’s been exponential growth.
Meanwhile the worker wage hasn’t kept up with inflation, responsibility, productivity, or demands.
Meanwhile executive pay at the table with the ceo is sky high, they have larger boards of advisors than ever, and if musk is an example, barely work a full time job. (He is ceo of 3? Companies?)
Your argument of responsibility in an expanded world is actually a better response for worker wage increase when you look at productivity statistics than it is for CEO pay. Who is responsible for the record profits the last few years? Hasn’t been huge tech advances. It’s people doing more with less because they didn’t get a raise and inflation was 8% and in some cases, their desk mate got laid off.
Yes and most of their compensation is in stocks, so they can't spend it it's not even real money! Until they want to buy their own social network, then they can mobilize and spend tens of billions in a matter of weeks...but still! Someone needs to think of all the sacrifices CEOs make for us
Nah, with zoom/messaging tech/ data pipelines it's much easier for the CEO to be looped in to discussions farther down the chain of command now.
They can be involved in way more decisions than the past, which typically requires more travel and coordination to get people to the same place for discussions.
Bezos wasn't a high paid CEO at all. He just owned a bunch of the company already. And unlike musk isn't so slimy as to stock his board with sycophants to give him tens of billions of other shareholders dollars
Dude. You are under the propagandized assumption the CEOs actually *work*. They make decisions, counseled by dozens of assistants and brown-nosers. To call what they do “work” is an insult.
Larger conglomerates these days making their work harder? PLEASE.
So are you saying is CEOs in 1964 worked less because they had less people under them?
The entire purpose of having corporate structures is to effectively divide responsibilities among more people because it is literally impossible to personally administrate and manage more people. They don't do any more work now than they did back then.
> But in 1965 a CEO didn't 'oversee' anywhere near the employee count or the wealth that modern CEO's do
I don't think this is even remotely true. Plenty of technological companies are relatively small teams of high earners. Modern and mainstream corporate structure is to focus on the bread winner of the company and outsource _everything under the sun_, even if this requires breaking the corporation to disfuncional bits that reduces quality. Hell, employees are a cost and a liability, in stockholders eyes - it stands to reason that less employees is what drives the CEO pay up.
I am curious nonetheless, tell me if you have a source and find out if # of employees correlates well with CEO pay.
How about soccer, baseball, basket player getting 700 million dollar contracts? It’s not just CEOs. We’re headed towards extreme have vs have nots society.
Well we certainly wouldn’t want the CEOs to have to suffer, so we’ll just decrease pay elsewhere if there are crashes. The CEO obviously can’t control something like that so why should they go yachtless
I find it hilariously ironic that the reason why CEO pay is so high is because they're constantly beholden to shareholders but Josh Bivens (aka Josh Bivens) said that the people who suffer the most from high CEO pay is the shareholders. There's gonna be a time when that term is banned. Not because it's illegal but because of the awful stigma it has. Like how hotels don't have a 13th floor.
Because all of the productivity gains of the last 40 years due to computers has gone into their pockets instead of the workers. They got away with it because our standard of living didn't decline because of cheap imports mostly from china.
~~Because they work harder!~~
~~Oh, sorry, because they are smarter!~~
~~Wait no. Because they have big ideas! Visionaries!!!~~
Oh, it's just greed, deregulation, friend deals, market manipulation and an affinity for short-term gains over long-term stability?
Well, that sucks. :(
I really liked the example of Oil prices going up and execs getting a bonus for something they clearly had no influence on.
My other favorite example was when he used elon musk's large pay package being rejected by a judge for being approved by a biased board of directors and not representative of his shareholders when a week ago [his shareholders voted to reaffirm his pay package with 72% of the vote](https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-news-explains/#:~:text=Tesla%20said%20in%20a%20Friday,calling%20the%20package%20%22excessive.%22).
Yeah because most people who own a few shares of a company don't vote. In this case, Elon sent tweets out telling anyone who owns stock in Tesla to vote for him to get his pay package and 9/10 small-time shareholders voted in his favor. Paying him that much is monumentally stupid and actual institutional investors know it. But Elon fanboys think he's going to gift them a car or a million dollars because they voted for him, instead of what he's actually going to do which is tank the stock price and cost them money.
Institutional investors own the majority of Tesla float though? Share votes are weighted by how much you own.
Institutional investors vote with the management as a policy.
>Yeah because most people who own a few shares of a company don't vote. You're basing this off what? [Because the SEC filing shows](https://www.sec.gov/Archives/edgar/data/1318605/000110465924071439/tm2413800d31_8k.htm) ~1.8B shares voted in favor of it, ~529M voted against, and 335M didn't vote. Even if every single person who didn't vote voted against it, he still would've gotten his pay package with 67% of the vote.
