
Overpaid CEOs 2019 - Flott
https://www.asyousow.org/report/the-100-most-overpaid-ceos-2019
======
munk-a
The CEO (and upper management in general) pay scale is total BS when viewed
through normal compensation lenses, unlike normal people who are paid for
their time, upper management is usually compensated on performance -but- they
are compensated on the performance of their company (or division) and they get
all the pie. Since nobody else's pay is scaling with performance (outside of
bonuses which in my experience usually don't exceed 5% annual salary) their
salaries end up inappropriate scaled into the stratosphere because the
company's performance justifies increasing compensation to employees to retain
them and sustain that performance. In actuality employee retention is
bottoming out in the modern era (compare it to the 60s) and people are the top
make f-u money that is so out of step with the people doing work at a company
that it isn't even comparable.

Wealth and earnings inequality is a serious issue in this modern world and
it's ridiculous, some people are more efficient than other people, nobody is
100x more efficient than anyone else. Take an arbitrary dude off the street
and give them the experience of a CEO and I bet you that substituting him in
would at most lose the company 40% of growth/whatever.

~~~
zdragnar
And yet, if you took Blizzard CEO's total pay (from the article, I think
around $28 mil) and spread that over the nearly 10k employees, everyone gets
an extra $3k, which wouldn't do diddly squat for retention.

Also, losing 40% of growth would be pretty awful for anyone who has company
stock (employees, 401ks, investors) especially if that's year over year.

~~~
shredprez
The extra $3k might not mean a lot, but knowing your CEO gave $28m back to the
workers at his or her own expense? I'd argue that kind of thing is great for
retention.

The challenge, obviously, is that CEO pay is a market and the current, insane
pay scale has emerged from it. The only way for it to change would be a)
regulation (good luck to the enforcers), b) a global moral awakening among
CEOs that causes a sufficient majority of them to abandon their salaries
willingly (ha), or c) labor unions, where extortion over pay becomes
bidirectional (rather than the traditional CEO->Worker shit flow).

In any case, people tend not to care much about CEO pay until the company
stops paying workers' bills and keeps padding leadership's massive fortunes.
People will accept insane wealth inequality so long as it doesn't come at the
cost of their personal livelihood. Easiest way for CEOs to keep making idiot
money without political costs: lead well enough to keep your workforce
employed and reasonably paid. Literally the bare minimum expected of the
title.

~~~
eigenvector
"CEO pay" is only a market if you believe that having been paid an
astronomical amount of money as the CEO of an unrelated company is a
prerequisite to being the CEO of, say, Activision. In the past, companies
promoted CEOs from within their own longterm management, instead of CEO being
some kind of mystical profession unto itself.

~~~
dnautics
That's very much a market, and you've pointed out exactly what's wrong with it

------
Traster
I feel like CEO pay is one of these emergent problems with our current system.
We have this group of people whose salaries are just astronomical compared to
the average person in the company, and whilst it's true their job could
technically make more of a difference these payouts are totally asymmetrical
and completely independent of how effective a CEO is.

~~~
roenxi
It is highly suggestive that CEOs are the ones who determine the pay of CEOs,
in practice. If the shareholders actually had to negotiate the remuneration
packages I bet the CEOs wouldn't be able to command the salaries that they do.
There isn't enough evidence that paying more for a CEO increases profits.

The upper middle management strata is stuffed with exceptional people and the
skillset to be a good CEO isn't actually that rare; it probably isn't a supply
issue.

~~~
gradys
Isn't CEO compensation generally determined by the compensation committee of
the board?

~~~
nopzor
at a large enough company with an independent enough board, sure. but these
committees are largely driven by ceremony and politics under the guise of
having to do with objectivity.

------
ahelwer
Software engineer unions are coming, and it will start with the games
industry. Attitudes within our field are changing! Used to be you couldn't
mention the U-word without a dozen engineers jumping down your throat
bellowing about "efficiency" (for whom and what?) but engineers are smart and
you can only fool them with the same old anti-union propaganda for so long.

~~~
will_pseudonym
I think that if unions actually do make inroads into the software development
world, the gaming industry will likely be the last to unionize. The reason
that the gaming industry is worse off for developers is not because the game
development shops are inherently greedy. They have horrible conditions for
those workers because they can. So many people want to develop games rather
than do any other kind of software development, and so the game dev shops know
that most/all inhumane treatment will be accepted by the next person who will
gladly endure it to be working in the industry.

