> Alphabet CEO Sundar Pichai was awarded compensation worth more than $225 million in 2022
I know this has been discussed here and 225MM is like the salary of 1000 employees making 200K for only one year, it is stock which is volatoile, that the salary of a CEO is impossible to measure, bla bla bla. But holy guacamole, whatever is the angle I look at it 225MM pear year does not make any f_ing sense to me and it is simply obscene for the 99.99% of the world population as would be enough to retire 5 or 6 generations of regular people.
I wish I understood why so many options are granted in the first place. If they offered 10,000 fewer options, would performance be any worse? Wouldn't a lot of people be vying for that same position and couldn't the company use that to drive down compensation? Couldn't a company in fact, trade on the idea that the extra power and prestige offsets the need for additional stock compensation? And how much of the stock price change can be reduced to a CEO's impact anyways? If it can't be reduced, then why care so much as to overcompensate for their impact in the first place?
Sundar, like many other Google insiders, almost certainly has so much money he could just retire and live a life of luxury if he wanted to. And almost certainly he could probably choose a position within Alphabet with less responsibility like Chief Product Officer. To me it’s almost certainly a matter of the founders thinking he’s the best person in the world for the job of CEO and paying him a ton to justify the responsibility and stress of a position he could just decline.
This will sound insane but $200mm at Google scale is not even that much. All in, it’s about the cost of having another 200 SWE org or increasing earnings by like 1%. If it’s enough to keep him happy it’s easily worth it
but is it really? How do we accurately measure CEO performance? We can barely measure developer productivity in any sort of meaningful fashion. Blowing $200m on what is effectively a faith based assessment seems a bit questionable.
I'd argue that us rank-and-file employees should receive profit sharing if our company is overperforming.
It's impossible for any one of us to compete for that CEO position on any realistic grounds. So, we're left at the mercy that the board has decided this person deserves this compensation.
A CEO can help guide an organization, but it's everyone under that CEO who pulls all the strings.
when dealing with 1%, what is the need for accurate measurements? they calibrate his pay to other CEOs in tech and other industries, and that is good enough.
Honest to god, how hard do you think his job really is? How much of it simply comes down to just brokering connections afforded to him by his position? It's not like he's responsible himself for generating truly novel and useful engineering deliverables. I seriously struggle to see how he possesses some talent that warrants his pay, vs. just being a lucky sob in a world where boards will shell out ridiculous checks on faith alone that if they don't, earnings will suffer.
Pay is not about how hard any job is. My job is not nearly as hard as many people who make much less than me. It’s about the supply and demand of the role and how much value someone in the role can generate (which you can think of as an upper bound on pay). When you’re making decisions for >100k people earning >$100B/year it’s easy to argue that the person trusted with that much responsibility provides that much value.
I personally don’t think Sundar is an amazing CEO. He is very conservative and boring. But at the same time Google has tended to be too reckless and fund many projects with speculative ROI, or with no cohesive strategy. Google is making the shift to selling to enterprise and government where a level-headed conservative CEO inspires a lot more confidence than an ambitious reckless one. Also, they have one of the greatest businesses ever to exist (search ads) which, compared to any other >$100bb business, is a lot more precarious: it’s not contingent on long term enterprise contracts or lock-in or a physical moat (supply chain, brick and mortar presence).
His job is to keep the golden goose laying eggs and to make sure Google succeeds the transition to enterprise software. Believe it or not he’s more qualified for the job than all the other SVPs at Google and because he’s well connected with the founders he’s not a wildcard like an outsider would be.
The correct analogy is sports, so if you're comparing CEO pay to salaried SWEs rather than European football stars, you're going to distract yourself.
Team Google is a juggernaut with the funds to match, so they see value in putting up the money to get the top performer. They don't care how much luck the guy had to get where he is or how fair the pay is. They operate at a scale where small performance gains mean huge impact, so getting the guy who can make things go well (or who is less likely to drive the whole org off a cliff) is a bargain at any price. And let's not pretend we all know how to be CEOs of giant companies.
No one knows how to be CEO of a giant company until they do it, but there are many better qualified people that could perform that job for a whole lot less money. One could argue that taking such a huge pay increase immediately before laying off thousands of people is an example of poor CEO decision making skills, resulting in a loss of goodwill to the employees and potential future hires. The temporary $99 a night hotel deal for employees is an equally vivid middle finger to employees.
Honest to god, how hard do you think his job really is?
It's like a plumber coming over and hitting a pipe with a hammer and charging you $300. You paid $5 for the effort and $295 for the knowledge of where to hit the pipe.
I mean how hard is software engineering? Should people be paid $500k? Garbage collectors work harder than most FAANG engineers I know.
In the highest comp regions (where new revenue generating projects almost always get staffed) it’s a common ballpark estimate of the allin cost of a SWE including all benefits, office, hiring, infra costs, ancillary roles. Consider that a senior SWE alone is pulling about $400k in direct comp. Also consider Google’s total spending per employee (not even just SWE) is about $1mm and many of those are not engineers or in high comp regions. Of course a new org with no big sales/marketing/compute costs will have different cost structure vs search ads but it really is a workable ballpark.
Anyone can sound confident on the internet, but you don't seem to have anything to back it up. In my experience, 1 million per SWE in the Bay Area is actually about right across the industry.
You can look at public numbers to see that Google's revenue per __global__ employee is about 1.5 M and of that about 400 k is net income. SWEs in California make a lot more than the average global employee.
Costs also include server/DC/sales/marketing etc. you can’t include the server cost of say google maps as part of the people-headcount costs of google maps.
To be clear, it's an accounting artifact, NOT what he actually makes per year -- as the rest of the sentence might clue the reader into:
> which marked a staggering 3,474% increase from the previous year
For whatever reason, Google pays their CEO using a "triennial" stock award. It vests over 3 years.
So just to be accurate, his yearly compensation is more like $75 MM. Still obviously a lot of money for anyone, but now a number that actually makes sense to compare with other CEO's.
Just to be fair, for 90% of the world, the kinds of compensation many hacker news readers have (a Silicon Valley engineer who gets a high base plus bonus plus equity) would also be considered “holy guacamole, whatever is the angle I look at it … does not make any f_ing sense”
I work at a company with engineers mostly in the US and in an EU country, and my understanding is that, though our salaries in that EU country are top of the range, they are still meaningfully lower than for US engineers. The international talent pool is very good, and available at considerable savings. While I am glad I have my job, and that companies still seem willing to pay Bay Area salaries, I don't fully get why.
