The rich don’t see it that way. At its core wealth accumulation is a scoring contest so every penny counts for those care.

Also if you have all the material needs that is satisfied, then you go after the rare hard to get high value exclusive money drain this is human nature.

For your specific example what that 50m might make difference it maybe a bigger jet that flies further or a second jet for the family or a yatch or a castle in Italy or penthouse in New York.

For you and me that may seem ridiculous and unnecessary, yet we do the same thing too.

There are many many parts of the world owning a car (or even riding in one) eating three meals a day or eating out are luxuries many don’t see in their lifetimes. Yet we use do all those things without second thought to people leaving on $1 a day or less .

Imagine if I was visiting Laos and told someone I met in the countryside that I spent, say $2,000 on a racing bicycle -- which would be considered "normal" in bike racing culture in many parts of the US.

Imagine what that person would think!

My central point is this: People are quick to "normalize" their behavior relative to their perceived peer group.

So, yes, multinational CEO compensation is hard to comprehend. (It is arguably to the point where it does not serve those very corporations well. But that isn't my point...)

Just remember, the income and spending habits of a "typical" mid-range software developer in a major U.S. city are similarly incomprehensible for a wide range of people.

In some sense, it is turtles all the way down.

P.S. I'm not defending CEO pay. First, I haven't really studied it up close. I'd like to see more, erm, experimentation in it. Lowering it, sure. But also I'd like to see it deferred, for example, so a CEO's compensation is also tied to what happens after they leave. That would increase the incentive to not plunder the place or take shortcuts. Yes, I recognize this proposal seems to mix incentives between past and current CEOs. But that reflects reality. You can't just "wash off" a terrible previous CEO. And the "glean" from a wonderful predecessor will pay dividends for a long time.

P.P.S. Shameless plug: if you are a well-funded not-for-profit with a generous comp and benefits package, you could do worse than hire me. I'm an expert at studying CEO pay and pay inequity at organizations, both using intra- and inter- methodologies. I'm part of an exclusive self-selected, self-reinforcing group of self-proclaimed experts, so be sure to send your best offer.

There was a podcast episode on the psychology behind this. Radio Lab? Summary: people only look up, never down.

Ask someone who makes $100, and they'll explain they don't have a lot because someone makes $500.

Ask someone who makes $100,000, and they'll explain they don't have a lot because someone makes $500,000.

Ask someone who makes $100,000,000, and they'll explain they don't have a lot because someone makes $500,000,000.

Is this an offer of employment? It doesn't look like an offer of employment. \s

At my company (non-tech), all leadership compensation is paid based on percentages hit over the next five years.

Your first year, you’re only getting 20% off the position’s salary, and 80% goes to your predecessors. When you retire, 20% of your salary got the previous four years is based on how well the company does the year after you leave.

It strongly incentivizes healthy transitions and long-term plans.

The study of reinforcement learning, I've found, is incredibly insightful as a way to really force us to operationalize reward functions. I've benefitted from the process of reasoning and exploring RL reward functions.

Sure, I also value game theory, sociology, and psychology as well. People are complex, with culture, identities, imperfect reasoning, and biochemical influences.

That said, one key benefit of RL is the hands-on experimental aspect. You get to play God and see what happens. Surprise triggers cognitive dissonance and drives further questions. In contrast, some academic disciplines become rather enamored with their own theories, to the detriment of operationalizing them.

What type of company is this if you don’t mind sharing?

Imagine everyone is on a ladder. In order to ascend they have to step on the faces of the people below them while simultaneously getting their face stepped on by the people above them. Which one do they care more about?

Another way to think about it: Who has various kinds of power? To set pay? To help get one promoted? To help the company succeed?

Treating people well tends to have good long-term results. There are exceptions, situations, and cases where you have to be more cautious. To put it nicely, there are some people who favor shorter-term strategies. We all should recognize there is a fraction of people lacking in awareness or empathy or ethics. Some of the folks, wittingly or unwittingly, will bring down the entire ship if you let them. Still, IMO, a wise, ethical person gives the benefit of the doubt and helps others to the extent possible, without overextending themselves. As time passes, a good strategy is to help relatively more people who (a) need the help; (b) reciprocate, to the degree they are able; (c) and let's face it, those who can help you get a foothold. The third point is based on this logic: if you are a conscientious person, it is your ethical responsibility to not be naive. You should carefully strive to use your power to help. Sometimes this means playing the game.