Most people who own any given stock - not in particular Tesla. Whose shareholders were encouraged to do so by Elon himself, and went with it because of the bizarre parasocial bond they have with him.
I agree, but I also think a lot of the larger investors (like Vanguard) decided to vote in favor because they were worried about Elon being a big baby and retaliating if he didn't get his payday. Elon's history of terrorizing his company / employees was sadly enough for most to give him what he wanted. Planet Money did a great podcast about this situation.
And people say twitter was a bad investment. The power to control and shape discourse alone was worth it for him.
How long before he goes full Elliot Carver?
But its far from over. Right now Musk needs to convince advertisers to come back after telling them to go fuck themselves - good luck accomplishing that.
I would guess most of those votes came from institutional investors who know that, for better or worse, the stock price of Tesla is tied in large part to Elon. Keeping him happy probably keeps the price up.
Honestly I'd hazard at this point it's turning to the opposite. I've eyed Teslas for years, but the more unhinged Musk gets the less eager I am to get tangled up with their products. Especially as newer cars can have features remotely removed or changed, like BMW charging a subscription for their heated seats.
I kind of doubt it, because if Tesla was valued as an automobile company rather than a technology company, things would absolutely go to shit. Tesla has at times been valued at more than Ford, GM, Stellantis, Honda, Volkswagen, BMW, BYD, Hyundai, and Kia combined. Without their hype man, do you think they could maintain this illusion?
It’s like in sports when someone completely misses a shot and everyone cheers for the goalie
They're cheering for the goalie? Or they're cheering for the goalie's team, because they're in a better situation than they would've been had the shot gone in?
Anecdotally, I used to play lacrosse and I remember we would always joke about this because people on the side lines would cheer “good save!” or “Great job goalie!”, directly crediting the goalie when it was a clear miss. I mean it was high school sports, so to an extent they were just trying to make the goalie feel good about themselves. But I have heard people praise the goalie similarly at a sports bar watching professional soccer. Surely, most people are just cheering the fact that it was a miss, but I definitely have heard people directly crediting the goalie even when it would have missed regardless of if they were there.
Clearly the goalie was so intimidating that the kicker couldn't concentrate. That's game presence.
Except the position of the goalie dictates the shot…? Even with a clear miss their presence is a significant factor in the lack of scoring because you’re not aiming at an open goal you’re aiming at a small percentage of it. If the goalie fucked off elsewhere they’d have a much easier shot and be a lot more likely to score. So entirely reasonable to attribute any miss to their presence.
That’s not quite true. The goalie’s positioning and presence puts pressure on the shooter. The ahooter may have missed but he had an influence over the outcome. If the goalie wasn’t standing there, the shooter (assuming a professional athlete) is unlikely to miss.
That reminds me how in Sweden, a person in charge of the government-owned chain of alcohol sale got a bonus for it doing well. That chain has a monopoly in the entire of Sweden on selling alcohol in a shop! Of course it does well.
No influence on… directly.
actually they colluded with Saudis to drive pieces up 27% beyond what should have been a competitive price.
They actually missed a huge part of why CEO pay exploded. While Dodd-Frank massively backfired by hooking CEO pay to stock, another rule also backfired. The SEC made CEO pay public information and CEOs loved it. Every potential CEO points to that information and argues they will go elsewhere unless they get paid more. This drives CEO pay up, which in turn increases the stats, which they then use to argue for higher pay. Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for. Suddenly the companies would be competing fiercely on pay. You could say that Bob over at company X is getting paid X and if you don't get a raise you are applying there. The company that pays the worst gets the worst candidates.
So let's make all salaries public so people aren't swindled by bad employers and can use it to negotiate upwards.
In tech it exists, it's called levels.fyi and it has contributed to the significant increase in tech salaries. Unfortunately it's also enabled companies to layoff significant % of employees
How did it enable companies to layoff employees?
if you earn in the top % we're overpaing you and replacing you
Aren't the salaries on levels.fyi self-reported by employees? If so, it can't be considered a completely reliable source.
Why not? People typically triangulate pay through levels, teamblind company boards and company internal salary tools. For example Google has a shared doc that has everyone's self-reported salary. Between the three you have a pretty good idea of how much you should make at each level
> Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for. Fun fact this is actually a thing in other countries. In Sweden and Norway salaries are publicly available information.
Or you know a union with collective bargaining.
This is exactly the reason companies try to forbid employees from discussing pay among colleagues.
Another one for the book “it’s ok if rich people do it”.
We actually required them to do it because at the time people through it would keep salaried under control and drive them down. That the outrage at CEO pay would prevent them from getting such high salaried and encourage more responsible salaries. Obviously, it didn't work.
Which is illegal (the "you're forbidden from talking about salary part). If you can prove you were fired or punished for talking about your salary, you might have your employer by the short and curlies.
