99% Initiative September 2021

[Patirou]

I am never doubting that a CEO is a person who is not competent etc.

However, I think there has been a derail in their compensation, which is not healthy for corporations and society as a whole.

@Bojack

Otherwise, how would you attract a rich and successful person? And which board will take the risk to hire a young and unproven CEO?

Somehow, it has been managed in the past without these huge salaries, and people with these kind of skills are getting rather more than less (more MBAs, more people getting educated etc.)

@Bojack

CEO should be a shareholder and should receive compensation in stock.

Not sure, because this will focus the interest of the CEO to go for short term plans only to increase stock price, instead of insuring long term growth and economical success. There are plenty of examples where it went wrong, with world wide impact.

[Burningstone]

I totally agree on that and of course you need to offer a good salary to attract the guys you need.

However, I don’t agree with using responsibility to justify the high salary. To justify it they would actually need to take responsibility when s*it hits the fan and not chicken out and also getting rewarded for it.

I was working in a private bank in the past, which got some problems with the US authorities and as a consequence had to be closed down. The CEO made sure that thr employees get the least amount possible as a compensation and ran away herself with multiple millions once all the lawyers where in the house to investigate the case in detail.

For me stock compensation should only be available to cash out after 10 or more years to give the CEO an incentive to create a sustainable long-term environment and not short-term profits.

[Bojack]

@Patron

Entrepreneurship is a rare skill and it takes some effort

I’d add that if you hire a wrong CEO, it could cost company billions. Plus, a CEO with a track record is a CEO who already is rich. Why would a rich person go and work their ass off for a few thousand per month? That being said, I’m all for paying key employees with stock that has a long vesting period, instead of money.

[Patirou]

@Bojack

Why would a rich person go and work their ass off for a few thousand per month? That being said, I’m all for paying key employees with stock that has a long vesting period, instead of money.

You could also argue that since they have already more money they can spend in a lifetime, they would not be motivated by this anymore, but by the challenge alone, + a rich guy who has nothing to lose since he has already so much will take uncalculated risks

[Patirou]

@Bojack

This is a misconception, that workers in the industrial age were somehow exploited. Just think, why did they leave the countryside and go live in a stinky city? Because factory work was preferable to farm work and allowed to feed your family. It’s the same reason why people from Bangladesh go to work in Dubai. Sure, it sucks from our perspective, but their alternative is even worse.

Yup, well the problem is that ofthen they get lured with false promises.
Having worked in Bahrain, on construction sites, I can tell you that a lot of people wanted to get back asap, but could not.

@Bojack

Because factory work was preferable to farm work and allowed to feed your family

It becomes a problem when the factory owner is the reason that the farmer had to abandon the fields.

[Bojack]

@Patirou

Somehow, it has been managed in the past without these huge salaries

Yeah, that’s the mystery.

I guess in the end it all comes down to poor management. It’s a private company that wants to make money, they don’t pay CEO millions because they want to spoil him or sth. It’s what you have to pay to hire these people. They could hire you or me for much less, but would we really do a good enough job? Hiring a bad CEO for millions is of course terrible, but I don’t think this is the norm, or?

[Barto]

@Patirou

So countries invest into education, infrastructure etc, and then profits (and with it taxation) is going somewhere else. The worst part is that only big corporations can do that, small and medium companies do not have the lawyer power to do it (and not enough profits to offset the costs for some of these highly sophisticated constructs).

It says that about 66% of these profits come from Germany and France. So these rather high tax countries (actually not really for corporations, but higher tax thanx those cited above), could lower taxes significantly if everyone would pay up their fair share.

I agree the above is a problem. However success is not just due to education and infrastructure, it is important to create an environment to support entrepreneurs and reward risk taking and too high taxes goes counter to that

If USA had a 150% tax on capital like was proposed, Jeff Bezos would be paying 60% taxes. Would he have persevered with the effort and risk taking to create Amazon (?)

[Burningstone]

@Patron

There are already deferred compensation plans in many companies to address that problem, but 10 years is too long (3-5 years is more common).

3 years is definitely too short to see the long-term effects of the things a CEO implements when he takes over the company. A bit of restructuring here and there, fire some people, boost profit for 2-3 years then fly away. 1 year later it shows that this restructuring actually killed the company, but then the CEO is already gone and took the profits with him.

For me taking the position of a CEO includes a commitment to the company as well and I’d expect a CEO to stay at least 5 years.

@Patron

The average person doesn’t even stay for 10 years in the same company, it’s quite unusual nowadays.

We are not talking about the average person here

[Bojack]

Recently Musk has addressed clickbait news that often say “billionaire X paid no taxes last year!”. And he said in his case he just has no salary, so he pays no tax if he has no income that year. But when his stock options are about to expire and he has to exercise them, he pays 53% tax. I think that’s an enormous amount. The man is working his ass off, and once he realizes his profit, the government takes over a half. I guess if this is true, then most “paper” net worth of billionaires is pre-tax.

[Dr.PI]

@Bojack

Plus, a CEO with a track record is a CEO who already is rich. Why would a rich person go and work their ass off for a few thousand per month?

@Bojack

The man is working his ass off, and once he realizes his profit, the government takes over a half.

Maybe we should tell him that he must RE because he is paying too many taxes.

[JMH]

@Bojack

We are more productive than our grandparents, but we don’t earn (much) more.

Lots of automation introduced during this period…not only factor but definitely a factor in productivity growth…does the input to the chart specify ? Seems to refer to productivity in general…not necessarily comparing since the previous period has less changes to how manpower was used no?

@Bojack

What if, since our economies are getting more and more capital intensive, our productivity is improved thanks to the capital tools that we have at our disposal? Surely then the capital owner will pocket the majority of productivity gains? If I let you plow the field with my tractor, should I pay you more because you’re able to do it faster (and with less effort than manually)?

ÉDIT: seeing later post …I think we agree …also agree that responsibility and expertise plays a role but we are generalizing…less specialists then generalists so overall impact would be dilutive (harder) for overall salary increases for same work in previous period