What I've said above leaves open all sorts of paradoxes, value judgments, and dilemmas. Such is life. I think it is useful to frame ethics as striving towards an ideal (not just a goal) despite all the complexities. I could use all the feedback you all have to offer... I have a long way to go.

I don't entirely disagree with your point. However you and that person in Laos both have to work to put a roof over your head and food in your plate.

There's an absolute threshold at a few million dollars that guarantees financial independence wherever you are in the world. These rich people are well above that threshold. That's why it is more ridiculous to chase ever more money at their level than it is for you to purchase an expensive bike.

Indeed.

I see plenty of people on HN complain that no, they are not middle class while making $400,000/yr because they can't afford a 2,000 sq ft house in the most expensive area of the US.

Like the old saying "An alcoholic is someone who has one more drink than me."

> I'm part of an exclusive self-selected, self-reinforcing group of self-proclaimed experts, so be sure to send your best offer.

Not a job offer and no offense intended, but you sound like an excellent crypto startup founder there. Oh wait, they wouldn’t have used the term self and instead used a much more grandiose term. :P

I agree with you but there is also the dynamic that there is always other richer people than you with richer lifestyles. So while you might think that one jet is enough for you if you had friends who didn't own a jet. When all your friends own 3 jets it makes you feel like you should also own 3 or whatever random expense you can imagine.

And while you say "human nature" I'd rather say it's "human illness." They someone are within a strata of society where there is no limit, a 20 minute private jet flight or a $20,000 meal is not out of the question and is in fact the norm.

They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive.

this is entertaining but, I think the relative-riches-rat-race theory here is missing the harsh "stick" part of carrot and stick. Money systems have both. Many wealthy people have debt and cash flow pressures, sometimes badly. The casinos and rehab clinics are full of those who lost touch with emotional stability during the race.

The sort of stable accumulation described is typical for a very small number of people overall, from low income to higher incomes, in my experience. Life is complicated.

>They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive.

I know of a billionaire (one of the ones most HNers consider evil) that had a lot of the local millionaires sneering at him when he didn't renovate the vacation house that he bought in the kind of place where those kinds of people buy vacation houses. According to the help at the yacht club his rational was that it wasn't worth his time to think about and there was no sense in paying someone to manage the process because from his POV there's no difference between vacationing in a house his contractor optioned out vs vacationing in one the last owner optioned out. That said, I think it may have been a "guest house" because upon Googling he has a much more extensive mansion in the area.

I'd like to see what that amount of cash could could do for southern Madagascar right now.

I'd like to see what the amount you and I spend on a nice dinner out or nice shoes could do for a southern Malagasy right now.

Well, you can take a guess by observing how the vainilla price spikes affected Madagascar in recent years.

For one thing, as another comment mentioned, he didn’t actually get $800M because that was contingent on hitting various price targets that didn’t happen.

For another, it’s not like it’s just cash sitting in a checking account. It would be stock in the company. Since he’s a CEO, he can’t just sell it whenever he wants, insider trader rules mean there’s only certain windows when he could buy or sell, and the CEO selling off that much of his holding would raise all sorts of questions among investors.

If he did it as a personal gift to each employee, there’d be enormous gift taxes that would eat most of it.

If he did it as part of their compensation, it would be coming from the company, not him, and he would have to justify to the board of directors and shareholders why he’s spending so much on a lavish severance package that is far beyond the industry norm (assuming they aren’t already getting generous severance packages)

It’s not as simple as “Oh rich people could just fix every problem by giving away all their money, but they’re just greedy jerks”

To counter that a bit, rich people with these kinds of assets can take out loans or cash with their assets as collateral. And of course these loans have way better rates than whatever kinds of loans you and me could get. Even better - This way, they don't even have to pay capital gains tax.

What I'm saying is, Vlad could most likely buy an expensive yacht without ever having to actually sell stock, so the argument that "it’s not like it’s just cash sitting in a checking account" is not that fair as well. Makes it seem like the uber-rich are actually quite restricted and that all of their money is locked up in investments and other things. Which is simply not true, they can use these locked-up assets in very attractive ways.

