The same document points out that the CEO and CCO (both co-founders) each realized more than $168M in compensation in 2021. That's the number to talk about I think.
$168M/(3800 employee / 100*23 layoff) = $192,219 per layed off employee
Not that I am suggesting he should pay the layed off employees from his personal kitty. Just trying to understand the numbers.
Edit: OP said CEO and COO each. So $192K x 2 ~= $384,000.
Should we talk about that too?
Hate to go there on HN but there _is_ a moral side to this.
What is the cost of making the kind of mistakes this guy did? And who should pay for them?
No there isn’t. Wasting money to keep employing people isn’t good for anyone. The labor market is still tight right now so the employees are better off going to a company that actually wants them.
Is this a valid argument? I dont know, but i feel that it isn't.
Are you saying executive compensation should be orthogonal to company performance?
Overpaid executives failed, so workers lost their jobs, but the executives get to keep theirs all the while saying things like "I take responsibility for this" when it is objectively false that they are taking responsibility.
Does that seem right to you? Is that a good way to run a business, to keep failed leadership?
Their failure has already dropped a huge amount of their stock-based compensation. Their base salary shouldn't be determined by the company's failure (only their _future_ salary).
What if you applied this to a worker instead of a CxO? Would you yourself take a pay-cut, after the fact, if the company fails to perform?
Yes. Yes I would take the CEO's total compensation package.
I am skeptical that the CEO is worse off than any employee.
As in you would accept, without knowing ahead of time, a cut to your salary when the company's performance drops?
I'm not talking about performance based bonuses or commission based pay. I'm talking about a salary that was pre-negotiated at the time of your employment, but upon the company performing badly, your salary is dropped.
This is what the OP is saying - that high CxO pay is the problem, and that they should have been paid less (after the company's performance dropped).
Plenty of CEOs already do (or did during their tenure) take no material base salary and their compensation is tied entirely to the performance of the company.
Is that not reasonable for large, profitable businesses. It has its own issues, but what compensation plan doesn’t?
that's not what i meant.
The question is whether you would take a pay cut _after_ the company performed poorly, but you didn't know ahead of time that it would cut your pay. Performance based bonuses or commission is obviously pre-negotiated and thus, not subject to post-fact alteration.
Should companies be forced to keep unproductive or no longer useful workers? Clearly there is not enough customer demand for Robinhood to continue employing their ops/content/etc. workers. What are those workers going to do then, if they keep working?
Do you understand how risk works? If you take on more risk, you should be compensated for that risk, else it doesn't make sense for you to take so much risk if you can get the same reward by taking less risk.
Executives as a whole (CEOs, VPs, even directors!) take a lot more risk - career and financial risk - than your typical line engineers. Their success depends on the success of the initiatives they lead, which can be subject to macro or competitive factors entirely outside their control. Those initiatives are generally longer timeline, meaning they have less chances at bat (and thus higher variance in outcome) than an IC. And a shitty IC can always be rehired pretty much trivially. If your company fails with you at the helm, you're not getting another CEO job. For example, Carly Fiorina has never held another management role in a large multinational corporation after her failure at HP.
On top of that, executives have to hold a large portion of their compensation as stock which they are barred from selling as long as they work at the company. If the company tanks, they take a retroactive paycut, often times upwards of 50%. They don't get refreshers to boost their comp back to original levels like ICs either.
Yeah CEOs nowadays have quite excessive compensation. But they will never have compensation at a single digit multiple of the average employee. The risk they take is too big for that to sufficiently compensate them.
Case in point: Intel's CEO's 2021 salary was reported as almost $180M. In reality, he got only about $10M. He hit literally none of the targets that would allow him to get the rest of the compensation (although in theory he has a few years to hit those targets).
As for Intel: $10m a year is still a lot of money.
I have also heard that targets are occasionally hit. ;-D
In absolute terms, 100% yes it is.
In "CEO of a major corporation most people in the world have heard about," it's basically nothing.
