Yes, getting into the weeds is valuable, but here we're talking about the money in your bank at the end of the day, and that CEO salaries haven't changed much doesn't say anything.
Yes, a CEO should be making more money than the average employee. The debate is over how much -- why do CEOs get absolutely massive bonuses and golden parachutes and stock options and for employees it's expected that you put in the work in the hope of future recompense in terms of bonuses, promotions, etc.
Because their decisions can drive a company into bankruptcy or transform it into a trillion dollar company. Your average line employee has no such leverage from their actions.
Take a scan down the Fortune 500 and put a star next to each one you think has had 'exemplary leadership' rather than 'competent administration' or 're-arranging deck chairs while the titanic burns'.
The CEO of eBay got busted sending bloody pig masks to people who left bad reviews on the internet, for god's sake. These people aren't a higher plane of being.
But also, the board makes CEO decisions, and it's not totally uncommon for board members to also be CEOs of other companies, so they buy the kool-aid because they also benefit from it.
Plus, CEOs and boards don't exist in a vacuum. You've got to keep up with the Joneses if you think you're letting a good candidate get away.
To a first approximation, there are no non-stockholders.
One real question is why, when stockholders vote on CEO compensation, fund managers are allowed to cast the votes of fund investors. If you invest money on behalf of other people, there are all sorts of fiduciary duties to keep the money separate, but that money gets you votes, and you get to vote them according to your personal preferences, not according to the preferences of your investors.
Good company, bad company, the CEO compensation won't drive the stock price. It's still grotesque and unnecessary, you could pay half or less and get the same mediocre result in most cases.
2) I lied, I don't avoid eBay. I buy the same index funds as everyone else. Shareholder activism is a myth right now unless you're one of a very few people controlling in actuality a very small % of the market.
Compared to Steve Jobs, Cook is milquetoast. He's fantastic at supply chain management, and milking existing products/services. He's exactly what stockholders have wanted for a CEO after the Jobs died. Someone to basically do the same thing for decades. Milk the iPhone for all it's worth.
Yes, I know he's introduce the Watch and AirPods. But he also introduced the HomePod. He's no tech visionary, and eventually his value will drop and Apple will need a new leader. But for now, he's warming the seat.
I'm an Apple shareholder since before Cook, and admit I was skeptical about Cook. But as a shareholder I'm very happy with Cook's leadership. If his compensation is $$$$, that's cool with me.
BTW, Jobs was a visionary, sure. But that wasn't enough - he nearly wrecked Apple through mismanagement. Next Inc. bombed due to his mismanagement as well. But Jobs learned how to run a company with his management of Pixar, and then returned to Apple as still a visionary, but with management competence.
But hey, I might be wrong. Let us know how your shorts on Apple are working out.
I'm sure Apple shareholders are happy with Cook's leadership. AAPL has done very very well in the last 20 years. But is that due to Cook, or is that inherent in being CEO of a company that created the iPhone? Would Scott Forstall have been as effective in driving the stock price higher had Tim stayed as COO?
Imagine Apple today without the iPhone. It would still be a 2nd tier personal computer manufacturer with a recognizable design aesthetic. But everything that makes Apple the trillion dollar gorilla stems from the iPhone. Not only the outsized profits from selling 200m units a year, but without the iPhone, there's no iPad. No watch (same cpu designs). And no M1 Macs to boost sales to 2x the previous year. All stemming from a bet Apple made in 2004.
That's called insider trading and those who do that ends up in jail or at best have to hide in the sun for the rest of their life.
https://arstechnica.com/information-technology/2018/01/intel...
The article also cites Equifax's CEO selling before the news of their data breach went public.
And that's just the ones that are prominent enough that everybody knows about it.
Official resignation letter:
https://blog.waymo.com/2021/04/capstone-of-my-career-email-f...
"Interpreted" letter:
https://gist.github.com/ChuckM/ff5fc8c800c7fe9160483b68ec45a...
Because employees generally hated profit sharing and created unions to fight against it. Joseph Blasi talks about this in his book The Citizens Share. And it's not like he's some crank conservative, he's the economic advisor for Elizabeth Warren.
[0] https://www.theverge.com/2018/10/3/17934194/amazon-minimum-w...
And amazon is using that fact to justify lowering total compensation for hourly workers, so I don't think they actually do have an incentive to give RSUs in this case
The problem is that a lot of people will spend their surplus cash on more consumer goods rather than rather than investing it their 401ks.
By number, most of Amazon’s employees are working minimum wage and probably don’t have much of a balance. Many of them might get evicted if pay gets delayed even a couple weeks.
Amazon is probably a safer bet.
It's the same thing as top athletes getting contracts paying them millions of dollars whether or not they continue to win games.
I know in the NFL, a lot of those contracts have clauses big enough to drive a dump truck through. Many of those million dollar football contracts are back loaded to only pay out if the athlete competes the full term [0]. Winning and losing games is definitely tied to whether they stay or are cut.
Unlike a CEO, a poor performing athlete has no golden parachute to fall back to.
[0] https://www.pff.com/news/nfl-salary-cap-terms-tricks-to-know...
Athlete contracts on the other hand are fixed. If the athlete does well the team organization gains the benefit. If the athlete does poorly the athlete may be fired or transferred. And there is no gold parachute when they are cut.
So I don't recognize the similarities between CEO and pro athlete compensation at all.
Athlete pay (at least for athletes who are paid by an owner and not mostly from prize money) isn't really tied to winning or losing, but is largely defined by collectively bargained negotiations, based on how much the league brings in. You also have guys like Bryce Harper who, even when he goes 0-for-3, will earn their keep in other ways, like getting people to watch games on TV which increases rights fees & ad rates, selling tickets to games where people spend money on parking and beer or jersey sales: https://www.mlb.com/news/bryce-harper-sets-pro-sports-jersey...
In short, athletes get paid a lot because they know how much money their bosses are making from their labor and have collectively bargained to get their fair share.
This is correct, but the post you're replying to has the answer: CEOs successfully claimed more of the portion of surplus value which was going to stockholders, employees claimed less.
It's key to analyze these things if the goal is to see employees better rewarded, as they should be, but it must start from the correct analysis.
The details of how to do this are way over my head, and I won't embarrass myself by trying to make suggestions here.
Some people here also pointed out that Amazon would rather pay RSU, but people prefer cash. We all know that Amazon outperformed the market in the last couple of years and that the RSU would have been more valuable than cash, but even with the benefit of that hindsight, most warehouse workers would still pick cash because they don't have the privilege of making long-term investments. The sad reality of today's society is that it's not that hard to make profitable long-term investments (just look at pretty much anyone's 401k) - but for the majority of the population, they just don't have enough money to put it to work.
No, there are references stating that CEOs get exceptionally high equity comp in addition to exceptionally high cash comp.
Win on the carousel, don't lose on the swings. They've set it up so they can't lose.
Union membership is much higher in public institutions (I personally have some issues with that but it's a digression) which probably un-ironically are known to be relatively stable and well paid.
And yet, workforces continually vote against unionization while these debates about pay abound. Maybe it's just the vocal minority, but I don't quite get it.
Additionally, your comment leaves out the golden parachute CEOs often have, which is orders of magnitude greater than most severance packages, if there's even a severance package in place. Financially, it's pretty hard to fail as a CEO of just about any public company; even in failure, you profit considerably.