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Activision CEO Bobby Kotick now one of America’s highest paid executives (arstechnica.com)
21 points by shawndumas 1492 days ago | hide | past | web | 20 comments | favorite

"Even spreading that stock award out, though, puts Kotick's 2012 compensation at more than $20 million."

He'd just make the list of the top 20 highest paid baseball players. $20 million is a lot of money, no question about it, and it's a lot of compensation for any CEO. However, I fail to see why baseball players with so-so stats should make more than a guy running something worth as much as all of Major League Baseball combined.

Should they all make a lot less money? Why do I care? If I disagree with ATVI's compensation policies, I'm free to not own the stock (or even buy their products). If I don't like how much the Phillies are paying Cliff Lee, I'm free to never attend their games. And so on and so forth for the rest of the economic sphere of products and services and companies.

  2013 Top MLB Player salaries = ~$20MM
  2013 Average MLB Player salary = $3.4MM [1]
  2012 Minimum MLB Player salary = $480k [2]
One could argue that the salary disparity between the top MLB players and the average player salary (40x) is much smaller than that of the average US company CEO and employee (300x+).

Of course, we should probably consider the minor league players:

  Minor League AAA Player Salary range: $5k/mo ~ $25k/mo for a 6 month season [3]
  -> $30k/yr ~ $150k/yr
(I think signing bonuses and whatnot for top draftees are just outliers)

So if we suppose that a AAA player gets $100k/yr and a top MLB player gets $20MM/year, then the salary disparity is now 200x, approaching the salary disparity of US corporate employees and their CEOs. That's actually quite a striking similarity!

[1] http://www.cbssports.com/mlb/salaries/avgsalaries

[2] http://www.spotrac.com/terms/mlb/mlb-minimum-salary-69/

[3] http://www.quora.com/How-much-does-the-average-AAA-baseball-...

Exactly. Moreover, the real underlying issue here is that many people think they could do the CEO job. What's so special about ordering around flunkies all day? They don't fully appreciate the idea that a CEO of a 1000 person business is the signal integrator and nervous system, the guy whose speed of critical internal and exernal decision-making sets the clock of the whole organization. As CEO, you have dozens of smart managers approaching you constantly for rapid decisions/conflict resolution on the most intractable internal problems, the ones they couldn't solve, necessitating constant context switching. Each inquiry means parachuting in to a highly technical/complex area and instantly solving or adding value for the line manager, despite the fact that he's a smart guy who's been working on the problem for weeks. And as you gate the clock of the organization, you need to be available much more than forty hours per week.

Most people understand that they suck at pro sports, but they don't understand that they'd suck as CEOs. If I had my druthers everyone would have to start a business as CEO to "graduate". Most would fail horribly, just as most kids fail differential equations. But then they'd know they can't handle the CEO position, just like they know they can't do advanced math or steal second base. And that would drain a lot of the energy out of the idea that CEOs are overpaid.

> If I disagree with ATVI's compensation policies, I'm free to not own the stock (or even buy their products). If I don't like how much the Phillies are paying Cliff Lee, I'm free to never attend their games.

Except your actions have no impact, they are as effective as those of the "complainers" that you deride and serve the same purpose, namely egocentrism.

The typical rebuttal is that individual actions would make a difference if many people participated in them but this is a counterfactual: They don't, as evidence by the state of the world, and they won't, as evidenced by history.

I did some digging in Oracle's SEC filings and in fiscal 2009, Larry Ellison (who in FY 2012 was still the highest paid CEO in the country) was given ~$80MM in compensation, where 97% was in "variable compensation" (stock option grant + performance bonus)

  Name - Lawrence J. Ellison
  Size of Option grant in FY09 (Shares) - 7,000,000

  Accounting Grant Date Fair Value of Option Grants in FY09 ($) - 78,421,000

  Intrinsic Value of FY09 Option Grants as of 5/29/2009 ($) - 0

  Intrinsic Value of FY09 Option Grants as of 8/10/2009 ($) - 3,640,000

The disparity between the intrinsic value of the option grants between May and August must mean that the shares increased in value by about $.50 in those ~3 months.

I'm always astonished that Ellison still owns ~24% of Oracle.