See this article for a better write-up: https://www.businessinsider.com/securities-asset-backed-loan...

Loans still have to be paid back at some point. It’s true that sometimes banks are happy to let the billionaires have the loans for their whole lives and get paid back out of their estate when they die. But, when you borrow against a security (like a stock) and the value of that security plummets (like pretty much every tech stock did recently) the terms of your loan can force you to sell the stock and pay it off right away. (and sell it at the worst possible time since it just crashed and now you’re locking in that loss) So it’s not really a good idea to over leverage yourself in that way.

Sure, he can borrow a bunch of money against his stock and buy a giant a yacht or give it away to people who got laid off, just like a normal person can borrow a year’s worth of salary from credit cards or take out a high interest loan to buy an expensive car, but that doesn’t mean it’s a good idea.

The article said it was around 1000 employees. So cutting his pay by $50m would mean $50k per laid-off employee.

How as an investor or shareholder can you not look at this as downright robbery?

But the same $50m paid to a single employee (on top of hundreds more) is not robbery?

I might have been too obtuse with my post. I meant that it's robbery for the CEO to be compensated so much.

That would be his money, not the shareholders

>I realize it's not something that happens

It definitely happens in some cultures. I remember reading about the CEO of Nintendo taking a temporary pay cut after the botched launch of the Wii U. At the time, people were talking about other Japanese CEOs that had done this too.

It's the difference between having only one or even no helipad on your floating gin palace or two.

With $800M you can’t keep up with the really successful billionaires. You know, things like sports teams, bezos’s yacht etc.

Lots of execs take "only" $100ks of compensation in salary and the rest in stock.

He's perfectly capable of giving stock to these employees as well.

It's simple to say we'd be more charitable if we had incomes 1,000x or more our current annual compensation, but I do genuinely wonder if I'd be different. Would I be greedy, would I care about doing right to the laid off employees-- it's hard to imagine how crossing that bridge might change people.

I'm not going to try to justify how I would act, or how anyone else should act, were I to have a compensation package putting me easily in the top 0.1% of society, but we can collectively dispense with the notion that certain types of compensation (i.e. stocks) must necessarily be prohibitively harder for a CEO to give up than just money.

The CEO of Robinhood would need to file a public form with the SEC if he wanted to sell any of his shares. People watch that and say "hmmm, why is the CEO of Robinhood wanting to sell shares? I wonder what he knows that we don't" and the stock goes down on that information.

Stock is absolutely more difficult to liquidate for a CEO.

I think by example we can guess that you might act exactly that way (since so many other people do) but IMO the important thing is how do we as a society want people to act (ITT it would not be how this person is acting).

IMO we as a society should pass rules and laws to prevent people from acting this way ie limits on compensation.

Is it charitable to accept responsibility for the consequences of your mistakes, and compensate those you've harmed? Or is it just common decency?

It's probably not that simple. Most chief executives delegate the responsibility of hiring staff to others. Sure, the buck stops with the executive, but ultimately nobody can review every single operational decision at scale. Maybe they hired for a world where the pandemic didn't happen and the monetary supply didn't tighten, then the world changed.

The entire purpose of the C-suite is to stay on top of macro level stuff, and its the boards purpose to make sure the C-suite is doing it. They didn't do their job. And they got rich not doing it.

I think it's high time to see if there aren't better ways to track the macro level stuff than hiring overlords. It seems to keep not working well.

What CEO doesn't approve overall hiring numbers? If you're worth paying millions upon millions of dollars a year, shouldn't you have capital-F Foresight?

Or is it more that most public-company CEOs are probably not playing above replacement level?

If the CEO is ultimately responsible for nothing, why are they paid so exorbitantly?

"With great power comes great responsibility"

Nah, there's not really responsibility when your parachute is golden.

Well I agree that there isn’t in practice, but I wish that there was

Looking at Robinhood stock, it might be way less than that now. But I get your point

Robinhood is a public company. There's no difference between getting stock/RSU compared to getting paid in cash and then using it to buy stocks.

There is if you are an executive that is privy to non-public information.