Poor logic. Why should that matter? The initial argument was that no one should need that much money.
The sporting events can't take place soley due to the star. Do you think the star built the stadium or did all the background work for a movie? By this logic, movies with novice actors should always do bad.
> How many people bought or used a tech product solely based on the CEO of the company?
Not explicitly.
What about founder CEOs who built v1 on their own?
A CEO cannot be a CEO (unless they are a founder which is a different matter altogether) without an existing enterprise with equipment and real estate to manage, so I don’t see the point there.
Founder CEOs are founders of the company and of course they will receive large payouts. The gripe is with non-founder executive vp sliding into CEO jobs and going from making $1 million a year to tens or hundreds of millions of dollars a year practically guaranteed with all sorts of golden parachutes attached.
> How many people bought or used a tech product solely based on the CEO of the company? Virtually none
A lot bought it because of some decisions made by the CEO. They likely wouldn’t have bought it if he hadn’t made them (of course it varies a lot between industries).
By how much would you say a famous actor/athlete increases the revenue 10/20/50/100/1000%? A CEO can do that too.
How do you measure what affect the CEO had? CEOs (like Jack Welch for example) get great acclaim for years according to short term benchmarks only to be proven to have made disastrous decisions for the business. Appraisal of CEOs is more witchcraft than science.
That is a fair critique and overall true. But it also highlights the pay of these CEOs to be so absurd as to be barely comprehensible. It makes me wonder what types of personalities these people are. If I even had that salary for a year, max three, I'd retire and spend time learning and doing non-profit and foundation work.
That's why you'll never make CEO pay. Most people, myself included, will happily retire with a couple million.
A lot of these people have ambitions that require a lot more money than that. Maybe they want to cure aging or explore space or something.
Another way of looking at it: if someone makes 100m a year and they are thinking about retiring, how much would you need to offer for them to choose to work another year instead? That's how much you need to pay them next year.
Whatever their ambitions are, it doesn't seem to be something that's doing the world very well. Inequality is increasing, climate change is boiling us alive. Houses keep getting more and more unaffordable... These people only work for themselves and their close circles. It just doesn't seem to be a structure of governance that is doing the world very good.
And it's honestly not really anything to do with retirement. It's about doing something with my life that isn't just following someone else's ideas, who just happens to be higher in the pecking order than me.
Has there ever been a case of a CEO singularly or even collectively achieving said ambitions? No. A lot of these people are cut throat, near sociopaths in personality. I guess we should be lucky they're just CEOs. If they're not of that personality, it's often largely due to luck. James Simons, who has had a large impact via his foundation work, in which he ensures funding for people to drive their own ideas versus his, readily and humbly admits that luck is very underappreciated in success.
People for whom being an important executive is at least almost as important as having as much money as they can reasonably consume.
Certainly there’s a vast range of FIRE styles and even what constitutes retirement but at some level it’s a combination of keeping score, feeling valued relative to peers (see also sports), and the industry recognition.
Unlike all the software engineers at Google who would be happy to have their various titles replaced with some egalitarian "developer" title.
Most people have egos. Some more than others. And public recognition via titles matters a lot for future opportunities. (Though maybe you don't care much about that so long as you make enough money.)
If you are running something worth over $1 trillion that makes hundreds of billions of dollars per year it makes sense though, right? You can argue even a mediocre CEO could do ok, and I’d agree, but at the same time you could easily justify paying huge amounts of money to get a CEO who will only perform better by 1%/year.
To me it’s really the size of the big tech companies that’s mind boggling. The fact companies that didn’t, or barely, even existed 25 years ago can make hundreds of billions of dollars is just insane.
>If you are running something worth over $1 trillion that makes hundreds of billions of dollars per year it makes sense though, right?
But he isn't running it. He has legal control over it, but in terms of sweat equity he only gets 24 hours in the day like everyone else and you can't tell me he somehow converts that to 1000x the labor of an average, capable, willing, working employee.
Maybe they do but consequences for bad actions are not 1000x average employee. They actually get a golden parachute when they screw up, destroy a company and lives of thousands of people.
So rewards and consequences are not at all proportional like you are trying to imply.
I think this misses one important point though: why would any human being need this amount of money and could these resources be allocated better? If we look more broadly than a single employee or a single business entity fwiw, this feels like a huge waste of resources.
Compensation is not about need, it's about supply and demand. If I as a Google shareholder could pay 225 million to receive billions in profit and thereby drive up the stock price and my stock value, then I'll take that deal, and that's how every other shareholder thinks, too. Because if not, then they could simply vote to not pay for the CEO's compensation.
This kind of job requires really solid skillset across various domains.
It feels like you not only need to be great at managing people, doing business, doing politics (the real one), having vision, but also do not be bullshitter, so your employees believe in you.
Meanwhile, CEOs strategies aren't something you can test within a month or two and fire CEO and get a new one.
In some industries you need at least a few years in order to see whether specific "bet" was good, so you aren't going to fire your CEO after half of the year.
Meanwhile CEOs decision can have very very costly impact on the company, so the risk is huge.
We want our best decision makers launching and backing companies, not retiring because that's all they're able to do. Musk and Bezos need more competition.
I do agree in principle but it’s not that obvious to me if overall it would be much better if all the surplus went to the shareholders instead. At least CEOs generally have to actually work for that money..
> CEO's aren't special
some CEOs are terrible, a lot are mediocre and a few are indeed special and worth every penny they get and much more (from the utilitarian/rational point of the company’s shareholders). The problem is that it’s very hard to tell in advance..
Sure, but he decides how to allocate resources, make acquisitions, etc. across over 100k employees. If he decided to pull another Google+ he could easily destroy many tens of thousands of engineers’ worth of labor. And it’d only take him a few hundred hours to make that decision, set up the org to lead the project and delegate the execution to them. Putting those engineers on something that actually makes money and is a viable business like Cloud could do the opposite.
It’s not about the time it takes him to make these decisions so much as the quality of his decisions having potentially massive $ impacts on the company’s performance.
None of that is really his call to make alone, upper management & the board also has influence & burdens much of the load. This idea that he's the only man in the room or on the planet that could do this position seems pretty absurd.
