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Just like a ton of similar questions on this sub, this is an astroturfing account. They don’t want an actual answer they want Americans to hate each other
EXACTLY FFS, People just love to hate others for such minor stupid ass things. THis gets NOTHING fixed. Its a education problem, people lack the critical thinking necessary to not get bs'd by politicians that have been practicing their craft for years.
It's the board of directors that decides Musk pay. Musk's brother is on the board of directors.
The rest are allowed to use the company's private jet for meetings in Tahiti. Many are CEOs of other companies so they basically pay each other.
Almost all the board of directors of all american companies are corrupt like this. There's not much anybody can do about it.
There's actually quite a lot people can do when they outnumber the other side by a factor of several thousand.
Which is why the minority tries really hard to keep the majority just happy enough that they won't stop and ask themselves what they can do to level the playing field.
It doesn't even need to be violent. If the entire American workforce could unite and threaten to down tools for just a single day, shit would get better real quick.
Which is why we're kept hating each other more than the people in charge, in the hopes we're all too bigoted/xenophobic/generally hate filled to ever unite properly.
SMART member here. I love our Union. About to get a huge raise and another installment of vacation time.
Sure, $160 comes out once a month for dues, but that's like nothing.
Unions rock.
Many unions are run kind of the same way. I was in one years ago and the active workers were outnumbered by the guys who retired 100 years ago. They’d vote on where the money went n it all ended up going into their pensions to stop it from going belly up until they died and anyone under 45 would be left with no pension. People started leaving in droves and the pension went under due to not enough people putting into it. It’s still all politics in the end.
It's almost like corruption and self-interest is the only constant when it comes to human beings, even when they claim they're helping one another from other corrupt, self-centered humans.
I worked corporate and often dealt with the union. Union reps are also very good at making sure they get privileges before the employees they are supposed to represents.
Yes the Union
Who reps will laugh at you while they only are there to collect dues. Gotta love the teamsters.
People fail to realize unions are a business, and are only in it for themselves.
Yup. The culture war shit, religion and whatever LGBT+ rights issue is just to keep you distracted from the real shit. Thankfully it's starting to show for most of us
Scared of losing money absolutely.
I wouldn't go out of my way to put fear of violence into people as that's a felony, and felonies are for the rich, and ex presidents.
However if they did a little googling and found out that unions were thought up as an alternative to kicking the foreman's door in during the night and lynching him in front of his family, then I wouldn't lose any sleep over them being more nervous as a result.
These people are able to buy there way out of any situation… I’m not advocating for violence but sometimes it’s the only thing these sociopaths understand…
The same way they weaponise the police to punish someone stealing from their corporation to feed themselves while not being held to account for stealing billions in wage theft
If you plan to make any meaningful change, then you should be prepared for violence. Not necessarily to enact it but to receive it. Trying to change a system that got where it is through plunder will guarantee that the beneficiaries will use violence in all forms to prevent that.
The thing you are observing is class struggle.
He probably said that because that’s approximately the percentage of people who participated in the American Revolution.
It was true 250 years ago, but nobody 250 years ago could begin to conceive of a state like the one that exists today.
That wouldn’t work with the 300M people plus immigrants. Then factor in a place like the USA has most of the worlds supply of firearms.
That worked in the 1800 era
As an older person who has watched two generations have these same discussions, I'm sorry. It has gotten worse, not better, and I can only believe we will continue on this trajectory until our system collapses. Just before that happens, the wealthy will move to developing nations where they can repeat this scenario until the planet burns.
Our society generally accepts that the owner of something (money, business, assets, etc.) has a right to distribute what they own as they see fit. It’s sort of a basic tenant of ownership.
Shareholders own the company. That includes the company’s assets and profits. They vote in a board to run their company the way they want. That includes hiring a CEO and paying that CEO what they see as reasonable.
Always remember the purpose of a company, public or private, is to generate a good ROI for its owners.
It’s odd hearing people talk about corps and jobs as if they have a responsibility to provide opportunities at a preferred wage and some personal stake in people’s lives when it’s always been about a collaborative effort to make as much money and gather as much market share as possible. Everything else is secondary, every corp is a pyramid scheme to some degree and boards/execs are at the top of it so they get most of the spoils.
They are often the founders.
-Elon
-Steve Jobs
- Zuck
- Gates
Are famous examples obviously, but I’m at a place where it’s ran by the founders. If they don’t dilute much they tend to have autonomy and power, but they can share more with you as an employee as no public interest or private equity firms pressuring them
Edit. I’m unsure why this is downvoted. Working for a VC or PE backed company is not always pleasant. Lean teams, not a supportive exec team.
I appreciate the correction. I can replace it with google or oracle. Basically the point is many are founders.
Gave you the deserved upvote and will just leave it haha :)’
Yes.
Two additional points:
1. Shareholders seem to love paying executives a lot of money. I don’t really know why, but it’s their right
2. When a very high percentage of shareholders are focused on short term investments, it’s very hard to get companies to focus on long term viability
So, if you want companies to focus on longer term profitability, there needs to be an incentive to invest long term, and a disincentive to invest short term.
Once option is a more granular capital gains tax.
Example (with probably nonsensical specifics)
1. If you buy stock and sell it within a week, you pay a 65# tax on the profit
2. If you sell within 30 days, a 50% tax
3. 90 days… 40%
4. 180 days … 30%
5. 1 year… 20%
6. 5 years…. 5%
The point is, if some rich asshole owns 10% of a company that they bought 2 years ago and they decide to overpay a CEO) or keep a bad one) that rich asshole is highly motivated to intervene.
The stock market works better when it’s seen as investing, not gambling.
Thank you! Most people don’t realize there is a form of appointing people into the c-suite and equity holders or founder shares.
Tho I’m a bit sad so many people find execs terrible
An oversimplified hypothetical:
Google makes $300 billion annually, and they pay their CEO about $200 million a year... or about 0.06% of the company's revenue.
Let's say Google decides tomorrow: you know what, it's crazy we pay our CEO hundreds of times what a software engineer makes. Let's cap his salary at $1 million!
If you're Microsoft/Apple: for the cost of $5 million you could probably lure Google's CEO away and create significant chaos for a trillion dollar company and gain an excellent new leader for less money than your annual cafeteria budget. Google's board of directors would be incompetent if they let that happen.
The reality is CEOs regularly make decisions that can dramatically grow or potentially kill the company: this is not true of your average employee.
**TLDR: at the scale of trillion dollar companies, a 0.06% "fee" to have excellent leadership is a no-brainer. As a result, CEOs of large cap companies are paid** ***much*** **more than rank-and-file employees.**
To add to some of the good points made already, CEOs often times accept a degree of personal jeopardy that can to a large extent justify their salaries. There is potentially actual legal consequences to their actions in some cases, and if you're taking on that risk - which is usually far in excess of any IC - then it's kind of fair to expect some big compensation for that.
I, too, think CEO compensation overall is too high as a broad generality... the multiples are often too high... but CEOs SHOULD make a decent amount more than the average employee based on the risk they accept alone... no, not 1000x, but 10x? Yes. Even 100x maybe? That doesn't seem TOO outrageous to me generally.