That's insider trading, and a whole different accusation than the one levied above, which is implying some sort of wealth inequality issue that executives are compensated in stocks and non-executives are compensated in cash.

My point is that if you have non-public information, you can’t actually sell the shares for cash whenever you wish, so it’s not the same thing.

>you can’t actually sell the shares for cash whenever you wish, so it’s not the same thing.

I guess it's true that you can't sell "whenever you wish", but if you set up a rule 10b5-1 plan your shares are effectively as good as cash.

Frustrating to see the incredibly common conflation of equity and salary. Even though it’s always correctly suffixed with “compensation”, people assume that means “a bank account with 8 zeros”.

That's because it effectively is. I suggest you look into pledged asset lines (and more broadly 'buy, borrow, die'), which are even more tax advantaged than just getting paid directly. Sure, there is some marginal cost associated with borrowing against granted equity, but it's almost certainly less than 10%. So yes, it is accurate to assume that if an exec vets $x00 million dollars of equity a year, they have a high percentage of that available to spend on whatever consumption or investment they desire.

Quite possibly the best comment in this thread. Some people are quick to say that the high on-paper number doesn't mean anything, but remain (in most cases wilfully) blind to the fact that the low on-paper number doesn't mean anything either. As you point out, the real number is unknown and often not fixed but for all practical purposes probably still way higher than most of us will ever experience.

It's even more bizarre/frustrating for someone, especially in tech where many of our TC is largely RSUs, not understand that wealth is almost never held in cash.

When I was young (and poor) I also believed that being rich meant having Scrooge McDuck piles of cash to swim in.

After my first big RSU payout I quickly realized that nobody with more than a few 100k in assets keeps anything close to the majority of them in cash. Savings accounts are for the poor. Anyone, even in the every day millionaire level, keeps most of their wealth in non-cash investments, leaving only enough cash to cover crisis situations. Especially with inflation this high, holding cash is literally throwing money away.

Nobody has a bank account with 8 zeros, except maybe lottery winners that never learned the basics of asset management.

It does happen, though it’s a newsworthy event: https://nypost.com/2011/06/30/atm-receipt-showing-astounding...

> But it’s not clear where the customer spent his 400 bucks.

Haha, I have an idea. P.S. Dealbreaker.com is great in general for tabloidy high finance news

Scrooge McDuck was a gold bug so he may have kept the gold to swim in just like Peter Schiff

Canonically according to Rosa the money bin is just his “personal memento” cash - the money he earned by hand and remembers every bit of. It’s only a portion of his fortune.

That's a great point, even Scrooge McDuck does not hold cash!

not putting everything in a "saving account" isn't the same as having it tied up in equity. OP was contrasting cash and equity.

Feels like you're arguing semantics, either way the CEO is being made wealthy right?

Probably still getting much more than they need to live off of, so some of that should go to the people getting let go.

Steve Jobs famously took a $1 salary and everything else was in stock.

Coz salary is taxed higher, many billionaires do this. He had enough control to not pay tax and just spend on the company's credit card.

The take away here is, he did get compensated. What proportions were cash salary, irrelevant.

That's not really true, at least not in the same way being discussed above. Jobs already owned millions of shares in Apple stock, so yes, he profited from the stock but AFAIK that was only from the appreciation of existing stock, not from new grants.

If nothing else, he also got unlimited personal use of the company jet.

There's a whole options backdating scandal associated with his comp, so no, it wasn't just existing stock.

But how would that motivate the other CEOs or aspiring CEOs to be better CEOs? /s

Sure, go ahead and ask those laid off if they'd feel better if they were given a nice grant of $HOOD, which was worth about 500% more in 2021.

The post-IPO 2021 price stabilized for a while around $50, so $50M is about 1M shares. The article says about 1,000 people were laid off, so if split equally that's 1,000 shares per employee. Since then, the price has come down to about $9, so it's a severance of $9,000 today.

I would hope everyone getting laid off receives at least that much.

What do you mean "how is your life different"? His yacht may not have a second helicopter pad, for example!

Thing is, though, you really do need that second helicopter pad. That way, when yours is parked up there, you can still receive visitors. It’s not easy being rich.

100% this

Or he may have to settle with a medium-sized jacuzzi.

https://www.youtube.com/watch?v=frh5lA5uGRU