Any moron knew it was time to invest in da Cloud once AWS was successful. I’d expect more interesting ideas than the old tried and true “get some lucrative government and enterprise contracts”, “guess we better dust off our AI tech and react to OpenAI”, etc. He seems to be a reactionary not a visionary.
Yes, he was late and executed poorly. Generally Google is operationally deficient, but technically rich. That is a management problem. The best thing for Google is to split up into parts so they can become more focused and lean within each business category: social media, ads, search, cloud services, etc
How? Jobs did have some original ideas, but it's not like NeXT was a resounding success on its own that toppled Apple & Microsoft. Being the ideas guy is different than the implementation guy, and in some cases he was neither.
Why couldn't he just turn NeXT into the wealthiest company in the world? Perhaps you could say that's what he did by getting bought out by Apple, but Ives was an Amelio hire, and hard to say Ives wasn't as pivotal to Apple's future success as Jobs.
Jobs takes a lot of the credit, and some of it is due, but there were many other people involved in bringing him back on board & the transition back to profitability/dominance.
Well, that's not entirely fair, Jobs was credited for making a huge partnership with Microsoft that saved Apple. That deal would never have happened if any other person in the world tried to make it happen.
It literally had to be Jobs and Gates making that deal, and it worked. Apple got enough money to launch its iMac which made it enough money to then launch its store, which gave it enough money to finally turn real profits.
I know a lot of people were involved in that happening, but Steve Jobs was literally the only person in the world who had the cult following to execute on his vision. Any other leader would have been met with resistance and skepticism every step of the way.
Am I suggesting that SJ should make $200mil for that effort, no, but I am suggesting that if you're making an argument against CEO impact, SJ is probably the worst example as I'm 100% sure that man was the only one who could have turned Apple around.
Some of the Microsoft deal was due to the antitrust pressures MSFT was under in the late 90's, seeing Apple go under would've removed any deniability and put them under the microscope.
That said it's hard to argue that Jobs didn't have vision, or wasn't at least able to find people who had vision & talent, even if he was a polarizing figure.
> Why couldn't he just turn NeXT into the wealthiest company in the world?
That is a great question. The answer is complicated, but the primary reason is he screwed up. The machine was way too costly for its target market. By then, he'd run out of money. But he'd learned a great deal. He then bought control of Pixar, and turned that from failure into a massive powerhouse. Then he went back to Apple.
There's a book about it, "The Second Coming of Steve Jobs".
Jobs made three fortunes: Apple II, Pixar, and then Apple again. Just one of those would be a spectacular achievement, but he did it 3 times.
Would Apple have become one if not the most successful companies of all time if they had all the other people who helped Jobs accomplish this but not him?
Its not like the individuals actually need the money like, perhaps, a new product line would. Its just about getting paid the most. If you look at it that way, we would do well to deepen the progressive tax.
He did not get a golden parachute. He was compensated that amount over time. He grew a company from $400MM in revenues to $70Bn and was rewarded $1.6Bn for it. I fail to see any issue with this.
It's stunning how you can make that much money while also pretty much completely burning the company to the ground. Destroyed nearly all trust with consumers, the core product is mostly a joke, every legal jurisdiction out there has a case against Google pending, and oh, yeah, even Google's own employees have been shaken by the layoffs and many of the usual shills for the company have gone quiet because, well, they stopped getting paid.
If CEO pay is supposed to have any relationship to actual outcome, dude should be long gone, not be getting salary increases.
Sure, shareholders have gotten some short term gains, but the company no longer has a positive long-term outlook.
I imagine the shareholders and board members that approve these pay packages are rational, self-motivated actors who believe that doing so is in their best interest.
Also, keep in mind that the terms are determined well in advance if these payouts, and tied to stock price or performance. So if the stock does well the amount can be very high, or if the stock does poorly then it can be (relatively) much lower.
And since layoffs hopefully mean that society is getting equivalent output (ads, I guess?) with correspondingly less input (labor), it’s not a sign of weakness or mistake when they are implemented.
The shareholders have all delegated their voting rights to money managers who don’t care as long as they keep getting a percentage of assets under management and the board members are all obscenely paid executives at other companies who don’t care as long they keep the executive pay cartel going.
>whatever is the angle I look at it 225MM pear year does not make any f_ing sense to me
Whenever a company starts, its not like the salary is auto set at 225M. The salary of the CEO is tied to the stock price to incentivize growth. Initially CEOs make way, way lower amounts (ignoring bullshit VC capital and inflated salaries).
If it so happens that the stock goes up with growth, then the increase in salary represents the responsibility amount that the CEO has, as bad decisions can cost lots of peoples jobs and so on.
Whenever you have market upswings that cause these ridiculously high 225M, its in a weird way the people saying the CEO wants to get paid that much. People spend more money that they have due to wfh and stimulus (granted by the people and who they vote for), causing revenues to go up, causing investment capital to go up (with a tieback to people putting money in things like 401k that depend on this as well), causing the market to go up, and so on.
“ then the increase in salary represents the responsibility amount that the CEO has, as bad decisions can cost lots of peoples jobs and so on.”
He made bad decisions that caused people to lose jobs and they knew this well before the layoffs were announced. So he gets a raise and continued support?
> The salary of the CEO is tied to the stock price to incentivize growth
If it were a more reasonable amount I would agree, but with the amount they're given they could do a piss poor job, tank the stock value 90%, and still come out with $22M.... not much of an incentive
The claim is that you want the CEO to be aligned with the shareholders, and therefore you incentivize them with high salaries.
Who cares about future shareholders or consequences for that matter when you earn 225MM ? Go move to some country that doesn't tax capital gains, sell it all, and live on 4% of it, which is 9MM per year; live like a king, buy absurd amounts of land and multiply your passive income. Obscene is an understatement.
That makes sense to you and me but...if the world were only populated by people who were happy to just have enough to live a comfortable life as soon as they could, or even a very rich life as soon as they could cash out, then we would not have half the insanity we do today. And Sundar Pinchai and other CEOs could have quit a long time ago if they wanted to do that. If I were in the place of ANY CEO today of Google, Microsoft, Facebook, of course I would quit immediately with far LESS money and do something else....but they don't, speaking of the incredible pathology that lies within them.
I guess the counterargument would be that the $225MM is imaginary money - he doesn’t actually make that much until he cashes out and cashing out at the wrong times is what we should actually condemn.
