Microsoft CEO Nadella’s compensation drops… to $48M — CEO to employee pay ratio hits 250 to 1::Try to hold back your tears as CEO to employee pay ratio hits: 250 to 1
I’d support laws that limited CEO:Employee wage ratio to something more like 10:1.
If you pay me 100k and you’re making 1m, I can accept that there is no room for a raise or a bonus.
If you are making 10m and I am making 100k and you deny me a raise, I’m feeling disenfranchised.
I’d like to see such a rule, but doubt that there won’t be any loopholes to circumvent it. You can already see some of those in sports. There are a lot of stories on how clubs “dealt” with financial fair play in european football and I heard rumors of a similar thing with the american salary cap too.
Just some ideas:
- ridiculously long contracts with “fair” pay
- managers are working for a seperate company that only contains managers
- seperate overpayed contracts for a none existing job
- material/service based rewards like private jets
All in all good luck with finding a politician pushing this through (most lf the are exactly in those positions) and finding all the loopholes. Rich people can pay a lot of experts to become even richer
There will always be loop holes, but then you fix those. And regardless, loop holes are not used by all, and they take time to find. So that’s no reason not to do it.
Absolutely right, but nobody should expect it to be a perfect solution to all the problems.
All you have to do is have a subsidiary corporation that the executives work for. They get paid whatever insane amount and the parent company hires the executive company so it’s not direct payroll. I’ve seen this exact arrangement done for other tax reasons.
Those are only loopholes if they are allowed to exist. If people do those things, but then get fined/persecuted as they are infringing on the spirit of the law to limit executive/worker pay ratio, then they are not loopholes right?
It’s better to place the burden on the company as a whole per revenue than per CEO pay differential. Amazon for example made somewhere in the 500 billion dollars in revenue for 2022 but for all ~1.5m employees only spent ~42 billion on salaries for an average of ~28k a year.
They have so much ample revenue to use for increased salaries that goes unanswered.
Won’t work, can’t work.
There are companies which have insane revenues but tiny profits - let’s say manufacturing, where you need to pay a shitton for materials and workers, just to get a bit in return.
There are also companies where the main source of income is selling people’s time, say a consulting firm like McKinsey. Their income/revenue ratio is gonna be totally different from the first example.
I’m sure there are good ways to do it but this ain’t one of them.
I can see your point, but I am also tired of pointing to CEO salaries and thinking that reducing them will make any meaningful increase on company wide salaries.
There’s always making cost scalable to reported profit. It’s annoying to see a company like Amazon make so much but pay employees so little because it’s"competitive pay" to the business they’re ruining through monopoly.
Do you live in Europe? Then do consider signing the commission for the EU commission https://www.tax-the-rich.eu/
This. So this. I’ve been saying the same for years, if not decades. The highest salary in a company should never be allowed to pass the lowest by a factor of 10.
Also, companies should be limited to 1000 employees and an x amount of value.
Companies should become less influential
Guess he has only been working 250x as hard as the other employees
Dunno why “working hard” is such a thing. There are some situation where it’s a necessary thing but not many. In many intellectual professions, it’s often a negative.
I closely work with the CEO at my organization and their whole job is decision making. If you have common sense then you can be a CEO
unironically I do think that the ceo of a corporation as big as Microsoft does much greater than 250x the work as a low level employee. Not in terms of hours spent, but in terms of skill required and impact.
Bullshit, so many things incorrect and nonsensical about what you just said.
do you not think being good at something increases the amount you should be paid?
To a degree, yes. I can believe that somebody’s labor could be worth 5-10x another person, but 200-300-400x? No, at a certain point, your labor tops out in value.
Making successful choices is not by itself sufficient to determine the “value” created. If I choose winning lottery numbers and win 100 million dollars, that doesn’t mean my decision on those numbers is worth 100 million dollars, it was luck.
There is more to value than just how much money results from a decision. And also, the value is generated and enabled by the workers at the company, not just the CEO.
If I tell a group of 10 people to build a piece of software that I think will be really profitable, and those 10 developers build it. Then I sell the software to another company for 10 million dollars, take 9 million of it for myself, and give the rest of the developers 100k, is that fair and right? When without their labor, I would have zero dollars? My idea and leadership isn’t worth anything without the labor of the people I am leading and who make my idea reality.
Now you can say that the devs also wouldn’t have 100k because they wouldn’t be smart enough or have the vision to write that software themselves, which is dubious, but even if we grant that, I can understand that being worth more, maybe an extra 50-100k. Not millions more.