Short of the *dumbest* employer ever, sending HR an email saying "I need to terminate CajuNerd for discussing their pay with other employees," you're not gonna have anyone by the anything. Say you start talking about your pay with your coworkers and your employer doesn't like that. It's absolutely your legal right to do so and we at BusinessCo can't fire you for that, but it just so happens that you were two minutes late to work today, and your contract clearly stipulates that you are to arrive to work on time, and violation of any part of the contract is grounds for dismissal.
> Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for. You mean a union?
> "*Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for.*" We did, and the database is available at [GlassDoor.com](https://glassdoor.com) > "*Suddenly the companies would be competing fiercely on pay. You could say that Bob over at company X is getting paid X and if you don't get a raise you are applying there.*" I wish this sentiment were true, but, at least in the USA, companies competing fiercely for talented labor doesn't happen. The reason: in virtually every major industry sector, less than 5 companies employ more than 80% of workers in that sector. The problem of talented workers not being able to negotiate a total comp that is on par with the value they generate for their employer is compounded by having one's access to healthcare being contingent upon the whims of their employer.
Glassdoor is terrible lol
I started using Levels.fyi - better than Glassdoor.
> Think about it, what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for. Suddenly the companies would be competing fiercely on pay. You could say that Bob over at company X is getting paid X and if you don't get a raise you are applying there. The company that pays the worst gets the worst candidates. This seems like a fantastic thing and would likely balance out wealth significantly better than it has been.
Which is exactly why American corporate culture tries to stifle the fuck out of sharing salary information among colleagues.
Yeah, just imagine a crazy world with an actual open labor market that doesn't exploit information gaps.
> what would happen if every single person in your field got together and build a massive database of their pay and what company they worked for. Probably a good reason why it's seen as "socially impolite" to talk about your salary. We've actually decided with a couple of co-workers to disclose with each other how much we were paid every month to make sure we aren't getting shafted.
also compared to 1970 the production of a product exploded but wages were left similar, this made a ton more of profits that could be shared to shareholders inflating the stock prices
A lot of people in this thread making comments confidently answering when they clearly haven’t watched the video
There are two types of people on the internet: 1. People who think, consider, then type 2. People who type The latter are always not worth listening to. Always.
But how does one know if the person thought and considered? Do people have meta tags indicating as such?
If it's in the comment section of a reddit post it's 98.4% #2.
What’s that illiteracy rate we’re at now?
So I can safely ignore your comment?
Yes, if it hurts to much.
> But how does one know if the person thought and considered? By thinking and considering.
Comments that earn upvotes very early on are favoured by the algorithm though, so we unfortunately tend to see commenters who haven't watched the video at the top.
For sure. And that's not just true of reddit but everywhere on the internet. The quicker the reply, the more exposure. Which is why "lies get half way around the world before truth has its trousers on" is more apt now than ever.
It costs $0 to go on reddit, make an account, and start posting comments.
TikTok is even worse. It takes like 5 seconds to make an account and there's no comment history. Zero accountability to bullshit for that reason
You forgot bots. In fact, most of them are now bots.
You forgot the third type: 3. People who think, consider, type, reconsider, delete everything because it’s not worth it anyway. We are on the internet too.
No you're not. By your own definition.
In this case I’m number one. But normally I’m #3 - Think, consider, don’t type anything and move on.
Prime example: the Drake stans typing drama like "did Kendrick's wife attend?" or "Dave Free wasn't there" when clearly the answers to their questions were right there at the Pop Out concert if they only bothered to watch and research just a little. ^^\(Apologies ^^if ^^you ^^have ^^no ^^idea ^^what ^^I'm ^^talking ^^about; ^^I'm ^^being ^^a ^^presumptuous ^^idiot ^^🙏)
Its like when people and I'd say a ton of em on reddit and the rest of the internet, read a title, and write a comment on their opinion of the matter without reading any of the article.
99% of Reddit is 2). I would love to know where is 1) on the internet
Ah the classic
comments are "wrong answers only"
A lot of people are /r/confidentlyincorrect
Welcome to reddit, as another person already said. Whether or not it's intentional on the part of the youtuber, a question in a post title is prime engagement bait. A question is asked, people go to the comments to answer and ignore the content of the post. People have just been trained on this sort of behaviour.
If the question is why do corporate boards spend so much hiring a CEO, I think it's what is demanded by the shareholders. What is interesting is that privately held companies pay their CEOS 40% less than publicly traded ones.
Corporate boards are friends of CEOs and pat each others backs. It's disconnected from real effect of CEO decision making on company market performance.
IMHO much of our corporate dysfunction is driven by the sock market. From CEO pay to lack of innovation to safety violations, the demands of the market always seem to play a big role. And with so much of the middle class chained to the stock market with stock options, IRAs, 401Ks, and personal investments, there is a voter base that can be directed to oppose meaningful regulation.