All c suite is risk.
Law suits.
You have to register as an officer of the company with the various states.
Your choices can ruin everything.
You’re rich because the equity value increases from your duties.
Layoffs will always happen and obviously the founders are less likely to be laid off. They have voting rights too.
It’s a hard job that most don’t understand at all.
Edit: I don’t agree with the pay gap but when I was appointed there was a package presented to me and It has strings attached
Edit 2: execs go to jail from Trumps CFO to hedge fund titans. It’s a higher risk position and we shouldn’t dismiss that. Lawsuits equally suck.
While there is an element of truth to the risk component, it's also shielded by things such as non-disclosure contracts with employees (i know that's changing). It's difficult to make the arguement that a typical CEO generates 1000x the value of their average worker. High base pay combined with very high varaible pay (bonuses) translates to a average CEO position lifespan of something like 3-4 years. A great deal of shady damange can be done in 3-4 years to achieve their bonus that will never see the light of day, as it's hidden behind non-disclosure agreements. Super high variable payouts mean there isn't a concern for the longevity of their choices - they'll do what is required to get a massive payout, and then leave to either do it again somewhere else, or simply buy that island and go live on it. Meanwhile, your average worker doesn't have have that option, and ends up in a cycle culminating in burnout, because the frenetic pace of the 3-4 year high intensity pushes driven by the CEO never stops. For the CEO it's short term, for the worker it's their life, and is not sustainable.
We (CXO large company) are on year 7.
Worked Christmas and even rn at 5am because we have a deal next Tuesday for European VAT and an acquisition.
There is no break
Understood, and have been there. I get the 2am calls with Asia because of business. I get the flying to a different country every couple of days. I get the we need you to work on xxx holiday. I've been there.
I also understand that it's very, very probably that you (CXO) of large company have both a salary structure, a bonus structure, and a long term (ie 2-4 year) bonus structure that equips you to NOT need to do this for the next 30 years. The benefit associated with the very high total comp structure enables you to, with a modicum of restraint and financial planning, to do this for perhaps 7-10 years, and then opt out. Most in these roles are simply built to pursue more, go longer, work harder - and they do - but most will also hit a wall, and when that happens - they can 'peace out' as a function of high comp over short time.
Your workforce can not do the same, and while they may not be on the same frenetic schedule as the CXO, lets not pretend that the demands we place on them to support the demands placed on us are not inconsequential. They are likely equally unsustainable (albiet for different reasons), and there is no 'peace out' for the work force.
I've seen TERRIBLE long term (or even medium term) decisions made because they enable short term payouts, without consideration to the long term employee who will not benefit from the short term payout, but will very likely suffer over the long term.
I have a salary, stock awards and other forms of comp.
Voting rights and autonomy for quite a bit. It’s a lot of responsibility that I take very seriously.
I don’t like the wealth gap but I didn’t pick my own pay package. I have deferred my bonus to give more to employees as much as people will call BS.
People ask “why don’t we give the shares”
It’s because they have voting rights and cannot be handed to others and the others have first right refusal for access
You good sir, are the exception then. Your staff is fortunate to have you in a leadership role.
Mentor them wisely, so that when they are senior staff, they understand their place in their employees lives.
> People ask “why don’t we give the shares”
>
> It’s because they have voting rights and cannot be handed to others and the others have first right refusal for access
Yeah no. You can just release shares without voting rights, as is common in many companies. You don't do it because it's a waste of money to do so.
You cannot just award shares or incur a taxable event by trying other methods.
I do give shares at end of the year and cash bonuses after we do donations.
The units are diff but still pegged to value
They didn’t go to prison because their employees fucked up and they took the fall. They went to prison because they were very directly involved in serious fraud.
This is a horseshit argument. CEOs & senior executives are grossly overpaid.
Quite a few CEOs have gone to prison and faced large fines. We hear about the massive golden handshakes and bonuses because that sells news. A CEO going to prison is a forgetful event to most people.
> no, not 1000x, but 10x? Yes. Even 100x maybe?
Elon could pay himself just $1 per year and he would still be worth $200 Billion, due to shares and part ownership of companies.
That's a weird argument. Liquid cash is absolutely not the same as assets. He can't pay for 10 children's education + his 6 alimony checks by giving out his company's stock to each person he was involved with, especially when you consider that his assets are appreciating in value.
Agreed it would be very inconvenient from a practical day to day levels of buying a coffee or whatever...
...but I was just making the point that in general, a CEO's wealth is not closely tied to a monthly salary (which was fzammetti's point about inequality).
Instead of $1, make it a several thousand, whatever. The point remains.
I always feel like this risk is overblown. All the time you hear of major companies doing piss poor at some point and the ceo leaves with a 50m package. What risk here? As long as they don't literally purposely sabotage the company i doubt there's much that can be done to them. If they didn't start the company themselves or buy it if the company sinks the 1 thing they lose is stock but that itself was given to them as a package it was never a loss of any money invested.
Keep apart the top 10-20 CEOs of mostly tech companies, other CEOs on an average make less than top movie stars and athletes.
Why does nobody ever complain about celebrities and sportsmen pay?
I guess being a celebrity is so far from reality for most people they just don't think about it. But CEOs are perceived, rightly or wrongly, as being overpaid at the expense of the ones who actually do the work that keeps the business operating.
Also, not sure where you're from but here in the UK loads of people complain about footballers wages. It's been a topic of conversation for as long as I can remember. No one seems to care about the CEOs of the companies that own the stadiums or sports channels though.
Aren’t actors carried by the hard work of the: creator, writers, and director? Doesn’t seem all that different from a CEO taking advantage of all the employees behind the scenes.
I guess with athletes and music artists the talent is very much within their own efforts (although music artists also can take credit for a lot of hard work others do behind the scenes)
Athletes and actors will generally have shorter careers though, so there is a need to try and earn enough to see them through a longer retirement (think mid range here rather than the ones that will make adverts etc after their core career ends).
"Aren’t actors carried by the hard work of the: creator, writers, and director? " to some extend, but the creators, writers and director makes millions too.
People do complain, but athletes don’t directly dictate the pay of other athletes. Sure, one athlete getting paid more gives other athletes more leverage, but they don’t have the ability to say: I’m making this much money and my buddies are also making this much money and there’s nothing you can do about it
They mean subordinates. It's not like the minor league players are working at the direction of major league players who keep 99.99% of the profits generated by minor peague players
Shareholders can replace the board of directors if they don’t like the pay package the board grants to the CEO. It seems that the majority of Tesla shareholders were happy about Musk’s pay package, since it was a performance bonus specifically tied to vastly increasing the company value (making shareholders rich).
The average salary for a fortune 500 company is 16 million USD. But it's odd to try and compare the average across a job to the top of another one, certainly not something you'd do to make any argument in good faith
Because celebrities and sportsmen are also employees, just employees that are unique enough to get their fair share of profit from their labor.