Fields that have cachet like show business and gaming will always be the last
to have workplace issues of all sorts.

~~~
egypturnash
Uh, you _are_ aware that game developers are actively talking about
unionizing, while most software developers aren’t? The shitty conditions are
what’s making them decide to start talking about banding together to demand a
bigger piece of the profits.

Every discussion of game unions I see here tends to have a lot of people
talking about how they are quite happy with their financial compensation at
their non-game job, and how they don’t _want_ to unionize because what if it
was a _shitty_ union?!?

Also, Hollywood is kind of one of the major bastions of strong unions in the
US. There’s a _lot_ of entertainment unions in show business.

(My favorite example: compare the conditions of folks at union 3d animation
gigs with the condition of folks in the non-unionized VFX world; better pay
and more stable jobs for pretty much the _exact same skills_.)

~~~
forrestthewoods
> you are aware that game developers are actively talking about unionizing

Not as much as you’d think. PolyTaku and r/games want the games industry to
unionize. People actually in the industry not so much.

------
lefstathiou
I believe CEOs are compensated what they are in order to get them thinking
like “owners” which many “professional” CEOs are not ultimately. Mark
Zuckerberg, Steve Ballmer, Gates, Jobs don’t/didn’t need large salaries
because their identities were tied to their companies.

Owners eat sleep and breath their company in a way the average salaried
employee plucked at random from +10,000 employee company will not. To the
points made by other comments, the CEO is entrusted to make decisions that can
ripple through thousands instantly. The amount of value they can create or
destroy in an instant is probably roughly in line with the multiple they are
paid over the average employee. Thus their negotiating leverage is high and
equity holders are happy to pay the price.

Said differently, if you owned all the equity of Google, how much would you be
willing to pay to ensure that equity is protected? I think that number is more
than 10x the salary of the average Google developer.

This is subject to the laws of supply and demand like any other system and it
is pretty rational.

~~~
CptFribble
This is actually pretty insightful, and it leads to an interesting question:

If CEO pay is a rational outcome of protecting the equity in a company, and
CEO pay is too high, does that mean there's "too much" equity?

There's some evidence that income inequality is bad for society in some ways,
which I tend to agree with if it means inefficient/uneven distribution of
resources/opportunities/community investments. In this sense, and considering
the previous question of "too much equity," is it possible that a company's
market value can be too high?

~~~
pm90
Too high in what sense? Just too high in absolute dollars? Equity is not the
same as cash; its a gamble: you're willing to pay a certain amount of money
for something that _you 're betting_ will increase (or at least hold) value.

------
_cs2017_
If EA Board could snatch a CEO they like for $5M/year, they would. So why
don't they? I'm sure there are thousands of professional managers with solid
game industry experience who'd be ecstatic to be offered a CEO position in
either company at $5M / year or less. The Board clearly think they are not
good enough, and limit their candidate search to people with very special
credentials (e.g., those who've served as top executives in large companies,
etc.). Such a high bar limits the candidate supply a lot, and then the
competition for those candidates between companies drive up the pay (quite
similar to NBA or NFL).

Why is Board so obsessed with credentials? Is it because they want to play it
safe (kinda like dumb execs choose Oracle over open source solutions because
they want to protect themselves from criticism by going with a famous brand)?
Or is it because those credentials are truly imporant for the success of EA?

I don't know for certain but I suspect the answer is kinda in between. The
quality of a CEO candidate is really hard to judge. So the Boards think like
this:

> We'll screen for all the obvious things (experience, references, track
> record, culture fit, etc.). Hundreds of people will pass that screen. We
> have no clue of how to choose among them, so we might as well go for someone
> who's done it before. Perhaps we don't need to be so restrictive. But
> there's a chance it actually does matter, say maybe 10% chance that a person
> who's been a top exec before will do better than candidates without such
> credentials. A good CEO can increase corporate value by billions of dollars
> over a few years, so even a 10% chance is worth a lot. So let's go bid for
> one of those bigshot ex-CEOs, even if that means we have to pay an extra
> $20M/year.

So in some sense, high CEO pay is due to the "religious" belief that whoever
made it to the top is super good.

Maybe this religious belief is actually rational, maybe not. I kinda suspect
the latter, since other countries seem to pay CEOs a lot less; I find it
unlikely that the US CEOs have such unusually high skill compared to the rest
of the world. But I don't have high confidence in my opinion.

~~~
eanzenberg
This is pretty much the right answer in a sea of nonsense and angry comments
here. CEO pay is where it is because those boards believe it’s necessary. If
they thought they could pay 5mm instead of 20mm they would in a heartbeat.

------
goldcd
Activision Blizzard _googles_ 4k employees and.. Last year managed to re-make
Crash Bandicoot & Spyro - and a CoD. That's it.
[https://en.wikipedia.org/wiki/List_of_Activision_video_games](https://en.wikipedia.org/wiki/List_of_Activision_video_games)

That boggles my mind.. That CEO salary seems rather on the high side. _I_
could have told them to "do another CoD" and rummage in the vault.