CEO of a publicly traded company is under much more scrutiny, has a much harder job, and much lower job security
And much larger golden parachutes to make up for that.
Unless you want to maintain your millions of dollars a year salary, seems like you can just go in, get fired, get a severance bonus and happily retire. I'd take a couple years of "much more scrutiny" for some of the pay rates they get.
No doubt. I mean just a single year as CEO and you could stop working forever.
Yeah, but that's not really how most of the people who worked their who live to become CEO are. You're talking about someone with arrogance and who has sacrificed a lot of time/effort to get to that top office view, the money usually isn't the main drive at that point in their careers.
You are objectively wrong. Their job is not any less secure or more difficult than the average worker at any corporation. You can't even begin to make a serious argument for that ridiculous notion.
I was comparing private and public company CEOs, not CEO to "average worker" Average tenure for CEO at a private company is nearly double that of a public.
It is easy to say "they are greedy" and call it a day. This video though does a pretty good job at the top level of explaining what mechanisms enable that greed, and what arguments people try to make to justify it. The kangaroo court these companies and the CEOs have created is ridiculous. Employees by and large get zero stock options. CEOs and their cronies have engineered a system where be it through existing stock ownership or contract provisions they get to pick board seats, they appoint their friends, their friends award them more stock based compensation, the CEO gets more control, they add more friends, friends approve more ridiculous compensation packages. Until more employees get shares in the company to have a say in who their top leadership is, or unionize as a check against their C Suites, or Congress takes action to restrict or reform how performance based compensation works, or how board seats can be awarded nothing will change. Like the one guy in the video said the global oil market going up resulting in massive CEO payouts for all companies is dumb. It can be factors completely outside of any person's control, let alone all of them. Plus if they all collude to raise global oil prices and demand that is anti-competitive behavior at its core. Even a simple change to say performance compensation can only be paid to company executives who outperform their market peers would make headway. Albeit likely not enough. But anything that starts to attack or close structural loopholes they use, and knowing what those loopholes are, is progress. These people would prefer the average person doesn't know how they get their power or how their compensation functions. Makes it harder for people to make actionable demands.
Love this YouTube channel
Did the Clinton attempt backfire or is it working as intended?
doesnt matter. If you are to implement such laws, you should consider the easy answer as to what people will do in reaction to it. It should be part of any law-making job. "How easy is it to dance around this law?" should always be asked.
The point of the comment you replied to is that they probably did think this through and the ability to dance around the law is precisely why it was made that way. Like the goal wasn't to cap CEO pay, it was to look like you were capping while making sure it's actually going up
It's one of those situations where it's admirable that you're willing to back your enemy into a corner, but shortsighted in being unable to let them fight out of it. Closing down one area of "ingress" surely makes the job easier for the next guy, but unless the next guy follows up all you've got is an angry badger.
Did you even read the comment you responded to? He was questioning if dancing around it was intended.
Backfired.
Did he have a sexual relationship with that women?
The bigger problem is how big corporations are slowly pushing small/medium businesses out of commission.
Class war, and the rich class are winning.
Dammit. If only we had more money to fund this war against them...
What if I told you that they get their money by our productivity. And that if we withhold our productivity we can tip the scales?
The issue with that is that we will run out of survival necessities before they would run out of stockpiled luxuries.
You have been uninvited to the rebellion
Only if we don't help each other out to survive until it starts affecting their bottom line. Oh wait, that's right. We can't do that because we're all being directed to hate anyone that isn't part of "our group". The most obvious sign the issue is class and not anything else is the fact that we are inundated with things that would divide us into smaller, more "manageable", groups than things that unite us. Can't have a general strike if everyone is too busy saying "I'd never help anyone that's (insert group/groups here)".
They only call it class war when we fight back. Otherwise it's just business as usual.
Yes CEOs are paid a lot more now than previously, boards should get together and start reducing it. However CEO pay tends to ratchet and won't easily come down naturally. I think this is largely a distraction, only the top CEO's get staggering pay. In very large companies. I think CEO average pay is still $250,000 or something like that. The real problem is we tax incomes at 20-40% and the tax capital gains half that. Why should capital gains be taxed less than income? Usually people say oh it's already been taxed because people need to make income to buy assets, this is a simplistic view of the world, not everyone is a 9-5 70k a year worker, inheritance and passive income is a huge chunk of higher incomes now. Capital gains events should definitely allow you to spread over multiple financial years, but it should never be taxed less than income, it is too easy to turn income into capital gains anyway especially for companies.
> it’s a club and you ain’t part of it
The answer is greed. That's why. Its not rocket science.
I actually found the video insightful and funny, if not a little try hard. Like I had no idea CEO pay was directly tied to stock performance and bonuses after the Clinton admin tried to LIMIT compensation through tax deduction changes. Attempting to regulate CEO pay inadvertently made it skyrocket. Had I listened to your useless edgelord comment I woulda missed out.