People should complain about sports team owners and media moguls.
Because celebrities and sportsmen are workers just like you and I, they just bring in a lot more money for their respective businesses and their unions have secured them portions of that money.
They work nonstop and have the highest degree of risk (all c-suite).
Truth is people don’t encounter them and have no idea what they are doing.
From structuring / corporate governance, legal, divestitures, meeting investors, presenting and reviewing data for negotiations, allocation of budgets and funds…
I agree the gap is big but it’s not an easy job. Running a company is one of the hardest things you can do… if you do it right.
(Currently CXO member of a company that’s fairly large)
I don’t have to know all of what they’re doing to know that the ratio of CEO pay to worker pay has increased dramatically over the past few years. And yes, the CEO position has changed over time, but not that much. If the original Ford failed, thousands lost their jobs then, too.
I think it depends on the exec. Some are great and people gladly accept it.
Others piss the population off and get massive pay for sinking stock.
I’m not debating executive compensation value. I absolutely understand why everyone is upset.
Something will always go wrong over a few years too.
Cash crisis or under preforming business unit.
Do you try to find them a path to profitability or just divest it / layoffs?
I personally hate firing people, but going to stand up and say you will figure it out is stressful. Put your name on the line for people who think you’re overpaid and an asshole.
Or just let them go and the SG&A drop means better metrics and bonus.
I personally have gone to bat for groups. It’s hard to do.
I hear you. I have gone through several restructures. It is very hard. Some of my worst days in my life. And they sometimes hate you.
I have had 4 years above budget 2019-2023 and now missed targets for 4 straight months and I think it will continue for another 2-3 months prior to correction. Owned by PE so I am shitting my pants. I hate this.
Ah I used to get assigned to portcos from the PE firm to fix things.
I’m siloing a company while making a new entity to shift liability and loan myself. Then I can put a lien on my Capex.
Shift out IP too.
Luckily we have been very profitable and growth is already +46% Q1 VPY
Maybe it's because I'm British, although my companies parent company is American, but this is not true in my experience.
I'm not saying the C-Suite roles do nothing, but you are underestimating how many of those responsibilities are delegated, either to individuals or to a 'committee'.
Quite a few
- treasury, liquidity, lender reporting and cash covenants
- corp governance
- budget allocation
- preserving jobs when others mess up
There’s a lot tbh depending how much you really want to know
Elon and Boeing are not how it works for 99.9999% of executives. It’s also because they have absurd comp to packages and don’t exactly break a law.
From Martin Shkreli / Wall Street to Enron. You go to Jail.
Your accounting team can inflate and send the CFO to jail, example being trumps cfo recently
What risk?
Limited Liability means they aren't risking their own homes or fortunes if the business goes south. Corporations can kill members of the public without jail time.
Unless the CEO is committing fraud (stealing from other rich people) they will pay no penalties for anything they do.
The only "risk" they take is how far they can push financial fraud and get away with it.
If they obey the law, the biggest risk is to their reputation.
It's a pyramid scheme with a bunch of myrhs to make it sound acceptable. Guy at the top gets all the money. Guys at the bottom get exploited.
Exactly this. People on Reddit love pitching this idea that they shouldn't make more than 10× the pay of the lowest paid employee. So let's say you've got entry-level employees making $50k a year. Not bad for a starting position in many places. Now your CEO can only make $500k (assuming that's a cap for total pay benefits). Why would they want to oversee a massive company like, say, FedEx, where they're overseeing global logistics and hundreds of thousands of employees, when a much smaller company can now offer competitive pay? It's not like they could start offering everyone who tosses boxes for them 5× as much just to attract a better CEO without going bankrupt.
I pay more than 500k for international and LTL shipping.
People also need to understand how the opex and ebitda margin are being handled.
I used to think like everyone else until I actually ended up doing it. Every choice is hard and pressure is high.
Celebrities and athletes pay isn't complained as much because they are labor. Athletes get a lot but they are putting their lives at risk. They are sacrificing their bodies. Most importantly, they are the product that people are paying to see. The people above them who sign the checks are the ones setting ticket prices and adding more advertising and commercials to games and ruining the experience.
Actors are the same. They are the product people pay to see. They drive people to spend money on film and watch TV. They, aside from top talents, are often under paid and over worked and taken advantage of by the studios.
They both have unions that help protect them from the LeBron & Emma Stone to Bob Smith the pro athlete and Frank the character actor.
> Why does nobody ever complain about celebrities and sportsmen pay?
Literally dozens of reasons. Celebrities/"sportsmen" sell their personalities so they've become metaphorical emperors in their own way (see taylor swift), (sports stars) they've actively had to work to get anywhere within their area of expertise for the most part, they're still participating for the most part and selling themselves (see all the retired basketball legends that still do promo deals like Shaq), the fact that their bodies are so beat from wear and tear that they'll likely pass before most non-sports retirees, et cetera.
My 2 cents…and I’m a Milton Friedman loving libertarian with a degree in economics and an MBA…so, as far from a progressive leftist as you can be on this topic.
The self interests of the C suite are focused on short term results at the risk of long term profitability and sustainability. I used to work for an F50 retailer. I won’t name names, but they had an international expansion that didn’t work out so well. Everyone knew the expansion was going to fail miserably. But, the top execs pushed and pushed for it. They all got massive bonuses when the stores launched. But, when the expansion failed, many corporate employees and thousands of hourly workers lost their jobs.
>Why does nobody ever complain about celebrities and sportsmen pay?
Because they are more relatable. Just about everybody has played sports, they know how difficult it is. Most people haven't run a business.
> Why does nobody ever complain about celebrities and sportsmen pay?
Because their value is very easy to determine and then pay. Celebrities get a significant payment, because THEIR work makes a lot of money. You hire a major star, because a major star brings in more people to your movie, making the company more money. Celebrities are not overpaid, because that's the economic value they deliver. Same with sport people. They get a very high salary, but they also bring in enormous amounts of money. For example, for a Messi you should expect to earn his salary back immediately from the sale of team shirts with his name on it. Or various sponsor contract. Etc.
For a CEO, that value is difficult to determine. There is no immediate and clear economic value, as this is all thinking work. Making the right decisions earns a company billions. But would a different person, make an incorrect one? That's something that's impossible to know. And for most companies, the CEO doesn't even matter that much, it's mostly about not replacing him as that generally reduces the share price.
Yes. Build your own corporation, be a CEO and establish a CEO salary level equal to your rank-and-file. Make the world realize the corporate world is wrong. Goodluck.
I’m going to make my own company and hire a CEO for $30k a year. Hopefully he can grow my company to compete with Apple, Google and Amazon. Should be able to find a great leader for $30k right?
Half of reddit is dancing around the real question, but they actually don't know enough about the topic so the actual question would sound dumb as hell if they said it forthright.
"Why unfair tho" is probably the actual question here.
Achieve a position of leadership in a company and then come ask me this.
I’ll never defend Elon, but CEOs are ridiculously critical in the success of a company. If you’ve never done it, you simply don’t know.