I find his dividend income astonishing: 0.007 * $36 billion ($252 million per year)

Of course Steve Ballmer does even better: 0.029 * $15 billion ($435 million per year)

Yup, with that kind of cash flow, he can easily absorb the operating losses from the Lanai island businesses that he purchased a couple of years ago to reduce his tax exposure X_X

At first I found this upsetting. But this is how games are. Good for him. His mission of taking the fun out of making games is really paying off. There are small, weird, indie games that can be fun to play, but there's no money in that. Millions of people play Call of Duty. He's making games tons of people love and making money doing it.

There's no money in Minecraft and Kerbal Space Program and Torchlight and countless others?

Turns out there's a massive amount of profit to be had in successful indie games. The distribution channels are spectacular today, from the general Web to Steam to Amazon to Xbox Live etc.

But being successful isn't enough. For an indie game, making ten million in revenue is a dream come true. For Activision, a game with an expected revenue of 10 million isn't worth the distraction. It's like trying to pitch a CRM for taxidermists or a Haskel IDE to VC funds: it may be a great idea, but the market isn't big enough to interest them.

Not so much Xbox Live, they charge five figures for patches: http://arstechnica.com/gaming/2012/07/microsoft-comes-under-...

The unintended consequence of charging that much for patches is that simple updates just don't happen, and that everybody gets a lesser game as a result. As much as one would say "get it right the first time", everybody makes mistakes. Thus when it costs $10,000 to fix a save game issue, it's may be a business decision to not patch. Thus, for better games, being in that position shouldn't happen.

This is a bit off-topic, but Kerbal Space Program is the best piece of software I've seen in the past 10 years, hands down. I've been playing it for the past few months and I'm absolutely hooked; it's Lego for space -- how can you go wrong?

>His mission of taking the fun out of making games is really paying off.

And the only other major players are the "addictive but not exactly fun" mould of social gaming companies :(

(I have the pleasure of getting the double whammy of not only reading about the US-based social gaming companies like Zynga et al., but also the Japanese ones such as Gree/DeNA/etc X_X)

Even the new Final Fantasy Tactics S game that was announced is a social game :( http://www.gametrailers.com/side-mission/50952/square-enix-i...

"The firm's stock price has risen nearly 16-fold during this long tenure..."

I think that sums it up pretty nicely.

Why do we care how much money other people make? It seems like an unhealthy fascination.

Your right, we shouldn't care about how our nation's wealth has been siphoned to the top 1% to 5% of our population over the last 30+ years.

Hey look another reality TV show is starting tonight...

One reason would be to scrutinize and consider whether top executives deserve the mammoth compensation that they receive these days. Recall that executive compensation is at an extreme all time high these days relative to even just 2 decades ago.

Executive compensation seems so out of whack because it has kept up with inflation, while real wages haven't even come close. Why? Allow me to explain.

The S&P 500 now gets half of its profits and sales from the rest of the world. The boom in countries like Brazil, China, India etc has vastly expanded the rest of the world's share of the global economy relative to the US. CEO's are compensated for this performance, but labor is paid based on local / domestic factors, not the profit generated in foreign markets.

The CEO wage numbers in the US demonstrate how horribly the US economy has fallen behind when it comes to labor keeping up with global growth. You can easily test this by scaling the corporate sales backwards, eg to the 1960s, and adjusting CEO compensation for inflation.

Everybody likes to talk about worker to CEO pay ratios, but what they never want to talk about is the destruction at the root of the problem: the Fed destroying the US Dollar. CEO pay has kept up, worker pay has not, and the why is easy to understand: the US economy is being flushed down the toilet.

By tapping into global growth, multi-nationals have been able to keep up with the horrific dollar devaluation that has occurred since the 1960s. CEOs are compensated on that basis. Meanwhile labor directly suffers the full intensity of the dollar's destruction. It is thus that the American standard of living has plunged over 50 years. Minimum wage has fallen from $45k to $50k per year ($1.25/hour in 1964, inflation adjusted), down to $14k or so today.

Americans used to be able to more than get by on one income, while a spouse stayed home to raise a family of four. The savings rate was radically higher also.

Fundamentally it's the same reason why wealth can survive inflation, but wages cannot. One can easily be shifted to defensive assets, the other drowns.

Even running just 3% real inflation per year is massively destructive to the standard of living over the course of a single decade. You have to generate 34% wage increases just to tread water.

You might if you were a shareholder...

Tis only a matter of time till us little people get the same pay package!

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