If you're in charge of managing 121k people - 10x the average salary seems like a minimum. 100x seems in the realm of reasonable.
If the CEO's salary is distributed to all employees, they would get a ~0.05% raise. If distributed to the shareholders, it would increase profits by ~0.01%.
Yet this person's decisions can have much bigger consequences to both employees and shareholders.
I agree they manage the strategic vision of the company. The research on whether they make a real difference in the long term trajectory seems mixed.
Except, that’s not a CEO’s job. Even remotely. At best they “manage” a few department heads who each manage a few middle managers who each manage a few direct managers who then manage the workforce.
Even then, that’s a misrepresentation however. They are in charge of managing and directing overall company strategy in the interests of the board. The COO (and, sometimes, the CTO; in tech firms) is usually (indirectly) in charge of managing people.
I think it’s a valid point that they bring large value to a corporation, but it would be very difficult to quantify that value to be anywhere near 100x any other non-Csuite employee.
The risks of a bad CEO are enormous.
1 - https://www.forbes.com/sites/annefield/2022/05/23/ceo-worker...
And yet, SW professionals did just fine for decades when making anywhere from a quarter to a third of today's FAANG salaries (inflation adjusted).
So the question becomes, are CEOs pay commensurate with their added value? Put differently, is the rise in production mainly attributable to the CEO (as wages were largely stagnant prior to 2020, yet CEO wages increased rather dramatically.) Are they adding more value now than they did before and, if so, can we actually measure it?
Try again.
Do you have a source supporting your comment that SWE comp in 2005 was the same as it is today?
But sure, from a super simple query on any search engine:
https://insights.dice.com/2018/02/09/tech-pro-jobs-pay-2018/
Feel free to gate your query to anytime between 2003ish to now, the results are all the same with a few exceptions (MLE and DeFi jobs, for instance): stagnant or decreasing.
They absolutely did not with just a BS. Perhaps a few companies paid that high, but 100K would be an easy outlier.
To give you an idea, even in 2010 most non-big names outside of SV and Seattle paid under $100K right out of school. Many companies in my city were offering $70-80K. Even my big name company paid under $100K in those days.
According to BLS data [1], the median computer scientist salary in 1997 was $82k, adjusted for inflation [2]. The same data has software developers median salary today at $121k. It seems SWE are getting paid much, much better today.
Granted, the occupation titles don't align perfectly. There was no "software developer" role in the 1997 dataset, but most of the computer science positions have a median salary in the low $80k-range in todays dollars. Also note that the timeframe you chose was at the peak of a tech bubble. Probably not the best for comparison, just like you wouldn't want to use 2006 or 2021 for a gauge on housing costs.
But you bring up an interesting point. The CEO may be incentivized to promote wealth disparity. If they are measured by profitability only, without regard to the larger systemic effects, it incentivizes them to take a myopic view. This could mean implementing policies that help hit short term targets without regard to long term health, suppressing wages, etc.
To a certain extent, whichever side we’re on is really just a narrative we tell ourselves since there doesn’t seem to be conclusive data about CEO impact.
Except if the CEO screws up the company goes bankrupt and people lose their jobs. Look at Nokia and RIM.
Exactly why you need a good CEO at the top to understand that the landscape has changed with a new competitor but Nokia and RIM failed to adapt.
The board of directors are the ones who measure CEO performance and set compensation but most of the times they just rubber stamp whatever the CEO does.
Perhaps CEO pay is beyond the pale generally, and these are obscene expectations.
https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
Their salary has a higher salary than you.
I’m stealing this line
Nearly all of that only vests if Robinhood stock hits price targets between $120 and $300 per share. The remainder requires a price of $50.75 to be sustained for 60 days. Since none of these goals have been met, Vlad has not received any of it. And unless the company turns around dramatically - it's currently around $9/share - it's likely he never will.
[1] https://www.sec.gov/Archives/edgar/data/1783879/000178387922...