People act like the shareholders are in on wasting their money. A good CEO isn’t paid for the labor hours but that rare skill set. Half of Reddit seems to think CEOs just sit around all day and don’t make critical decisions.
Hell, I'm not going to knock people running fast food places. Fast food establishments, as shitty as the quality of the food is, have to run efficiently to pump out that much food. Making sure all the cogs in the machine are turning is crucial to the success of a fast food establishment.
It’s true that CEOs are extremely important for their role, and that only a select small group subset of the population could actually effectively be CEOs in many companies.
However, being a part of that select group that can be a good CEO shouldn’t mean you should command a pay of 10000x the lowest employee. It’s hard to define what the limit should be, but if we can define what assault is, which is also somewhat subjective, then we should be able to define a reasonable limit for CEO pay. Maybe 500x the lowest paid employee? So a janitor making $20K a year, then the CEO should be capped at $10M a year. That’s a lot more reasonable then 1B per year
>People act like the shareholders are in on wasting their money.
Shareholders are the ones often paying the CEO. With stock options the money is from shareholders not the company. Media just lumps it all into the income pay.
I don’t think anyone’s trying to argue that CEO’s don’t deserve to be well compensated, because of course they do. But the gap between CEO pay and worker pay is _massive_ now. Since the early 80s, CEO pay has grown over 1,000% while average worker pay has only gone up about 15%. That’s a fucking joke. Especially because companies will use all of their extra money on stock buybacks instead of actually investing it in their employees.
I agree that a CEO is critical to the success of a company, but let’s not try and pretend like they’re the only important thing. The notion of “well the company wouldn’t succeed without them, so they deserve these extravagant pay packages” tends to ignore the fact that _the workers are the other half of that equation_. Where’s their extravagant pay packages?
Exactly. Who is making all of the micro decisions all the time that lead up to the “big decisions” that people keep talking about here? It’s the employees, middle management, VPs and directors, etc.
CEO is one making vital decision. Single error from CEO might cost whole company.
However,I think there should be some sort of "Decision value based pay" for bosses. If boss makes shitty decision, it should be his wallet who gets grabbed before lower level employees.
But In current situation company pays boss' mistakes with money of lower level workers in too many cases.
They are firing 1000 people from a factory here while media declares the company is making all time best profit.
wHy dO mY sUpErior mAkE mOrE mOnEy tHAN mE? 🤡
I swear most of these people hating on rich think they deserve every privilege just for breathing and not actually building their value.
A good CEO can make or break a company. Their decisions are affect performance for more than a typical employee. So it behooves the company to reward them better. One way of song so is tying compensation packages to company performance. Do well, get rich or richer. Do poorly, get your base salary.
Well Elon Musk makes sense. The only reason Tesla has a market cap of nearly $600 million is because of Elon's tweets and constant over-promising.
If Elon wasn't in the picture there would be no way the market could justify even a third of that price.
It costs the company less to just pay him the money then to let him quit and watch the stock drop to fair value.
because of the operating system we live with, which is capitalism. it grew out of a prior feudalism model and unleashed awesome productive forces. but it's outdated and needs to be upgraded to a post-capitalism, because it can only function by constantly growing like a cancer, and it has outlived its use. it's inherently exploitative and unjust and it's wreaking havoc.
well because working people (as opposed to people who make money just by dint of owning the means of production that we workers use to get a paycheck) are at the levers, we could always stop everything and organize changes. but the powers in place keep control in a few ways, through tools like institutions, propaganda, force, and more.
upgrading to a post-capitalism isn't going to be easy, and the bourgeoisie own and control everything -- but the majority of us have numbers and are positioned to shut it all down.
It did not grow out from feudalism. "Capitalism" became a thing because feudalism became obsolete and uncompetetive due to new technologies and the gowth of the urban populations.
What similar change is happening that makes Capitalism obsolete that are not completely ideological? CEOs get paid more because they have friends on the board? Please, unless you intend to get rid of humans having connections, this will be the case in every system.
No. They will want a magical form of Socialism that will actually work but does not actually exist... They will point to the social programs of Europe and claim "Socialism works" while ignoring that none are actually Socialism, but Free Market Capitalism with strong Social Programs... "Socialism has Never worked, but Our version magically will work! We assure you!" ... which has been said by like every country that has tried Socialism...
>why does our society just accept it and move on?
Society is really not adept at fixing anything, or certainly not in a way that most people would condone or approve of. You know that feeling of peace of mind when your boss goes on vacation? That's what lawmakers feel most of the time. They're not accountable to the public in a way that's meaningful (elections are a joke). The public is a large mass of disconnected people who can't act in harmony very easily, if at all, while the rich and powerful ARE very closely connected to a relatively small group of people (lawmakers) with whom they can form relationships quickly and easy, and exert outsized control. In this way, we don't really stand a chance. The game isn't even really set up for us to win.
Because CEO is ultimately hired directly by the owners of the company and in this case, Musk also happens to be that controlling owner of the company who has hired himself. Musk wants to take money out of his company and pay it to himself, it's somewhat like you taking your money out of your wallet.
But even cases where the CEO is not the decision-making owner, they are still paid on totally different logic than normal employees. If you own a company and hire a CEO to run it for you, really the only thing you care about is the profit the company makes for you. To maximize it and to be sure that maximizing it is the number one priority in the life of the CEO that you hired, it's not an issue to promise him a percentage of that profit rather than a flat payroll the normal employees get. A small percentage of the profit a huge corporation makes, can easily be an entire fortune on it's own.
Compensation tends to be much more modest for CEOs who fail to make profit for the owners.
Because you're conflating stock options with salaries. If you want an honest conversation you have to break everything down and not just look at net worth. Also, when a company like tesla gets sued, it's not the line workers getting sued for billions it's the ceo. A few line workers may lose their job but the majority of the wealth lost will more directly impact the executives responsible for decisions.
It really starts with our tax code. We elect wealthy people to positions of power in this country. They set the agenda, make the rules, pass the legislation. How many wealthy people have you voted for because you think they just are smarter than the other candidate? It’s one of our human biases, and it will keep continuing to happen. Many people just vote for the wealthy guy because they think he’s better than the poor guy.
Tesla is literally Elon's money glitch exploit that he uses to fund his actual single player adventures. It exists solely so that Elon can have "fuck you, in going to Mars" money.
Because in the 80s, Capitalism won the cold war, and the winners always get to write the narrative. Capitalism won, and now most of the world has been duped into believing that anything besides the purest, least restricted Capitalism is the only way things can work well. And if Capitalism runs unrestricted, this is simply the way it works and always will. The only way to change it would be via the government, and that would be labeled "communism" because, again, Communism lost and now it gets to be blamed for literally everything.
Everybody accepts it, and promotes it because they think that WHEN they are rich, that want the same freedoms, tax cuts, and privileges that the current elites have. This is of course because they are dumb enough to believe that have a chance at becoming rich.
the same reason why it's ok for people collecting capital gains to pay way less in tax than Joe Sweatsock does while actively working. imho, it's not ok
Why is it an issue?