~~~
goldcd
EA seems to be doing better - there's a few new things in there once you strip
out Battlefield, Sims and the Sports stuff - but still.. ..For some reason I'd
still thought the big publishers were some massive force of nature, crushing
all in their path. We could stand on the side-lines booing their latest
monetization strategy, but I'd still considered them to be invincible
monsters. I'd imagined I'd see a list of a load of games I'd never heard of.
Games they'd taken a punt on that hadn't paid off - as that's what I imagined
you did as a corporate monster. 80% would vanish breaking even if lucky, and
20% would make 80% of your income. That's how you stay big. Instead their
entire output appears to be just rubber-stamping iterations of past glories. I
genuinely feel a bit sad now I've looked into it. They're still monsters, but
of the dinosaur variety.

~~~
freeflight
> We could stand on the side-lines booing their latest monetization strategy,
> but I'd still considered them to be invincible monsters.

I think that's been falling apart for a while now due to fan backlash.
Activision has never been very popular, now Blizzard fans have finally gotten
the message that they are one and the same, reacting in overblown ways to
mobile announcements.

EA struggles from the same reputation issue as Activision. The latest
Battlefield was met with quite some hostility and afaik hasn't been doing very
well commercially, while the last Mass Effect received luke-warm reception
killing the franchise for good.

If it wasn't for that very smart PR move of keeping Apex Legends under wraps,
until release, EA would also be in quite some trouble now. Particularly with
Anthem underwhelming people everywhere, confirming the notion that whatever
made Bioware special, is by now long gone.

Doesn't look that much better at Bethesda with their Fallout 76, after years
of taking the fan-goodwill for granted, they've now managed to really piss
people off.

Take2 and Ubisoft have mostly managed to pull through unscathed so far, but
imho overall this is the result of indie development and publishing having
gotten as strong as they are now. Nowadays consumers can choose from a wide
selection of very high-quality games, often sold below the usual full-retail
price and they've become very aware of it.

If the established big players want to keep their dominance they need to
change their course heavily, show actual goodwill instead of constant
willingness to exploit every commercial angle available.

~~~
taurath
The big guys got addicted to the “stamp” AAA games over the last 15 years and
their competitors are eating their lunch in terms of gameplay. They have tons
of resources and could pivot to making just plain great games but probably not
sustain the sheer buckets of guaranteed money their investors priced into
their stock ticker. Monetizaion strategy is all Wall Street wants to hear
about during product announcements, and players are listening for it so they
know not to go.

Of course, massive amounts of games are still being sold. Just competition is
taking a big bite out of them.

------
deleted_account
This is the actual report: [https://www.asyousow.org/report/the-100-most-
overpaid-ceos-2...](https://www.asyousow.org/report/the-100-most-overpaid-
ceos-2019)

The methodology "lists the 25 most overpaid CEOs, identifying the company, the
CEO and his pay as reported at the annual shareholder meeting, and the pay of
the company’s median employee."

Activision Blizzard's Kotick's $25M comes in at 306:1; Electronic Arts' Andrew
Wilson's $35M is 371:1 .

Ronald F. Clarke of Fleetcor Technologies Inc is a generous 1517:1.

------
ggregoire
For reminder, Activision Blizzard laid off 800 people last week.

------
CyberDildonics
Reed Hastings founded Netflix and built it into what it is now, a dominant
player in the entertainment industry. He did it through a long history of
crafty, well planned technology and entertainment decisions. Not only this but
he was able to build it up from so little and in such a small amount of time.

~~~
HaloZero
The average salary also seems to be $180,000 which is pretty good.

~~~
nopzor
Not really a relevant metric imo

------
throway88989898
> computes excess CEO pay assuming such pay is related to total shareholder
> return (TSR)

Is this a reasonable assumption?

------
blaze33
Somehow related, but what defines a fair salary? Are higher up employees
actually bringing more value to their company or somehow extracting it from
others?

If your pay doesn't match the value of your work, I guess someone logically
profits from it?

------
chrisbennet
As a data point:

 _”U.S. CEOs earn from 400 to 500 times the median salary for workers. For
CEOs in the U.K., the ratio is 22; in France, it 's 15; and in Germany it's
12.”_

[https://work.chron.com/ceo-compensation-vs-
world-15509.html](https://work.chron.com/ceo-compensation-vs-world-15509.html)

------
system2
Why would anyone care about how much CEOs make? It is private industry, if the
board or owner wants to pay, CEOs get paid. It is not like they are stealing
tax payer's money to pay these people. When the CEOs expire, they are also
replaced. It is called business.

~~~
perfmode
What’s behind the growing ceo to employee income ratio?

~~~
T2_t2
Just some causes that I think are mostly good:

1\. Complexity - a change in exchange rates can hurt Netflix's / Google's /
Apple's profit, even if all underlying numbers are correct. Guessing exchange
rates is a terrifyingly difficult task, and it is just one of many
complications 2019 CEOs have over 1969, let alone 1919.

