[ElevenLathe]

Workers ultimately have a job because they are useful to management, and management have a job because they are useful to ownership. Top management has insane levels of compensation as a strategy by ownership to alight management's interests with their own, by turning them into owners. If there is going to be a management layer at all, for example the proposed "A-suite", then their compensation will balloon for exactly the same reasons.

CxO salary isn't the market clearing price for the labor these people perform, it's more like power-leveling your friends in an RPG so that they can quest with you. Owners want their managers' interests to be with capital, so they have to give them some.

[forgotaccount3]

> Top management has insane levels of compensation as a strategy by ownership to alight management's interests with their own, by turning them into owners. If there is going to be a management layer at all, for example the proposed "A-suite", then their compensation will balloon for exactly the same reasons.

That is not correct.

Owner's don't align top management's interests with the owner's interests by giving them 'insane levels of compensation', they do it by giving the managements compensation in the form of shares of the company. It's not the volume of the compensation that aligns their interests, it's the type. Otherwise the 'top management' could just invest in the competitor and torpedo their own company making multiples of the original cash compensation as clients leave for the competitor.

[mitthrowaway2]

If anything, a high base pay would be a dis-incentive to perform well, because increased wealth (a) reduces the marginal utility of additional compensation, and (b) makes the CEO less vulnerable to going down with the ship. The same goes for "golden parachutes".

IMO, if incentivizing good performance was really the goal, then companies would hire CEOs who are not already wealthy, pay them only enough base salary that they accept the job and can focus on it without worrying about paying bills, and compensate them mainly using illiquid, very long-dated stock options, which become worth a fortune if and only if the company is still around and profitable far into the future. It turns out that this is basically how founders are compensated, and it's a wonder that shareholders allow public-traded companies to be run in any other way.

[ElevenLathe]

Sure, if you want to spell it out. It is equity compensation, because they want the management to be owners of the same assets that they hold. Once that's settled though, the question is: how much equity? Well, it needs to be a large number. Owning $500 worth of stock doesn't make them a capitalist -- it just makes them a person with $500 worth of stock.

[pixl97]

>' could just invest in the competitor

I mean, the shareholders would most likely sue them out of existence for doing something like that.

[hiddencost]

Read more Marx?

[113]

> Workers ultimately have a job because they are useful to managemen

Workers have a job because their labour produces value

[RobRivera]

Eh - sometimes people get hired in bulk to show growth and then get assigned valueless work, or work not necessarily as valuable.

Both statements can be true.

[root_axis]

> sometimes people get hired in bulk to show growth

Um no, this doesn't happen. Nobody is paying useless people just to "show growth".

[fragmede]

Of the 8.1 billion humans alive, 3 billion of them have jobs (approximately). You are speaking for every single last one of them, that they weren't hired for some office political reason and every single last one of them is useful at their job? I haven't spoken to all of them, but I find that hard to believe.

[root_axis]

The fact that you have to invoke "every single last one" of 8 billion people to demonstrate the possibility of this happening is pretty telling.

[RobRivera]

Oh you know this for an irrefutable fact, now?

[root_axis]

Yes. It's the kind of thing stated by people who have never run a business.

[RobRivera]

You seem less deductive in your reasoning than desired for a good faith discussion, and pathological in your baseless accusations.

For example, I have run my own business before I hired people.

[spwa4]

True, but you should be more cynical. When push comes to shove, every famous court case between management and owners has gone the same way: management wins, owners lose (meaning when owners wanted to turn back a management decision, courts refused to do it, or when asked to actually pin that responsibility CxOs always whine about on them, financially)

Why is management paid so much? Because they can make the argument "give me more, or I'll destroy the company", and actually be believable.

THAT is why it's so critical for CxOs to be aligned with owners' interests.

[boringops-dan]

One aspect the AxO would address, is the idea that the CEO is some sort of all-knowing, all-seeing, smartest-guy-in-the-room type that is so special and unique, they deserve it all and more.

It sorta breaks the CEO job into component parts which theoretically would reduce the executive compensations as the the replacement system is more interchangable.