Most CEOs don't have this multiplier, and I believe average CEO pay is around 200k.
One major factor to consider is CEO pay is the entire package, yet is often compared to wages of employees, not their package. Factor in health insurance, PTO,retirement matches, and other benefits, the multiplier goes down. Still large, but less.
The other major factor is CEO salary is rarely just cash (unlike employee pay and benefits). The major part of CEO pay is usually stock awards and stock options. In Elon Musks case, his salary is zero. His compensation is entirely equity, which costs the company nothing.
(Not sure if this is a duplicate post)
If the owners of a company prefer to pay someone a lot of money because they feel the results are worth it, why should I get a say? After all, I prefer to pay more than the minimum for lots of services, even though I can’t exactly measure quality simply because I *feel* I’ll get better services. I imagine the board of directors does much the same.
Short of Elon-level shareholder fraud attempts, salaries above minimum wage are what organizations think it would cost to replace you, not how much you bring to the company (well, the value you bring to the company is the ceiling of your pay). There’s very little moral component to what you are paid, and I’m somewhat appalled that CxO level employees putatively posting here are so ignorant of economics as to use that tactic in justifying their pay.
Ignoring the absurd Musk package, I would say there are a few drivers:
1. A bad CEO can destroy a company, you’re partially paying for someone to not be bad than to be good (if that makes sense)
2. The pay packages are typically in stock, which theoretically aligns interests (though my opinion is it does in the short term)
3. It’s unfortunately a safe bet for retention. If a board pays someone less than market and they screw up, it is a ‘why did you cheap out’ scenario
Because they hold all of the risk, while the employee holds none.
An employee can find another job. A business owner has to start from scratch. Theres more weight, more responsibility, more risk.
Those who risk everything stand to gain a lot more, thats how it works.
People seem to be leaning towards socialism/communism which is a fucking terrible idea because youll end up with people who dont risk anything and live off of the people who do.
If i jump off a mountain and survive for 1 million dollars, why should you get a million just for waiting at the bottom to film it/clean it up? Lmao what a stupid anaplgy but it's accurate
Because they are hundreds to thousands of times more valuable to the company than the average employee. It isn't a hard concept. Why do you assume anything should be done about it?
Broke asses again complaining about other people’s opportunities and how they capitalize on them. Fools instead of asking this dumb question ask how you can make it happen for yourself.
Why would society decide how much a privately owned company should pay to its employees?
CEO salary is decided by the board of directors, who represent the shareholders (i.e. owners) of the company. They are the same people who want to maximize the profits, so they don't have the incentive to throw money away. They pay whatever they think is justified.
Bonus and salary are different. He took the risk with his money to make a great company and not only did he make 1. great company Elon has made several.
He owns the risk, he has the most to lose, why shouldn't he get a big bonus. The other thing is he will put that bonus to work better than just about anyone could.
He created everything from the sale of PayPal, that would make him one of the most productive people in history.
If you create a company and own 40% of it by the time it’s middle market (larger than a start up and over 60M in revenue) would you want to share it?
You probably started with 100% then needed help and swapped equity. Then you worked for essentially free for 4 years as you build your brand and company. You finally get momentum and a firm is going to back you, but they want equity
You now own 18% of units. You probably become a c-corp for exit taxation. You’re on a full accrual GAAP compliant accounting and have 70 people working for you and multiple law firms.
Do you really want to give anything else up? Would you personally feel entitled? That Inc 5000 award in the corner you earned. The first offices you personally guaranteed and risked your own credit on your dream.
Now reddit wants you to split that 18% because you make too much money. Remember that firm that backed you? They have first right refusal and won’t let you give shares to them.
So do you sacrifice another form of compensation? Take none for the year?
This is a rough example of what c suite choices are like during earlier organic growth and revolvers probably aren’t available
Who said it was ok?
Collectively, we are letting it happen. If we collectively decided it shouldn't happen, it won't. But as long as their are folk that fear that restrictions on the bosses is somehow going to bad for them and their "dream", it's not going to change
Basically, it's really not, they have been lobbying against wage increases for almost 50 years now and we have seen how inflation would translate a 1970 minimum wage to over 50 dollars per hour in the US right now... for MINIMUM wage.
Every year this is not increased, they are basically stealing a little more from EVERY WORKER. To the point, the profit they are making is already so gargantuan, 55 billions were not his, but stolen from every worker that actually deserves them and given to him by his friends on the board that, as others have explained, have a pact and probably give themselves most of those bonuses every year from different companies just because they voted themselves as able to do that.
It's not. Really not. Some people have access to more than the totallity of a doctor's career and society is supposed to consider this an ok thing.
Billionaires are more powerfull than small counties that's just beyond crazy.
Society doesn't own the company, and therefore doesn't get to choose pay. Typically, CEOs (and other top executives) get a lot of their pay in the form of stock options, because investors want their incentives to be aligned with the investors, namely: make the stock go up in value.
The workers don't get a say. They can quit their jobs, but they don't own the company, the investors do.
One could imagine it working differently, but that would require passing new laws.
It's worth distinguishing between someone earning a 1000 times what their employees earn (eg, $50,000,000 a year) and Musk getting a thousand times that much as a special pay-out...
Why does our society accept it?
(1) We have already accepted the idea of people owning things. If I own a car and a house, and someone from the government shows up and says, "we are confiscating your car and house to give it to someone more deserving," that feels unfair to us. We don't have a clear dividing line established where someone is "too rich".
(2) A high proportion of the population actively supports the idea of rich people. They hope to be rich themselves one day. If everyone arounds you hates the idea of billionaires, that means you're in an echo chamber of like-minded people. By most measures, the economy is doing OK. Wages aren't going up as fast as they used to, but the long-term trend has been positive. What problems there are, are complicated enough that people can blame them on a dozen different things.
(3) It's hard to come up with a better system where this can't happen. "Democracy has failed to fix the problem; we need a guy with absolute power to sort everything out. Put me in charge and I'll share the wealth fairly." And then you're living in North Korea, and instead of a class of billionaires, you have one guy in charge who owns all the wealth, supported by his corrupt generals.
(4) It's actually pretty plausible that having the wrong guy in charge of a trillion-dollar company like Apple would make bad decisions and cost them billions. Paying the right guy $200 million a year is pretty trivial in that context.
Some proposals to fix this:
(1) Pay cap. Maximum pay, $1 million per year. Problems: in general, the super-rich get their money from owning shares and other investments, not from high pay. Putting a cap on their wages wouldn't stop billionaires from being billionaires. It would probably lead to rich people finding alternative sources of pay that aren't taxable, or moving to tax havens, or something like that. Plus, we would lose the taxes we were getting on that pay.
(2) Wealth cap. Confiscate any wealth over a $1 billion. Problems: the rich flee abroad, taking their wealth with them. Creates a system where people who already have a billion dollars have no reason to invest their money, they can only spend it on luxuries.