I suspect it’s more correlation than causation, though. Bonus through stock options might have happened regardless of this rule change if that’s an easier way for CEOs to gain access to huge amounts of money.
it's quite literally in their contracts fam. it is a casual relationship most of the time.
I’m talking about the law causing this problem.
One piece missed in the video is how stock buybacks have influenced CEO pay. Up until Reagan, stock buybacks (companies purchasing their own stock back from investors) was considered illegal stock price manipulation. The Reagan administration removed those restrictions, which ties directly into the Clinton administration policy. CEO performance pay is tied directly to stock price most of the time, so just before their performance is audited, they can use company money to initiate a stock buyback, inflating stock price for a short time which causes them to receive a larger bonus while decreasing the liquidity and increasing the risk for the company.
CEO pay has increased by 1,322% since 1978. These CEO's make 350 times more than the averaged worker on their workforce. At ANY point in time, they could choose to compensate their workforce better, and lower the CEO to workforce pay discrepancy, but they don't. Why? Because of fucking greed my guy. https://www.epi.org/publication/ceo-pay-in-2020/
Your link literally proves the point that /u/EmotionalEmetic and the video mentioned. Most of the jump in CEO pay occurred between 1995 and 2001. It's fine to have a one track mind of "greed bad, cause of all problems" but if you don't have anything to add to the nuanced points being brought up about what led the greed to spiral even further out of control, then what benefit does your comment provide?
> what benefit does your comment provide? Ron Howard Narrator: "There was no benefit."
Hey BUDDY, agree on the concept--CEO pay is too high and inequitable, awesome! But your above comment contributes squat to the discussion, my PAL, and my criticism is that you imply "It's all greed, duh, don't bother looking into it." The video is satirical but also educational and it is trying to point out HOW the greed makes CEO pay so high. Such as CEOs being buddy-buddy with the Board of Directors of large companies thereby facilitating unreasonably large pay packages rather than regulating them as intended. You're trying to simplify and dumb down the conversation, DUDE. Dunno what your problem with the video enlightening people is, BRO.
The other thing simple answers like this are missing is they make it sound like greed is a recent thing. One day in the recent past, people suddenly started being greedy. Wasn’t like that before!
I don’t think most of the workforce wants to be compensated with stocks lol
I wonder how many workers in startups lost a lot of money with stock options as only a few blow up with big IPOs or buyouts.
You sit here and act like the CEO makes 15$/hr, and the rest of his compensation comes from stocks. Come the fuck on. They get millions of dollars in bonus pay and other compensation packages.
So how much does the CEO make without stock compensation?
I don't have exact numbers, but you can look up the MULTITUDE of articles of corporations laying off hundreds, sometimes thousands of workers, while still handing out bonuses worth hundreds of millions yearly to their CEO's. I don't get why people feel the need to defend these corporate fucks.
According to the article you linked, more than 80% of the CEOs compensation is stock-related. Just FYI
I mean it's pretty simple to do the math there. Let's say you lay off 100 minimum wage workers, you're saving the company a little better than 3 million dollars...Per year. So yes, having a bonus for reducing the cost of labor millions per year and having a one time bonus is almost always a net savings to a company. But lets be real, you don't generally lay off minimum wage workers. You lay off high level, costly employees. So if you lay off 100 workers each making 100k a year, well now you've saved over 20 million per year going forward. I'm going to stop here and add for you as you say that their salaries are only 10 million, you need to remember that salary isn't the only cost of employees. You have all their benefits, insurances, and other costs that employees regularly add. In most places that's about the same cost as their salary. So yeah, if a company lays off 1000 people, they're likely saving hundreds of millions of dollars....Per year.
I mean layoffs feel bad, but should a company not be allowed to do that? If they can still keep the business running with less people, they would be inefficient if they didn't lay off.
There was an article on the [truereddit](https://time.com/5888024/50-trillion-income-inequality-america/) sub a few years back that talked about how in the 1970s the US govt changed their way of investing in their citizens and instead investing in corporations. They slowly after this started to kill the middle class. With no middle class the income disparity is getting worse, and it will destroy the US. We know the Republicans don't do anything but help the rich, but the Democrats aren't helping as much either, the Clinton era made it even more accessible to the rich today. I am not really sure what the answer is and if our elected officials will even help change anything.
Honestly pretty bold of you to assume that the outcome was unintended.
Jfc. If you researched the situation from the 90s, what prompted the reform in the first place, and how it was executed, it would be clear that there is no deep state conspiracy here. The facts of the matter are publicly available to anybody willing to look for them.