That said, the rules for stock, stock ownership, and splits are all made up on the fly anyway so I don’t want to defend any of this. Stock dilution in particular seems like legal theft.
CEOs usually don't join without a golden parachute, and shareholders seem to only care about immediate gains.
To see the insanity, Selipsky in Q1 AWS all hands was talking about growth of the rate of growth, i.e. second order. Not steady income, not income increasing (which is already exponential across years), but super-exponential; i.e. 20% , then 25%, then 30% growth.
Who cares about sustainable and organic growth! We have to milk those pesky engineers and all our customers!
I think you're talking about the double Irish corporate inversion loophole, which applied to multinational companies, and was closed 10 years ago.
As a US individual you get taxed no matter where in the world you live, and you must pay capital gains on all of your assets before giving up citizenship
Why not? I know in Poland I am not taxed until I sell the stock; and if I am out of the country for X amount of time, I am not considered a taxed resident.
I am fairly certain the US is different, but I know that I can do that in Europe.
In the US, different states have different rates. At X00,000,000 he's basically all in the top bracket so ~13.3% in California (it's taxed as income), other states have lower, some states have 0%.
To shareholders (including many of us on HN, even), it's an investment of 225 million to receive profits of billions, thereby increasing the stock price for us. It makes perfect sense from that lens. If I could pay 1 dollar to turn it into 1000 dollars, I'd take that deal every time.
I do know it because I've also been in places where CEOs essentially destroyed the entire business. Just as absolute power in kings can create despots or benevolent dictators, so too can it occur in the chief executive officer.
Google is overperforming in-spite of its CEO, not because of him. Google hasn't really been doing anything recently other than run on the fumes of its past successes.
The entire purpose of compensation like this at the highest levels is to ensure that no other possible group could incentivize you to betray in any way the board or shareholders
Think about it like they are paying based on the question of: how much does it cost to keep this person protecting all of our Crown Jewels AND will never support unionization or anything that gives meaningful power to employees?
The bigger the risk to shareholders if something goes wrong with the stock, or if the CEO defected to a competitor, the more pay they offer.
well it's extremely unlikely to go to zero, and it can just as likely if not more so go up. He's almost certainly going to be offloading the stock at a pre-agreed rate, the kind of rate that means him and his children and grandchildren will never want for anything in their lives. It also exists as an asset, meaning he can borrow against it if for whatever bizzare reason he needs more.
just like everyone with net worths over something like 10 million. Like I say, almost nobody has cash/fully liquid assets in those amounts. Doesn't stop them from commanding vast amounts of resources on lavish lifstyles, not to mention foolhardy projects and follies on the regular.
They’re not options, they’re grants of stock units which vest over time. A unit of stock is a share granted and vesting at its full price, not an option to buy stock at some price later.
While startups use options, most large public tech companies typically do not.
I worked for a guy a decade ago who spent 8-10 years building a company to sell it for $300-400 million and he hasn't worked a day since. Owns a 30k acre ranch that a bunch of friends/family live on. Learjets. Villas in the islands, things like that. I can't think of one thing he hasn't done or is limited financially in doing. Last time I saw him he had a $120k watch on, some type of Hublot big bang.
And Pichai gets that yearly...
Here, check out the type of trash he spends his money on now. https://www.drivetanks.com/ Absolute waste to society.
A tank is 1 mpg. I am guessing they are not driving more than 1 or 2 miles on an excursion. This is hardly harmful to the environment compared to other entertainment options.
His ranch is on the MX/TX border and he owns domains (to resell) such as roaches.com, illegal.com, molest.com, etc. Take with those what you will of the sort of person he is. That's just the few I remember otoh. He has hundreds.
Not unheard of to squat on domains to prevent them from being used for nefarious purposes. Not saying that is what he is doing, but unless he starts using them for racist purposes, I am not going to hold this against him.
Literally nobody asked your opinion of how he uses his domains. But thanks for your sage response. Please continue playing devils advocate in situations you're completely ignorant toward. It really benefits everyone.
LOL "reddization of HN." I've been on HN for years before you. Maybe commenters should listen to the OPs better and stop playings devils advocate so much. Because especially in this specific scenario it is absolutely stupid.
Yeah, we've got a guy with essentially a right wing militia fortress on the border of TX who owns blatantly illegal-immigrant racist trope domains and it's not related at all. Some engineer who commonly talks infrastructure is just making all of this up because he's bored on HN this weekend. Who wouldn't squat on such gems as "molest.com" to keep them from being used?
Indeed, their entire comments on this thread are just passive aggressive and sarcastic insults, it's actually impressive how much anger there is. I noticed this Redditization as well, there are a lot of anti capitalist comments on HN recently which I don't remember seeing several years ago. For a discussion forum about startups and highly paid software engineers, they sure are surprised to see where their money comes from.
I first heard that joke in a 1990’s standup routine, fwiw. It could have been the same person telling the joke, I guess.
Anyway, it used to actually be used by white american racists; it’s been weakened to just self deprecating humor, kind of like jewish comedians like to tell jew jokes.
While we're on it, can we get some negative energy for holidays in general? It bugs me that most people have no savings and then we have people just swanning around burning resources for fun. The waste of drawing hard-working people into the tourism sector when they could be working on improving their own communities directly is just appalling. Let alone the environmental damage caused by the travel and the lost productivity from people literally just having fun.
Am I being sarcastic? Not even I am sure. The arguments are truthful. But the fairest way to organise things is that people who made a big economic contribution (represented by money) should be allowed to waste a similar-magnitude-but-smaller amount of resources. That is, ironically, the path to prosperity.
that tank thing isn't a great example, even blue collar folk could pretty easily afford some of them. It's a hell of a lot cheaper than a Disneyland hotel!
No, we need to fix the mechanisms that have allowed so much wealth to accrued by individuals.
Companies need to be taxed correctly. They need to give back to the societies that built the social structures that allowed them to be created and thrive.
I would somehow tax inactive capital. Capital that is not directly invested in a company or pays for employees. Everything laying around or on the stock market should be heavily taxed.
Islam bans stock markets and interest (though not all current so-called muslim countries) and every person who is rich (who have more than 87 grams of gold worth of things) is obliged to donate %2.5 of their total wealth to the poor every year. In Muslim countries, the state collects and distributes this, so it's effectively a tax. Necessities of life (shelter etc.) are excluded from total value calculation. Muslim countries traditionally took away land of people who didn't utilize it for 3 consecutive years, though idk whether this is rooted in the religion itself.