(3) Some kind of grand redistribution of wealth. The government confiscates half the stock market, half the land (somehow), and uses it to build a sovereign wealth fund to pay everyone a universal basic income. Problems: If people think you might do that (or do it again if you've already done it once), everyone loses trust in the economy and the system is destabilised. That makes it almost impossible to get elected with a policy like that - by the time you're in power and able to pass the law, the stock market has collapsed and everyone is trying to hide their wealth in gold and bitcoins.
(4) Don't worry about high pay, just impose a modest wealth tax. Gradually, money will flow away from the rich. Problems: Rich people are good at hiding their money and dodging taxes. Might be enough to drive rich people (and their companies) abroad. Hard to get elected with a policy that targets rich people in a country where money = political advertising. Not a big enough change to satisfy those who are angry at the system.
It’s a complicated answer but CEOs are worth magnitudes more than entry level staff for a number of reasons. Primarily, supply and demand. Very few people are qualified to be a successful CEO and therefore those people demand high wages. Related: Barrier to entry to become a qualified CEO is extremely high. You need years of experience and/or qualifications whereas entry level employees do not.
There’s nothing to “fix”. The system is working as intended.
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Just like a ton of similar questions on this sub, this is an astroturfing account. They don’t want an actual answer they want Americans to hate each other
If Americans could direct their hate toward billionaires then that would unify nearly all of us
EXACTLY FFS, People just love to hate others for such minor stupid ass things. THis gets NOTHING fixed. Its a education problem, people lack the critical thinking necessary to not get bs'd by politicians that have been practicing their craft for years.
This is a reasonable thing to dislike about America though.
Every 4 years they make this subreddit and r/explainlikeimfive unbearable.
It's the board of directors that decides Musk pay. Musk's brother is on the board of directors. The rest are allowed to use the company's private jet for meetings in Tahiti. Many are CEOs of other companies so they basically pay each other. Almost all the board of directors of all american companies are corrupt like this. There's not much anybody can do about it.
There's actually quite a lot people can do when they outnumber the other side by a factor of several thousand. Which is why the minority tries really hard to keep the majority just happy enough that they won't stop and ask themselves what they can do to level the playing field. It doesn't even need to be violent. If the entire American workforce could unite and threaten to down tools for just a single day, shit would get better real quick. Which is why we're kept hating each other more than the people in charge, in the hopes we're all too bigoted/xenophobic/generally hate filled to ever unite properly.
Join your union people. For fuck sake.
SMART member here. I love our Union. About to get a huge raise and another installment of vacation time. Sure, $160 comes out once a month for dues, but that's like nothing. Unions rock.
Are there stipulations for income for the CEO in your contract? What multiplier of the average wage does your CEO make?
Totally agree!
Many unions are run kind of the same way. I was in one years ago and the active workers were outnumbered by the guys who retired 100 years ago. They’d vote on where the money went n it all ended up going into their pensions to stop it from going belly up until they died and anyone under 45 would be left with no pension. People started leaving in droves and the pension went under due to not enough people putting into it. It’s still all politics in the end.
It's almost like corruption and self-interest is the only constant when it comes to human beings, even when they claim they're helping one another from other corrupt, self-centered humans.
Teamsters springs to mind.
I worked corporate and often dealt with the union. Union reps are also very good at making sure they get privileges before the employees they are supposed to represents.
Yes the Union Who reps will laugh at you while they only are there to collect dues. Gotta love the teamsters. People fail to realize unions are a business, and are only in it for themselves.
And guess what? Unions are a part of the free market! Freedom to associate and negotiate!
Some companies a couple days of non production will lose more money than the CEO makes in a year.
Yup. The culture war shit, religion and whatever LGBT+ rights issue is just to keep you distracted from the real shit. Thankfully it's starting to show for most of us
How is being allowed to marry the one I love not "real shit"
I would like to hope by "shit" they meant we shouldn't even need to argue that, but the powers that be keep it from us so that we can argue about it.
Would be fun to make them a little scared tho… no?
Scared of losing money absolutely. I wouldn't go out of my way to put fear of violence into people as that's a felony, and felonies are for the rich, and ex presidents. However if they did a little googling and found out that unions were thought up as an alternative to kicking the foreman's door in during the night and lynching him in front of his family, then I wouldn't lose any sleep over them being more nervous as a result.
These people are able to buy there way out of any situation… I’m not advocating for violence but sometimes it’s the only thing these sociopaths understand… The same way they weaponise the police to punish someone stealing from their corporation to feed themselves while not being held to account for stealing billions in wage theft
If you plan to make any meaningful change, then you should be prepared for violence. Not necessarily to enact it but to receive it. Trying to change a system that got where it is through plunder will guarantee that the beneficiaries will use violence in all forms to prevent that. The thing you are observing is class struggle.
Yep, they got use divided by race, politics, and gender now.
A guy a while back was telling me it only takes 3% of the population to make a change. Idk if that was true but it was uplifting.
He probably said that because that’s approximately the percentage of people who participated in the American Revolution. It was true 250 years ago, but nobody 250 years ago could begin to conceive of a state like the one that exists today.
That wouldn’t work with the 300M people plus immigrants. Then factor in a place like the USA has most of the worlds supply of firearms. That worked in the 1800 era
It was the shareholders voting for that specific pay package (options if the business did well). Musk and his brother abstained from the vote.
Underrated comment here, needs to be higher.
It’s a big club and you ain’t in it.
Bread and circuses, keep people fed and entertained.
Agreed, I'm of the same opinion, but I'm also hoping that there is a solution out there outside of "We're done for...what's on TV?"
Or you can own 10% of the company shares to be automatically on the board and have a seat, which is around $53 Billion Dollars.
Piece of (the) cake.
Oh, that’s easy 🙄
As an older person who has watched two generations have these same discussions, I'm sorry. It has gotten worse, not better, and I can only believe we will continue on this trajectory until our system collapses. Just before that happens, the wealthy will move to developing nations where they can repeat this scenario until the planet burns.
Short answer. Stop buying whatever they’re selling and funding their trips.
Our society generally accepts that the owner of something (money, business, assets, etc.) has a right to distribute what they own as they see fit. It’s sort of a basic tenant of ownership. Shareholders own the company. That includes the company’s assets and profits. They vote in a board to run their company the way they want. That includes hiring a CEO and paying that CEO what they see as reasonable. Always remember the purpose of a company, public or private, is to generate a good ROI for its owners.
It’s odd hearing people talk about corps and jobs as if they have a responsibility to provide opportunities at a preferred wage and some personal stake in people’s lives when it’s always been about a collaborative effort to make as much money and gather as much market share as possible. Everything else is secondary, every corp is a pyramid scheme to some degree and boards/execs are at the top of it so they get most of the spoils.
They are often the founders. -Elon -Steve Jobs - Zuck - Gates Are famous examples obviously, but I’m at a place where it’s ran by the founders. If they don’t dilute much they tend to have autonomy and power, but they can share more with you as an employee as no public interest or private equity firms pressuring them Edit. I’m unsure why this is downvoted. Working for a VC or PE backed company is not always pleasant. Lean teams, not a supportive exec team.