2\. Globalisation - rather ironically, if a company employs an extra 10% of
people - no one loses their job they just add an extra 10% - the ratio likely
gets larger. How is that a BAD thing that more people are employed? Mattel is
the most telling in this context ($6,271 average worker salary). IMHO it's a
GOOD thing that Mattel directly employs workers, rather than using a, say,
Foxconn. But it makes the ratio a lot worse. Obfuscating real worker wages is
bad for workers, but good for avoiding ending up on these sorts of reports.

3\. Market size - a follow on from 2, if Google makes 50% of it's revenue
outside of the USA, what should the ratio relate to? US workers to CEO? Or
South African? A lot of these CEOs are multi-country CEOs, and that is a level
of difficulty beyond what existed a quarter century ago.

4\. Market forces - a law to make CEO pay public means it is signaling
something negative when a CEO makes a low ratio, which drives it up. Having
public records of salary makes negotiating easier for workers, and CEOs are no
different, so it has had a double upwards pressure.

Just some things that have made it grow over time.

------
Flott
This is the source cited in the article here
[https://news.ycombinator.com/item?id=19229502](https://news.ycombinator.com/item?id=19229502)

I think the article is interesting enough to have it's own discussion.

~~~
dang
You're right that that should be the URL. "Please submit the original source.
If a post reports on something found on another site, submit the latter."
([https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html))

But it doesn't make sense to have two threads about this on the front page, so
we'll merge them. I guess I'll merge the comments from that one into this one
as a crude form of karma sharing.

------
evadne
Relevant book: The CEO Pay Machine @
[https://www.amazon.co.uk/dp/0735212392](https://www.amazon.co.uk/dp/0735212392)

------
dandare
Technical comment: the table in the article is not scrollable nor zoomable on
my Galaxy s6, I can see only the leftmost digit of the CEO salary. Quite a
bummer in 2019.

------
choppaface
This list appears to be missing the CEOs of banks. People like Jamie Dimon who
profited from the financial crisis should probably be on this list for life.

------
hnbroseph
large corporations seem more like corporate aristocratic states. the ceos are
frequently so thoroughly divorced from the common plebs in the trenches doing
the actual work that enables the company to actually exist. this divorce also
seems to show up in how compensation and performance apparently has so limited
correlation.

------
discobean
TIL I need to work @ netflix

------
ajobforme
how can mattel's median pay be 6k?

~~~
freeflight
They mostly make plastic toys, I guess the brunt of their workforce is made up
of low-paid foreign manufacturing?

------
anderspitman
Netflix's median employee salary is ~$180,000? Seems really high. Do they have
a non-traditional org chart?

------
trumped
and to be one of those CEOs, you have to be a special kind of crook...

------
jjtheblunt
I think it's hard to find a more flagrant exploitation of overcompensation
than that of Angela Ahrendts at Apple: given something like $70 million to
join, quitting 4 years to the week after starting, as if just used Tim Cook's
good will to profit, disgusted many of us hardcore engineers when hired that
compensation saw someone with no technical history so rewarded.

------
simplecomplex
Everyone is free to be a CEO. If salaries are really too high it should be
easy to get a CEO position by undercutting everyone else.

It’s easy to sit on the sidelines and complain other people are making too
much money. Remember that CEOs making less wont result in employees making
more.

Maybe it’s just me, but HN lately seems dominated by whiny/complaining
articles that don’t really contribute any knowledge or enhance our lives.

Wouldn’t it be better to focus on how one could become a CEO rather than knee
jerk reactions to people making lots of money?

~~~
cronix
People are also free to vote for people like Ocasio-Cortez, who are more than
willing to take it from the top as it continues to spiral out of whack. You
can only displace the bottom for so long, until they get fed up enough and
vote for radical change, or worse. That's probably not what most want, myself
included, but here we are going from 20:1 in the 70's to 300:1. How far do you
think that can reasonably keep tilting until people force a correction? There
is a tipping point, and it's not infinite.

It's not a knee jerk reaction to people making a lot of money. It's an honest
reaction to watching the people at the top continue to grow and grow and grow
over the last 40 years while the rest are basically paid the same (adjusted
for inflation) as they were making 20 years ago.

It's not me you need to convince. It's the tens of millions of people who are
barely making it, watching others get tax breaks while they truly struggle
with the basics of life. We're not at a reasonable balance any longer, and
haven't been. We can continue the status quo, and change will eventually be
forced. Something reasonable needs to give here, and the answer isn't
everybody becoming a CEO.

~~~
coredog64
> but here we are going from 20:1 in the 70's to 300:1

It's worth mentioning that the 20:1 from the 70s only covers cash
compensation. In the "good old days", execs would also get non-cash
compensation: Expense accounts, company cars, executive apartments, country
club memberships, etc.

Tax law changes disadvantaged those forms of compensation and are partially
responsible for some of that difference.