That doesn't change the ownership problem. This solution could still allow for a a handful of people to own everything because they would be invested in, and therefore have ownership of, all of the companies.
If throwing them down a well would solve it, then can you think of a less extreme solution, like for example, sitting them down to let them know that they have to give up their political power?
Yeah it's Uvalde. Uvalde is a very weird place compared to most USA town/cities. The people who live IN Uvalde proper are mostly hispanic and bracing the poverty level and work on the ranches or schools of people with tens/hundreds of millions who own 10-50k acre ranches out there and are just generally worth mega millions.
I mean what info are you looking for? I don't want to be associated with this company at all. I don't even have it on my resume, it's embarassing. I'm also not going to put myself into a situation where I've potentially got a guy worth $300+ million after me.
That's incredibly impolite but I don't really care. In the future there might be reasons people don't directly name call something that should be a huge hint for you to not do it yourself to them. You aren't swooping in like a white knight answering some searing question, you're potentially throwing someone under the bus, CTO guy. You should know better.
You literally added it after I posted my own response. I hope you're proud answering the $10mil question when I clearly wasn't going to.
Bro, satvik. I'm happy to hear your responses and learn from you but you're literally just attacking me at this point. It's absolutely hilarious. You think you're going to take me down or something weird. I'm trying so hard to take this seriously because you think you're going to post a tweet and get me nuked from society.
I'm looking at your previous posts and trying to find things that aren't "zero to hero" type javascript messages.
There's a gem 4 months ago that is "Why would you be hiring? Writing a backend is really not that hard if you already know the front end.." " and anyway it's good to be able able to do both sides" ..
Are you trying to learn, prove yourself, or what? What's the end goal here? Most of us write code to pay rent and buy cars. What are you trying to do?
Buddy, HostGator employee, I honestly have no idea what you're even talking about, regarding trawling through posts I've made and trying to find "gems", whatever that means. Seems you get easily aggressive towards anyone that challenges your comments, in this thread and others, telling people to "fuck off", that "literally nobody asked for their opinion" (on a public forum) and trying to find some gotcha in their posts, as if that means anything. All I said to you was that your response was weird and you immediately start popping off about being asked for an opinion, on a public forum. I don't care about you, much less "take you down," lol. You're the one who immediately started spouting personal insults after people calmly commented, so if you can't handle people commenting, get some anger management classes and perhaps step off, king.
You are so out of your element and just absolutely lost. I'm obviously not a HG employee. You challenged my comment? You weren't even part of the conversation. Your challenge was not understanding a modicum of politeness when someone is referring to an old business they worked for and might not want to be associated with so they give vague references that make it blatantly clear they don't want bring it up? This is easy in your stead because you have literally worked for no one that anyone cares about or has any interest in whatsoever.
If you were on hn throwing some spicy tea out for people to read, if you had EVER worked for anywhere that actually MADE spicy tea- you'd get my drift.
"This is a weird response, it's not like it's not public information, there's nothing "impolite" about it."
This is literally one of the most ignorant responses I've ever, ever seen on HN. Nothing I said was public information. and I clearly didn't want to expound. Take the fucking hint.
I don't know where your sense of entitlement is coming from, but first off, I don't owe you any information whatsoever. Not to mention the name of the company is absolutely irrelevant to the conversation we were having before you involved yourself literally only asking this question. I hoped, apparently wrongly, that someone could infer from me not bringing the name up myself that maybe I don't want to be associated with said place. I owe you nothing, welcome to hn.
People have their reasons for disclosing or not disclosing things. You aren't entitled to know why, by any means. You're a 32point 2 month old HN account who has literally nothing personal listed about yourself, whilst people like me do have personal things listed. Move off, bud. I owe you absolutely nothing and I have my reasons for whatever I say. And you are not entitled to a how, why or anything else about my reasoning.
Yikes - you've broken the site guidelines badly and repeatedly in this thread. We ban accounts that do that, and your posts have been well over the bannable line.
I'm not going to ban you because, fortunately, it doesn't look like you've made a habit of this in the past. That's good! but please go back to posting substantive, respectful things and don't veer in this direction again. It's not what this site is for, and destroys what it is for.
You also broke the site guidelines repeatedly in this thread. Please don't get sucked into tit-for-tat flamewars, regardless of how bad some other comments are or you feel they are. That's also not what this site is for.
Google is a $1.6T company. For a guy that runs it to earn $200 M a year is basically nothing. Can he do good enough of job? Great, he's then definitely worth it (and, actually, he's worth much more).
I fail to understand how thinking people could ever believe that this is true - it's got to be innumeracy and a healthy dose of propaganda. Would Google lose the now-equivalent of 200m annual if any one of the top 100 leaders within the corp ascended to the goddamned throne? Fuck no. It's nonsense to believe any one person is worth compensating at that level.
What are your thoughts on NFL player Josh Allen having a $250MM contract? I fail to understand why there is more controversy over CEO pay than athletes.
If Sundar Pichai ever had to compete against other companies at the level of an NFL player, vs. be asleep at the wheel of Google’s money-printing advertising monopoly, he would immediately crumple. This is obvious in their fumbling all the AI stuff, half of which they invented.
I don't follow sports, but at least those people are doing actual, physically comparable things with clear connections to revenue (more like music artists than CEOs).
Maybe that analogy is more apt than you intended though, in that the valuations are made for shallow human/society reasons that are quite decoupled from reality.
That doesn't even include all the merchandise and the food/drink sales and all the other benefits that come from signing big name stars. The CEO of a company doesn't have the same "star" power a pro athlete, musician, or actor has.
Physicality is far more measurable in its results than the product of a thousands strong multi-national company.
In other words one can pretty clearly attribute the performance of an athlete to said athletes talents and ability. In the case of the CEO making the same money, it's much harder to measure their performance, and even harder to attribute the success of the company to their direct performance. This point becomes even more true as companies grow in scale, such as Google has done.
That doesn’t mean that their performance can’t significantly affect their companies stock price to a much higher degree than similarly paid athletes could.
> Physicality is far more measurable
Who cares. Do you believe that only people whose output could be precisely measured should be highly compensated?
Of course there is a lot of inefficiency considering Pichai seems to be a very poor CEO who’s quite replaceable.
You don't think LeBron has any say in the teammates they sign?