At a certain point, it becomes egregious and disgusting.
Making successful choices is not by itself sufficient to determine the “value” created. If I choose winning lottery numbers and win 100 million dollars, that doesn’t mean my decision on those numbers is worth 100 million dollars, it was luck.
I would argue this is exactly what makes successful CEO’s so valuable. It’s a very valuable skill to be able to take educated risks. it’s not a lottery. CEO’s don’t get paid how much they do because they’re lucky.
Then I sell the software to another company for 10 million dollars, take 9 million of it for myself, and give the rest of the developers 100k, is that fair and right? When without their labor, I would have zero dollars? My idea and leadership isn’t worth anything without the labor of the people I am leading and who make my idea reality.
Their labor is replaceable. The developers just did the work on the ground, which is honorable and should be compensated, but being in leadership to bring a development project past the finishline and into profit is a lot more scarce a skill than being a developer itself. And developers almost always make out like bandits if they have a decent package.
Sorry you haven’t really made a convincing argument.
They actually do get paid what they do largely because they are lucky; lucky to have the privileges that allow them to get a high-end education, get into fancy business schools, make connections, have layers of safety nets for all the times their ideas fail, and then finally get lucky with their company, right place and time for it to take off and become extremely profitable, etc.
It’s a lot more scarce a skill because it’s manufactured to be that way. Imagine how many people would be able to test out their ideas in the market if they had rich parents and friends that propped them up for years until they finally succeeded.
Or are you a subscriber to the Ayn Randian, “Great Man” theory? Which is bogus BTW.
“The developers just did the work on the ground…” yeah…as in making the CEO’s vision a reality, the only action that directly results in material creation.
You’re arguing all this against a strawman anyways. Nobody is saying that having vision, ideation, and compelling leadership aren’t valuable skills worth compensating well for. People object to the idea that those skills are hundreds and hundreds of times more valuable than any other skills that literally make those ideas reality and allow that monetary value to be captured. Nobody ever became a billionaire by sitting on a bench all day, dreaming incredible ideas into existence.
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That’s still an obscene amount of money, but I appreciate the trend reversal.
It’s not reversing. He didn’t hit the right metrics to get the 50M he could be getting. He just didn’t get his bonuses.
He also froze employee wages a few months ago, thanks to inflation, if anything, it’s set up to accelerate to get even worse.
I hope he can financially recover from this
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Not harder, but it’s also a matter of knowledge. You couldn’t take any person off the street and have them be a successful CEO tomorrow. Same with other specialized roles, like medical roles, some IT areas, rocketry, etc.
That said, pay and benefits disparity is a real thing and I’d love to see it addressed. But what is reasonable to me may not be to others.
You couldn’t take any person off the street and have them be a successful CEO tomorrow.
Are you sure? Has anyone ever tried? Maybe we should do an experiment!
There was a documentary with this premise, only with commodities traders rather than CEOs.
The bottom line is yes, you can take someone off the street and have them trade places with a senior broker and thrive in that role; the only caveat being that the subjects of your experiment discover your plot and subsequently falsify orange crop yield projections causing you to lose your entire net worth investing in frozen orange juice concentrate futures.
Consider how stupid the average (median) person is. Then realize that half of them are stupider than that.
I don’t think you have to do the experiment, it won’t work.
You’re assuming you need to be smart/educated to be a CEO.
I know a couple CEO’s who are just trust fund idiots and bet people off the street would do just as good.
You seem very confident that you don’t need to be smart to be a successful CEO. Then what do you need? Surely if anyone could be a successful CEO they would do so, 10x salary is the prize. There must be something you need to be a successful CEO.
Most of CEOing is about networking and wealth. It’s a little club and we ain’t in it, even if we wanted to, even if the prize is 10x salary.
It’s called founding a company. Plenty of people try it all the time.
Nice hoodie Satya, bet it cost more than my annual salary.
Honestly this fixation on CEO salary is a bit silly, most of them are getting rich from stock, not salary.
it is total compensation. His salary was “only” 2.5 million.
I’m really confused are they saying the median or mean salary is 200k?
All benefits included that’s likely to be true. A starting software engineer job out of college hits over 100k$ in salary alone. It’s probably offset by administrative roles, but still you can get past 500k$ with ten to twenty years of experience. Not unheard that top employees will have compensations in the million.
But is it the mean salary is 200k or the median because it can’t be the lowest and usually the two are very far apart.