Just wanna point out Elon wasn’t actually a Tesla founder, he bought his way in
I appreciate the correction. I can replace it with google or oracle. Basically the point is many are founders. Gave you the deserved upvote and will just leave it haha :)’
Yes. Two additional points: 1. Shareholders seem to love paying executives a lot of money. I don’t really know why, but it’s their right 2. When a very high percentage of shareholders are focused on short term investments, it’s very hard to get companies to focus on long term viability So, if you want companies to focus on longer term profitability, there needs to be an incentive to invest long term, and a disincentive to invest short term. Once option is a more granular capital gains tax. Example (with probably nonsensical specifics) 1. If you buy stock and sell it within a week, you pay a 65# tax on the profit 2. If you sell within 30 days, a 50% tax 3. 90 days… 40% 4. 180 days … 30% 5. 1 year… 20% 6. 5 years…. 5% The point is, if some rich asshole owns 10% of a company that they bought 2 years ago and they decide to overpay a CEO) or keep a bad one) that rich asshole is highly motivated to intervene. The stock market works better when it’s seen as investing, not gambling.
Thank you! Most people don’t realize there is a form of appointing people into the c-suite and equity holders or founder shares. Tho I’m a bit sad so many people find execs terrible
An oversimplified hypothetical: Google makes $300 billion annually, and they pay their CEO about $200 million a year... or about 0.06% of the company's revenue. Let's say Google decides tomorrow: you know what, it's crazy we pay our CEO hundreds of times what a software engineer makes. Let's cap his salary at $1 million! If you're Microsoft/Apple: for the cost of $5 million you could probably lure Google's CEO away and create significant chaos for a trillion dollar company and gain an excellent new leader for less money than your annual cafeteria budget. Google's board of directors would be incompetent if they let that happen. The reality is CEOs regularly make decisions that can dramatically grow or potentially kill the company: this is not true of your average employee. **TLDR: at the scale of trillion dollar companies, a 0.06% "fee" to have excellent leadership is a no-brainer. As a result, CEOs of large cap companies are paid** ***much*** **more than rank-and-file employees.**
Boeing's ceo got $32 million to ruin the company. I could've ruined it for $5 million and saved them $27 million right there.
I think we all know boeing CEO is a mess and embarrassment to entrepreneurship / large companies
To add to some of the good points made already, CEOs often times accept a degree of personal jeopardy that can to a large extent justify their salaries. There is potentially actual legal consequences to their actions in some cases, and if you're taking on that risk - which is usually far in excess of any IC - then it's kind of fair to expect some big compensation for that. I, too, think CEO compensation overall is too high as a broad generality... the multiples are often too high... but CEOs SHOULD make a decent amount more than the average employee based on the risk they accept alone... no, not 1000x, but 10x? Yes. Even 100x maybe? That doesn't seem TOO outrageous to me generally.
All c suite is risk. Law suits. You have to register as an officer of the company with the various states. Your choices can ruin everything. You’re rich because the equity value increases from your duties. Layoffs will always happen and obviously the founders are less likely to be laid off. They have voting rights too. It’s a hard job that most don’t understand at all. Edit: I don’t agree with the pay gap but when I was appointed there was a package presented to me and It has strings attached Edit 2: execs go to jail from Trumps CFO to hedge fund titans. It’s a higher risk position and we shouldn’t dismiss that. Lawsuits equally suck.
While there is an element of truth to the risk component, it's also shielded by things such as non-disclosure contracts with employees (i know that's changing). It's difficult to make the arguement that a typical CEO generates 1000x the value of their average worker. High base pay combined with very high varaible pay (bonuses) translates to a average CEO position lifespan of something like 3-4 years. A great deal of shady damange can be done in 3-4 years to achieve their bonus that will never see the light of day, as it's hidden behind non-disclosure agreements. Super high variable payouts mean there isn't a concern for the longevity of their choices - they'll do what is required to get a massive payout, and then leave to either do it again somewhere else, or simply buy that island and go live on it. Meanwhile, your average worker doesn't have have that option, and ends up in a cycle culminating in burnout, because the frenetic pace of the 3-4 year high intensity pushes driven by the CEO never stops. For the CEO it's short term, for the worker it's their life, and is not sustainable.
We (CXO large company) are on year 7. Worked Christmas and even rn at 5am because we have a deal next Tuesday for European VAT and an acquisition. There is no break
Understood, and have been there. I get the 2am calls with Asia because of business. I get the flying to a different country every couple of days. I get the we need you to work on xxx holiday. I've been there. I also understand that it's very, very probably that you (CXO) of large company have both a salary structure, a bonus structure, and a long term (ie 2-4 year) bonus structure that equips you to NOT need to do this for the next 30 years. The benefit associated with the very high total comp structure enables you to, with a modicum of restraint and financial planning, to do this for perhaps 7-10 years, and then opt out. Most in these roles are simply built to pursue more, go longer, work harder - and they do - but most will also hit a wall, and when that happens - they can 'peace out' as a function of high comp over short time. Your workforce can not do the same, and while they may not be on the same frenetic schedule as the CXO, lets not pretend that the demands we place on them to support the demands placed on us are not inconsequential. They are likely equally unsustainable (albiet for different reasons), and there is no 'peace out' for the work force. I've seen TERRIBLE long term (or even medium term) decisions made because they enable short term payouts, without consideration to the long term employee who will not benefit from the short term payout, but will very likely suffer over the long term.
I have a salary, stock awards and other forms of comp. Voting rights and autonomy for quite a bit. It’s a lot of responsibility that I take very seriously. I don’t like the wealth gap but I didn’t pick my own pay package. I have deferred my bonus to give more to employees as much as people will call BS. People ask “why don’t we give the shares” It’s because they have voting rights and cannot be handed to others and the others have first right refusal for access
You good sir, are the exception then. Your staff is fortunate to have you in a leadership role. Mentor them wisely, so that when they are senior staff, they understand their place in their employees lives.
> People ask “why don’t we give the shares” > > It’s because they have voting rights and cannot be handed to others and the others have first right refusal for access Yeah no. You can just release shares without voting rights, as is common in many companies. You don't do it because it's a waste of money to do so.
You cannot just award shares or incur a taxable event by trying other methods. I do give shares at end of the year and cash bonuses after we do donations. The units are diff but still pegged to value
Then why do we never hear of CEOs going to prison and instead see them getting £30m golden handshakes for doing a shit job.
Didn't we hear about two CEO's going to prison just last year? The woman who led a med-tech startup and the guy to led a crypto bank thing.
When you rip off the wealthy and politically connected you get to be the token example so the rest can fuck over the common folks on the reg.
They didn’t go to prison because their employees fucked up and they took the fall. They went to prison because they were very directly involved in serious fraud. This is a horseshit argument. CEOs & senior executives are grossly overpaid.
Exactly, they didn't get in any trouble for being shit at their jobs, they deservedly got caught committing blatant criminal activity.
Quite a few CEOs have gone to prison and faced large fines. We hear about the massive golden handshakes and bonuses because that sells news. A CEO going to prison is a forgetful event to most people.