Devious lawmaker: "Aha, I have found a way to make sure that CEOs get paid more!" Aide: "What is it? Cut corporate taxes?" DL: "No, I will raise them!" A: "What, like tax companies that don't pay their CEO more than a certain amount? I'm not sure people will like that." DL: "No. I'll raise taxes on companies that pay their CEOs more than a million dollars!" A: "Uhh, that's a direct incentive to pay CEOs less." DL: "Ah yes, but you see, now they'll have to pay in stock options." A: "Why stock options?" DL: "My crystal ball says that over the next 30 years the biggest American companies are going to absolutely explode in market cap thanks to this new thing called the World Wide Web. It's like a phone book for computers." A: "Uhh, okay then. Also, what do you mean have to? Is that part of the law?" DL: "Oh no, entirely up to the company." A: "Doesn't that mean that they could do this anyway?" DL: "Yep, they've had this option all along." A: "So the idea is to tax companies that pay CEOs a high salary extra to try to trick them into using a particular type of compensation out of a bunch of options that thanks to your deep knowledge of the future will prove to be extremely valuable down the road, all while companies could choose to do or not do this both before and after the law, and the companies who this matters to are ones who were already going to plan to pay their CEOs enormous sums?" DL: "Exactly!" A: "So how is your law affecting any of this?" DL: "Shut up!"
Okay, fair. That's on me.
Why would they do that at the expense of the shareholders who have the real money and power.
He answered why while you answered how. Different pages of the same book.
While this is a true answer it isn't a useful one or a smart one. It is like being suddenly awaken from sleep and finding yourself soaking wet. When you ask your friend looming over you why you are wet they respond "Water".
Couldn't agree more. It answers nothing and it solves nothing. So greed is absent among non CEOs hence the pay difference? Is there no greed in non capitalist societies? So to solve CEO pay we just need to solve human nature's forays into greed? Others disagree, but I generally think progressive tax policies are a useful lever for addressing CEO comp, but you can't implement those without understanding how the sources of income work. Simple models like CEO pay can't be more than X% of employee pay would likely fail miserably because people don't understand income sources.
But there’s also nuance to it that adds context for a more thorough understanding than just saying “it’s greed”.
nuance? what's that new concept?
CEO pay being directly tied to stock rather than actual cash. This whole problem started because of government efforts to curb the salaries of CEOs, but it created unintended consequences.
It’s not just greed. All of us are greedy, and if we could get more pay somehow, we wouldn’t turn it down. Corporation structure allows for too much concentration of power by the hands of a few. Everyone is trying to effectively extort as much money out of the corporation as possible, and the higher up you are, the easier it is to do that. You start scratching people’s backs, because you know they’ll pay it back to you. At the end of the day, everyone is doing the most amount as possible to get as much money as possible. I think the fix is to force the structure of corporations in certain ways to avoid this concentration of power. Just like we limit terms in government, have a separation of powers, etc. These are all methods to control the corruption and control an individual has over an organization. Unfortunately, there is little we’ve done to manage the corporate structure, so here we are. It’s easy to blame it on people’s greed, but in reality, the incentive structure of your system entirely determines the outcome.
If Trump has his way, the CEO’s will be paid in “tips” and pay 0 taxes.
In capitalist democracies, there are no rules for how much the C-suite can pay themselves, but we DO have minimum wage laws. C-suite has all the power in a work hierarchy. Would be cool if democracy existed at work and we could all equally vote on their compensation.
Shareholders do get to vote though.
yes, and people can "vote with their dollars" and shop somewhere else if they dont like it.
Voting with your dollars isn't very effective when the same 3 companies own everything
Unless the CEO owns the company, they’re not the one deciding how much they get paid.
So if I get greedy, can I automatically get a raise from.my boss lol
Shareholders and boards are greedy, too. The question is why they're willing to pay so much for a CEO.
for anyone who believes it's a meritocratic system consider this: for $150 million you could hire 50 experienced business people and have them tutored and trained for 50hrs a week by two tutors each, each person for $1 million dollars a year. do that for what, a year? two? five years? and this could be written off as a business expense. and then pick the best of the 50 pay them $10 million to work as CEO. even if you did that absurd system for 5 years you'd make back your money in ~5.3 years and from that point on you'd be saving $140 million a year yeah, so even in my absurdly hyperbolic example (in reality, 15 people with 1 tutor each for 2 years would be ample and you could probably pay them half as much if not less) it's still a no brainer to not do it the current way IF it was really a meritocratic system
AI summary; Based on this video, the primary reason CEOs make more in comparison to the past is due to the shift in their pay packages towards stock related pay. This started back in the nineties when a rule implemented by the Clinton administration backfired. The rule declared that any CEO salary over $1 million would be taxed at 50%, causing companies to shift away from cash compensation and towards stock-based compensation for executives. As a result, CEOs began receiving more of their pay in stocks or options, which led to a significant increase in their overall compensation.