Tom Brady famously got Gronk out of retirement and Brown was on the team because of Brady despite having a horrible reputation and being essentially blacklisted from the NFL.
Star players are a dime a dozen in professional sports and I don't think their influence on the team makeup is as rare as you think. In fact, a big name star might have _more_ hiring power than a typical CEO in a public company.
Attempting to change the subject doesn't change the fact that this obscene compensation amounts to stealing from the pockets of his own employees. Rather than structuring Google as a dictatorship, how about we structure it as a democracy and ask Googlers what they think the CEO should be paid, at their own expense. Do you think they would come up with a number that is less or more than the current figure?
Keep in mind Google executive compensation appears to be biannual (his compensation in 2021 was 6M). Overall, his compensation for the past 2 years is less than .05% of Google's revenue during the same period. If the performance of a Google CEO even slightly better or worse Pichai going to have a much larger impact on Google than 225M. I'm sure plenty of the top 100 leaders at Google would be better than Pichai, but others would be worse and shareholders can't distinguish who until after the fact, so they saw Pichai as the best option.
You've inadvertently highlighted the actual problem - our economic system allows for megaliths like Google to exist and dominate, and we can't help but measure everything against them.
Like, run the clock forward and imagine Google monopolizes half of GDP. Should the CEO be compensated as a percentage of that? It's a fallacious view - how many super hard working and ultra educated people could be recruited to that post for, oh, say a cool 1M per year with a good retirement plan and no stock nonsense. Tons - a huge list of people who don't have the right connections to sit atop the money pyramid.
> how many super hard working and ultra educated people
Both attributes seem to be somewhat tangentially related to being a highly successful CEO.
There are plenty of examples of “super hard working” and educated CEOs running their companies to the ground and costing much, much more than just $200 million..
I don’t think “skillset” is the right word either. It’s the financial outcome of the decisions the CEO makes which is the only thing that really matters. Which is notoriously hard to measure and impossible to do in advance. So companies tend to use various proxies when hiring like past experience and less useful ones like skills, education, character, personal connections, work ethic etc.
Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid.
So if the board of 100 billion company believes that a CEO they can hire for 100 million will increase growth/profits by more than 10 million CEO would it seems perfectly rational to pay him as much (they might be awful at picking the ’best’ person but that does not invalidate the core principle)
> Obviously this system is very inefficient but nobody can deny that some CEO are better than others and that the best ones can make decisions which bring 10-100x or more money to the company than whatever they are paid.
There's nothing obvious about this to me - how would you distinguish that from survivorship bias? Why then do shareholders and boards often come into conflict on this issue?
Claiming that someone is worth paying 100m per year is an outrageous claim that requires commensurate evidence, not a wishy-washy statement about boards thinking its worthwhile. Boards are made of people in a very small oligarchic circle - their behavior is more easily explained by remembering that they're social animals in a hierarchical context than pretending this is all perfect economic rationality.
> There's nothing obvious about this to me - how would you distinguish that from survivorship bias?
So success of companies is entirely random? That seems statistically unlikely…
I mean are you really saying that there are no decisions that CEOs regularly take due to which a company might lose/gains up to millions to billions of dollars? Why wouldn’t you pay a CEO whose actions can bring the company billions a 100m or so? Seems like a good deal..
e.g. if you put a random highly competent, educated and very hardworking person in charge of Apple back in 1997 is it more or less likely that he would have done better than Jobs?
I mean, yeah I agree with you in part. In most cases it’s hard to distinguish real impact (even after a few years) from survivorship bias which is why this whole process is so inefficient. I’m sure that quite a few companies are just as likely (if not more likely) to hire a 100+ mil CEO who’ll be a net negative on as one who’s action will bring 10x+ in additional revenue compared to what most other candidates would have.
> So success of companies is entirely random? That seems statistically unlikely…
You're claiming that it's worth paying CEOs 100M+, and my point is that whatever level of competence/skills/judgement/character you desire for performance should be achievable at an order of magnitude lower salary offering. My point is that this astronomical compensations represents a really outrageously strong market claim about someone's performance, but the only evidence you're offering is that some companies do better than others. That is exactly what we'd expect in a market with many companies trying different things - aka, survivorship bias.
This is super common in tech, where people assume that successful entrepreneurs (for example) are visionaries, when in fact they had to be BOTH visionaries and ALSO incredibly lucky, and any structural advantages they had to acquire capital also help a lot.
> I mean are you really saying that there are no decisions that CEOs regularly take due to which a company might lose/gains up to millions to billions of dollars? Why wouldn’t you pay a CEO whose actions can bring the company billions a 100m or so? Seems like a good deal..
This is disconnected - that does indeed happen, and it's been interesting to watch e.g. Elon Musk set fire to several billion dollars along with his reputation over the past few years. My argument though isn't about whether or not CEOs are important, but whether or not their compensation is actually tied to their real value, or whether it reflects their membership in an oligarch class and their skill/luck in navigating that socioeconomic environment. This is a question about opportunity cost. Note - I would also be willing to believe that the perception of having a genius CEO who is "appropriately" compensated on a cosmological pay scale is valuable as a social signal in and of itself, and I would also object that this is irrational. In an economic system that capped CEO pay, that social signal could still exist unmodified at much lower absolute levels of compensation.
> e.g. if you put a random highly competent, educated and very hardworking person in charge of Apple back in 1997 is it more or less likely that he would have done better than Jobs?
Weird example, since Jobs took a salary of $1 during that time.
> I mean, yeah I agree with you in part. In most cases it’s hard to distinguish real impact (even after a few years) from survivorship bias which is why this whole process is so inefficient.
Couple that problem with ANY reasonable prior on the distribution of abilities in human populations and the distribution of salaries, and you end up with exactly what I'm proposing - CEO salaries are easier to explain by looking at human societies than any possible collection of individual attributes that such a CEO could possess.
Why's it so hard to believe that a worse CEO for one year would result in a 0.01% lower market cap? Given that framing, 200m is a very drastic under estimation.
I share that intuition, although I don't see any reason to trust the intuition of an outside (either myself or presumably yourself) making 2 second back-of-envelope calculations of that of the Alphabet board.
That “he runs” it is entirely made up as well. It’s a $1.6T company - one person doesn’t run the show.
Is he worth more? Is he worth less? Literally all of this stuff is not anyone’s business outside of their company and their stakeholders. We can’t truly have a clue what doing a “good job” is with them, or what the compensation should be.