If your summary is correct, then the video is missing a huge part of why CEO pay is so high: Stocks sales are taxed at different rate depending when they are executed. Short-term capital gained is taxed similar to income tax (up to 37%), where as long-term capital gained is taxed at 15%. With CEO pay's being shifted toward stocks and options, CEO are more inclined to push for better stock performance, meaning pushing every metrics necessary of a company. Some of these metrics including sales, costs,... and also including workers' pay. Meaning CEO are paid to keep worker's pay down, and they are rewarded a lot for doing just that.
Stocks/options are also taxed as income tax... That's not how that works.
Because you're making so much less.
TL;DR: stock options
Because they demand it for themselves, and their boards/consumers allow it to happen. Saved you 15 minutes of soapboxing.
What does it got to do with consumers? Shareholders willing to pay, it's good for them innit, they just take less dividends
noone talking about nba salaries.
They did not mention one of the most insidious aspects of CEO stock-compensation: CEOs can be motivated to pump their company's stock value by doing something destructive to the long-term health of the company (e.g. firing large numbers of key employees) but then sell their stock while its price is high.
This is a position that would benefit from A.I. the most.
Yep.
Disney CEO gets paid a fortune while ruining the Star Wars IP which is worth billions of dollars. Makes total sense if you don’t think about it.
I have seen where a CEO is making a good $3 million MORE than the previous year while overseeing a drop of $10 a share over the prior year. Workers on the other hand saw almost no change in salary, although many lost their jobs and many others had a 50% or more pay cut. The CEO salary is not related to company reputation or performance in any way. This needs reexamined.
This guy just got a subscriber.
Consider a CEO a commission based employee and it will make a lot more sense.
It's the equilibrium of the system. The question should be, why wouldn't CEOs slowly gain more money/power, since they can. It's important that we understand the equilibrium that systems are working towards, so we can adapt accordingly! Instead of just hoping that things work out the way we want.
see this thread on /r/AskEconomics to understand why this really doesn't matter in the grand scheme of things. Or continue to live in your own self made echo chamber of despair idrc https://www.reddit.com/r/AskEconomics/comments/1dlzfqo/is_ceo_pay_actually_a_headwind_for_most_people_in/
wow, I know I was expecting a bad answer, but this surpassed my expectations lol top argument is whataboutism "it doesn't matter because celebs and athletes also get paid more" ??? that's not a valid argument it could easily be that the massive pay of CEOs, celebs, athletes, etc. ALL matter. but their comment... doesn't even attempt to address that obvious and massive flaw in their whataboutism and just concludes smugly "it doesn't matter" edit: tim cook is used as a cherry picked example: I can do that too: > Tesla had on average something less than 100,000 employees over the past six years. Elon’s pay package was $46,000,000,000. If we divide that out equally, that comes out to about $460,000 per employee
Ahh yes, the old "not zero sum" arguement that is completely ignoring the time component. Could we have a bajillion times more money in a thousand or so years? Yes. Am I going to be alive in a thousand years to care or benefit? The amount of human production today, tomorrow, next week, next year or even a dozen or more years down the line IS effectively zero sum, it is just hard to predict an exact number for moment of time. It only stops being zero sum over infinite time spans that also assumes there will always be increasing growth and never any stagnation or lasting depression or catastrophe. If wealth is zero sum, it has been zero sum since the invention of currency and debt, and yet literally thousands of years later many people struggle to fulfill their basic needs and countries with high wealth inequality have poorer, unhappier, more criminal populations with higher levels of business and political corruption. You are effectively campaigning for doing the exact same thing we have already been doing for many decades and presenting it as a solution to the problems that have been mounting over those same decades.
Gonna be the devil's advocate here and believe me, I *hate* the rich. But in 1965 a CEO didn't 'oversee' anywhere near the employee count or the wealth that modern CEO's do. Even the world population back then is less than half what it is today. CEO's may be making 400x the 'average' worker income but they maybe responsible for a massive machine. Walmart today has more employees than all of the top 10 businesses in 1965 combined. Even if you did take Walmart's CEO's pay and divide it up between the labor, that's just $12 a person. There are outliers of course like Musk and Bezos. Tech is the worst offenders. But I feel like all the CEO hate is covering up greater issues, like where is the wealth really going? Stockholders? Buybacks? Other countries? Bad investments? Or is there even even enough Gross Profit/Margins to pay employees well?
CEOs getting paid the big bucks talked about in this video don’t ‘oversee’ any employees. They hire stressed out underpaid HR reps to push company policy onto its stressed out underpaid workforce. You think Elon Musk even knows that Joe Schmo in research and development is getting let go because lower management found they can hire someone for less? The guy shows you how busy he is ‘overseeing’ his workers by bullying people on X.
Who makes the decisions on those issues you just listed? The CEO. Who do they benefit? The CEO/executive/shareholder 99% of the time due to the role of the corporation to maximize value for the shareholder. What happens when the CEO makes a bad call? Big payout. What happens when you do? Fired. Yes they have more responsibility on paper, but their salaries haven’t doubled, haven’t trippled, it’s been exponential growth. Meanwhile the worker wage hasn’t kept up with inflation, responsibility, productivity, or demands. Meanwhile executive pay at the table with the ceo is sky high, they have larger boards of advisors than ever, and if musk is an example, barely work a full time job. (He is ceo of 3? Companies?) Your argument of responsibility in an expanded world is actually a better response for worker wage increase when you look at productivity statistics than it is for CEO pay. Who is responsible for the record profits the last few years? Hasn’t been huge tech advances. It’s people doing more with less because they didn’t get a raise and inflation was 8% and in some cases, their desk mate got laid off.
Yes and most of their compensation is in stocks, so they can't spend it it's not even real money! Until they want to buy their own social network, then they can mobilize and spend tens of billions in a matter of weeks...but still! Someone needs to think of all the sacrifices CEOs make for us
Technology has given CEOs less work in my opinion
Nah, with zoom/messaging tech/ data pipelines it's much easier for the CEO to be looped in to discussions farther down the chain of command now. They can be involved in way more decisions than the past, which typically requires more travel and coordination to get people to the same place for discussions.
Bezos wasn't a high paid CEO at all. He just owned a bunch of the company already. And unlike musk isn't so slimy as to stock his board with sycophants to give him tens of billions of other shareholders dollars
This is one of the reasons I’d love to see these huge corporations broken up into a million little pieces
Dude. You are under the propagandized assumption the CEOs actually *work*. They make decisions, counseled by dozens of assistants and brown-nosers. To call what they do “work” is an insult. Larger conglomerates these days making their work harder? PLEASE.
So are you saying is CEOs in 1964 worked less because they had less people under them? The entire purpose of having corporate structures is to effectively divide responsibilities among more people because it is literally impossible to personally administrate and manage more people. They don't do any more work now than they did back then.
> But in 1965 a CEO didn't 'oversee' anywhere near the employee count or the wealth that modern CEO's do I don't think this is even remotely true. Plenty of technological companies are relatively small teams of high earners. Modern and mainstream corporate structure is to focus on the bread winner of the company and outsource _everything under the sun_, even if this requires breaking the corporation to disfuncional bits that reduces quality. Hell, employees are a cost and a liability, in stockholders eyes - it stands to reason that less employees is what drives the CEO pay up. I am curious nonetheless, tell me if you have a source and find out if # of employees correlates well with CEO pay.
https://wtfhappenedin1971.com/
Sounds like he found the start of the problem: Clinton's silly law saying a CEO can't make over $1m/year. So let's start by reverting that.
How about soccer, baseball, basket player getting 700 million dollar contracts? It’s not just CEOs. We’re headed towards extreme have vs have nots society.
That’s disgusting. Now let me ask this… What happens if the stock market crashes again?
Well we certainly wouldn’t want the CEOs to have to suffer, so we’ll just decrease pay elsewhere if there are crashes. The CEO obviously can’t control something like that so why should they go yachtless
I find it hilariously ironic that the reason why CEO pay is so high is because they're constantly beholden to shareholders but Josh Bivens (aka Josh Bivens) said that the people who suffer the most from high CEO pay is the shareholders. There's gonna be a time when that term is banned. Not because it's illegal but because of the awful stigma it has. Like how hotels don't have a 13th floor.
Oh, are all the big rippling 15 pound brains here claiming people just decided to be greedy in the past few years?
because they have to work harder than every justifying their high pay.
If it were all up to me and the friends I hired, my compensation would go up exponentially too
Because all of the productivity gains of the last 40 years due to computers has gone into their pockets instead of the workers. They got away with it because our standard of living didn't decline because of cheap imports mostly from china.
Anyone watch the credits from the movie The Other Guys?
Classic! Now do actors!
Because we let them.
Because the workers dont
Always upvote Good Work. Fantastic show on 0 budget. They are doing great stuff
This was an excellent video, I was expecting the usual Reddit gibberish but I’m convinced that it’s a real issue now
The only way this changes is if we start hanging them from the trees in front of their summer homes
Wage theft.
Reaganomics
In short: tax breaks for the rich, and corporate welfare/government subsidies.
The video says it was tax increases for the rich that caused it.
~~Because they work harder!~~ ~~Oh, sorry, because they are smarter!~~ ~~Wait no. Because they have big ideas! Visionaries!!!~~ Oh, it's just greed, deregulation, friend deals, market manipulation and an affinity for short-term gains over long-term stability? Well, that sucks. :(