They want to ruthlessly hire-fire talent - it’s all entirely on them as a company. Being outraged about any of it is just as naïve as buying into the idea that their monopolies are built on merit and not on elite credentials and pedigree required to join the club.
For what it’s worth, I think the enormous payouts are there so that these guys’ judgement and decision making is 100% directed only on the company’s value and well-bring. They’re supposed to be in-bribeable.
> Literally all of this stuff is not anyone’s business outside of their company and their stakeholders.
Hard disagree - capitalism is great up to a point, but a functioning market and vibrant tech sector doesn't require that we allow individuals to become this obscenely wealthy. Answering the question of how extreme we want income/wealth inequality to be allowed to become is a valid economic question to be answered societally.
Alphabet CEO Sundar Pichai was awarded compensation worth more than $225 million in 2022, which marked a staggering 3,474% increase from the previous year, making him the nation’s highest-paid CEO, according to Equilar data.
There’s a whole rabbit hole to go down, but CEO compensation is not well defined. In this case it’s likely that Pichai was granted options with a multiyear vesting schedule, plus perhaps performance targets, and the entire net present value is being counted for 2022. Meanwhile he likely vested substantial options in 2021, but since it was granted in a prior year it’s not counted as compensation in that year.
This kind of accounting makes for extremely lumpy numbers and the evergreen opportunity to write articles about 3400% increases!!1! I don’t think it’s a particularly useful way to think about executive compensation and we shouldn’t pay attention to such articles.
I disagree. Yes we should think about option grants differently, but not that differently. At the end of the day I don't think anyone would say Sundar has been that much better than his replacement level CEO. Certainly not better enough to deserve 225 million in equity. The stock is up 10% this year, still below 2021 levels.
why should he be better than replacement level CEO? why can't we assume 225 million is what an average CEO running a Google sized company deserves? Like how we accept 300-500K is what an average Google SWE deserves?
Depends how you measure “earning”. If we look at Google’s stock price and growth in relation to its competitors he possibly cost significantly more money to the company than he was paid.
Probably we can argue the rights and wrongs of individual cases, but surely now is the time for swinging wealth taxes. Clearly the system has got out of control, and everyday people are suffering while the rich lead gilded lives.
50% on everything over say 2MM, into a sovereign wealth fund. Prison for attempts at evasion.
Maybe next year we won't do another 50% on what they have left.
I've been working on a solution for this, have pitched a handful of investors and every time I'm met with blank stares, probably because what I'm proposing would cut into their own dividends.
I know this comment will get lost in the sauce, but if you know an investor who is brave, cares about staving off the forthcoming proletarian revolution, I'd love to hear your ideas.
You know how the USA has a President? Switzerland has 7.
What is the role of the CEO? Is it to make decision? Is it to be a public facing role, a representative of the company as a whole? These can all be replaced with collective bodies coming from the firm itself.
There's a lot of structures of governance that decentralise the power of the firm and they work pretty well. But the current system is not really viewed as a problem for the people who participate in it. The boards, the CEOs, etc. these are not positions that truly need talent and shrewdness these are positions that exist for people to aspire to. This way, the bulk of the people in the firm have a clear structure to look up to. It's not that Sundar Pichai does work worth 225M a year, it's simply that he happens to be in the position of the CEO of Alphabet. It can be anyone (anyone in those upper circles).
I am extremely skeptical that at the higher levels of CEO pay there is any marginal utility.
I just don’t think the improved management quality you get from an additional $1M is actually making the company more than $1M in profits. Seems like a failure of markets
When Ford went public around 1956, the man who ran that got $250,000, about $2.8 million today, with much higher taxes than today. But he also got a thank you letter from Henry Ford II, so he had that going for him.
That was the largest IPO at the time, very complicated. I believe all the shares offered publicly were held by the Ford Foundation, for complicated tax and dynastic reasons.
But the main point here is how little the manager of the offering received. Imagine that today. $2.8 million would be nothing.
I’m not that sure that a higher proportion of profits going to the shareholders would be a better outcome. Sure the money saved by paying the CEO less might result in lower prices or go to lower ranked employees but it’s not obvious to me that that’s necessarily what would happen.
$1mm/year is such a drop in the bucket for a company making $100,00mm/year it almost doesn’t matter.
It’s not about the marginal benefits of paying the same guy just a tiny bit more anyhow, it’s about paying that guy enough that he doesn’t just decide to retire, or run a competing company, or start his own. Imagine if you think some guy is the most qualified person in the world to run your company, even if they only do a 1% better job growing revenue than the second best or “average”, when your revenue is measured in the hundreds of billions it’s easy to justify paying them such huge quantities of money.
The answer is actually antitrust and to break up Google (and other Tech giants) into smaller pieces. That should lower his compensation by a bit, since his individual power would be lower.
Yes, we would lose some synergies, but we would gain in terms of a more equitable society. Sometimes more stuff is not better.
Right, I understand the justifications for CEO pay. I am just saying that I absolutely do not believe that for large public companies he is 1% better than the second choice.
Google as it grew basically had two tiers of outcomes for insiders. The inner circle of insiders like Sundar and Susan had Google grow “under” them so they stayed near the top. A lot of this inner circle has either retired or left, isn’t fit to run the company (some of the purely technical folks) because of their skills, or was forced out because they did bad controversial things (there’s a joke that Sundar won by default because he was the only one that didn’t try to dip his pen in company ink).
The other early employees and insiders got layered with outside middle management as Google grew.
Since Google is basically controlled by the founders still there are actually very few people left who are qualified on paper to run the company, already work at Google, and have the trust of founders. Now I’m not saying that means nobody could do better than Sundar, but I do think the founders earnestly believe he is 1% better than any second choice.
I mean, nobody has really solved succession planning in any industry, and tech is still quite young. And the markets often guess wrong about which successors will do well. See: Disney and its failure to get a decent successor to Bob Iger
That might be true if the goal were to maximize the profits and long-term health of companies to deliver value to society. It's more as though the goal is to maximize shareholder wealth and minimize the dependence on expensive employees by encouraging a bitter atmosphere that in turn results in high turnover, which is in turn good for profits because it uses up the best 5-10 years of a young person's life in generating new ideas before they wake up and realize that they are not in any way contributing to the good of society.
> $225 million in 2022, which marked a staggering 3,474% increase from the previous year
This is obviously a "creative" calculation done in order to get the highest number possible, which makes the best clickbait. I'm disappointed that so many Hacker News commenters are stupid enough to fall for this.
CEOs pay is tied to the stock price. They will do whatever it takes to boost the stock price, until they are out with a golden parachute. From their perspective, the business is all about boosting the stock price. It doesn't matter if the boost comes from innovation, or from polluting the planet, or from unscrupulous addictive practices, or from culling the employees.
Employees are merely, an often undesired, side-effect in the business of boosting stock prices.
That is a very narrow and frankly sweepingly incorrect description of "CEOs" or "companies". They're not all the same. I for one (alongside many other investors) carefully study incentive programs and compensation oversight executed by the board of directors. There are many thoughtful companies (and CEOs) who e.g. align over very long-term targets, such as '5 year return on capital". Investors have found out a long time ago that incentivizing by short-term measures such as share price (or revenues, or EPS) can bring about very adverse long-term investing outcomes.
Let's imagine that shareholders agree on a 5 year return on capital plan. Now let's say some missteps/economic circumstances make revenue go down in the 4th year. The CEO will get heat from the investors. This is especially true if the board contains an investor representative who can vote the CEO out.
What choice does the CEO have at that time but to boost short term?
Look at the same story from an employee perspective. Imagine that employee worked for 4 years and the downturn arrives. They invested a lot of time of their precious life, much like the shareholders invested their precious money.
In the downturn, the CEO gets to make a choice and the choice ALWAYS is to boost the stock price for shareholders (and for themselves). Often, at the expense of employees.
It's really crazy how just a few months ago Facebook's long-term prospects were worth just 1/3 of what they are now! What do you think changed so much during that time to warrant the 3x increase?
Did you just learn this in Finance 101? The real stock market is priced based on many factors including interest rates, future growth expectations, etc, but the biggest factor of all is psychological.
Yes, but I think that is because investors rationally realize that the future is extremely uncertain and complex so it is better to weight towards shorter term more predictable outcomes.
Average CEO tenure is less than 7 years, not sure how you'd practically be able to accomplish any kind of compensation plan on a longer time horizon. What is the person supposed to do in the meantime, life off of savings?
And if you make them subject to "alternative minimum tax" where their stock based compensation is considered regular income for the year it is awarded based on the difference between the strike price and the market price, you "moderate" that process somewhat.
> compensation is considered regular income for the year it is awarded based on the difference between the strike price and the market price
Isn't that exactly how it works? Your grant price just determines your number of your shares. When your shares vest they get taxed as regular income for the entirety of the vest amount.
Executive stock prices should vest at the first of 25 years from the date earned or 10 years after they've left the company. That would encourage long term strategies rather than pump and dump.
That would certainly be one way of attaining long term vision.
But who will enforce this requirement? Only pension funds and other large shareholders have any (and often impractical) leverage over the board C-suite. Wall-street shareholders demand faster growth until they themselves can exit out. They don't care about the business or the services or the employees. They want a high growth return, year-over-year until their own investment carry continues to exist.
Stock buyback is equivalent to paying a dividend. If stock buybacks are prevented, companies will continue to layoff and pay out dividends. It doesn't solve the root cause that employees don't have a seat at the decision-making table.
At a minimum, if corporation laws were modified such that every laid off employee must be issued 1 year worth of shares as a golden parachute, the incentives will all get aligned very quickly and employees will not be abruptly thrown away.
By definition, one returns cash, the other doesn’t.
The stock buyback also prevents market price discovery because of an artificial price floor.
The buyback is also a subject to buyback tax, transaction fee at the broker, and the benefits of the buyback are not captured by the long term holders, only by short term holders, e.g. insiders, who often sell into the buyback guaranteeing a price floor and effectively an execution price.
The previous restriction on them was an example of controlling capital markets with statute. That was the point. These are all just words on power and numbers in a database. We can change the rules whenever we collectively choose to.
Employees do work and that work is meant to be profitable. If it is, then great. More employees, more profit. If it isn't, they get cut. That's exactly what CEOs are responsible for determining.
I disagree with pretty much everything you say except this.
>Employees are merely, an often undesired, side-effect in the business of boosting stock prices.
Employees are worse than a side effect, they're a cost center to be avoided if possible. You want to achieve your goals with as few employees as possible.
I do think hiring a bunch of people and then firing a bunch of people is indicative of some sort of mistake. Nobody can perfectly predict the future. That said, when someone takes a job they know it's not a lifetime tenure position and has some risk.
it is truly a product of the computer age, to come up with self-centered ego BS like this.
You do not acknowledge different industries or business models, distribution of physical goods or market brand activity, let along "things that take more that one person to do" .. This is a rote recital of an inner dialog of an ill "investor" CEO who might as soon throw his secretary off of a bridge than give a bonus for winter holidays.
There are not enough words to scourge this infantile, Ayn Randian nonesense from the page.
Never in history have companies hired more employees for the sake of having more employees. This isn't a new modern or even libertarian hypothesis.
Do you think people in 1000 bc hired more employees than they needed just maximize headcount. Of course not. You want enough to get the job done and not more.
People in 1000 BC is maybe not the best example here considering practically the entire population of Egypt was tasked with building or supporting the building of the pyramids among many other projects.
I think that's just as good of an example as any. Do you think pharaohs hired and fed more slaves than they needed to build a pyramid just to maximize worker numbers, or so the extra could sit around and take it easy?
Egypt had shops and Merchants too.
Can you think of any time between then and now where things worked that way?
And frankly layoffs had almost no effect on their stock prices. Announcing new products, even if quite half-baked AI efforts, had much bigger impact on stock prices than layoffs.
> And frankly layoffs had almost no effect on their stock prices. Announcing new products, even if quite half-baked AI efforts, had much bigger impact on stock prices than layoffs.
This is true but you know what? Every action of the CEO is meant for the investors and large shareholders. The layoff is merely a signal that says
"I am willing to do what it takes to give you your return. Buy more shares"
I know this has been discussed here and 225MM is like the salary of 1000 employees making 200K for only one year, it is stock which is volatoile, that the salary of a CEO is impossible to measure, bla bla bla. But holy guacamole, whatever is the angle I look at it 225MM pear year does not make any f_ing sense to me and it is simply obscene for the 99.99% of the world population as would be enough to retire 5 or 6 generations of regular people.