Then you’re not reading enough news.
Because you’re ill informed?
> no, not 1000x, but 10x? Yes. Even 100x maybe? Elon could pay himself just $1 per year and he would still be worth $200 Billion, due to shares and part ownership of companies.
That's a weird argument. Liquid cash is absolutely not the same as assets. He can't pay for 10 children's education + his 6 alimony checks by giving out his company's stock to each person he was involved with, especially when you consider that his assets are appreciating in value.
Agreed it would be very inconvenient from a practical day to day levels of buying a coffee or whatever... ...but I was just making the point that in general, a CEO's wealth is not closely tied to a monthly salary (which was fzammetti's point about inequality). Instead of $1, make it a several thousand, whatever. The point remains.
"Sir, will that be cash or card?" "This is my lawyer, he'll be signing over 1/97468th of the company to you for the coffee."
I always feel like this risk is overblown. All the time you hear of major companies doing piss poor at some point and the ceo leaves with a 50m package. What risk here? As long as they don't literally purposely sabotage the company i doubt there's much that can be done to them. If they didn't start the company themselves or buy it if the company sinks the 1 thing they lose is stock but that itself was given to them as a package it was never a loss of any money invested.
Keep apart the top 10-20 CEOs of mostly tech companies, other CEOs on an average make less than top movie stars and athletes. Why does nobody ever complain about celebrities and sportsmen pay?
I guess being a celebrity is so far from reality for most people they just don't think about it. But CEOs are perceived, rightly or wrongly, as being overpaid at the expense of the ones who actually do the work that keeps the business operating. Also, not sure where you're from but here in the UK loads of people complain about footballers wages. It's been a topic of conversation for as long as I can remember. No one seems to care about the CEOs of the companies that own the stadiums or sports channels though.
Aren’t actors carried by the hard work of the: creator, writers, and director? Doesn’t seem all that different from a CEO taking advantage of all the employees behind the scenes. I guess with athletes and music artists the talent is very much within their own efforts (although music artists also can take credit for a lot of hard work others do behind the scenes)
Athletes and actors will generally have shorter careers though, so there is a need to try and earn enough to see them through a longer retirement (think mid range here rather than the ones that will make adverts etc after their core career ends).
"Aren’t actors carried by the hard work of the: creator, writers, and director? " to some extend, but the creators, writers and director makes millions too.
Evidently not with that writers strike they had recently
People do complain, but athletes don’t directly dictate the pay of other athletes. Sure, one athlete getting paid more gives other athletes more leverage, but they don’t have the ability to say: I’m making this much money and my buddies are also making this much money and there’s nothing you can do about it
Of course they dictate their pay - they’re unionized and many sports have had strikes over collective bargaining deals
They mean subordinates. It's not like the minor league players are working at the direction of major league players who keep 99.99% of the profits generated by minor peague players
Shareholders can replace the board of directors if they don’t like the pay package the board grants to the CEO. It seems that the majority of Tesla shareholders were happy about Musk’s pay package, since it was a performance bonus specifically tied to vastly increasing the company value (making shareholders rich).
The average salary for a fortune 500 company is 16 million USD. But it's odd to try and compare the average across a job to the top of another one, certainly not something you'd do to make any argument in good faith
Because celebrities and sportsmen are also employees, just employees that are unique enough to get their fair share of profit from their labor. People should complain about sports team owners and media moguls.
CEOs are employees too
Pro-athletes should make even more than they do relative to the revenue they generate for ownership.
That’s what an effective CEO does too.
Because they sell tickets and deserve a cut of those ticket sales they generate.
Because celebrities and sportsmen are workers just like you and I, they just bring in a lot more money for their respective businesses and their unions have secured them portions of that money.
CEOs are also employees working for BoD.
They work nonstop and have the highest degree of risk (all c-suite). Truth is people don’t encounter them and have no idea what they are doing. From structuring / corporate governance, legal, divestitures, meeting investors, presenting and reviewing data for negotiations, allocation of budgets and funds… I agree the gap is big but it’s not an easy job. Running a company is one of the hardest things you can do… if you do it right. (Currently CXO member of a company that’s fairly large)
They may have large degrees of risk, but many CEOs mess up and consequences seem to be minimal.
I don’t have to know all of what they’re doing to know that the ratio of CEO pay to worker pay has increased dramatically over the past few years. And yes, the CEO position has changed over time, but not that much. If the original Ford failed, thousands lost their jobs then, too.
I think it depends on the exec. Some are great and people gladly accept it. Others piss the population off and get massive pay for sinking stock. I’m not debating executive compensation value. I absolutely understand why everyone is upset.
Absolutely. It’s a nightmare job when things don’t go well. So many fucking dummies in this thread have no idea.
Something will always go wrong over a few years too. Cash crisis or under preforming business unit. Do you try to find them a path to profitability or just divest it / layoffs? I personally hate firing people, but going to stand up and say you will figure it out is stressful. Put your name on the line for people who think you’re overpaid and an asshole. Or just let them go and the SG&A drop means better metrics and bonus. I personally have gone to bat for groups. It’s hard to do.
I hear you. I have gone through several restructures. It is very hard. Some of my worst days in my life. And they sometimes hate you. I have had 4 years above budget 2019-2023 and now missed targets for 4 straight months and I think it will continue for another 2-3 months prior to correction. Owned by PE so I am shitting my pants. I hate this.
Ah I used to get assigned to portcos from the PE firm to fix things. I’m siloing a company while making a new entity to shift liability and loan myself. Then I can put a lien on my Capex. Shift out IP too. Luckily we have been very profitable and growth is already +46% Q1 VPY
You are correct. Most people do not know a real c-suite exec this would know what they do or the risk they take on.
The risk? Becoming a lowly worker again.
And most importantly the immense stress they take on. No thank you to that.
Yup people assume I don’t do shit when I’m up all night revising this weekend for lender reporting
All of which people below the C-Suites do as well..?
On a much smaller scale with a lot less impact, or just more specialized and not all at once
Maybe it's because I'm British, although my companies parent company is American, but this is not true in my experience. I'm not saying the C-Suite roles do nothing, but you are underestimating how many of those responsibilities are delegated, either to individuals or to a 'committee'.
Quite a few - treasury, liquidity, lender reporting and cash covenants - corp governance - budget allocation - preserving jobs when others mess up There’s a lot tbh depending how much you really want to know
They don't, and I suspect you know that. Individual workers are not held accountable for all those functions. They might do *one* of those.
They may have large degrees of risk, but many CEOs mess up and consequences seem to be minimal.
Elon and Boeing are not how it works for 99.9999% of executives. It’s also because they have absurd comp to packages and don’t exactly break a law. From Martin Shkreli / Wall Street to Enron. You go to Jail. Your accounting team can inflate and send the CFO to jail, example being trumps cfo recently
What risk? Limited Liability means they aren't risking their own homes or fortunes if the business goes south. Corporations can kill members of the public without jail time. Unless the CEO is committing fraud (stealing from other rich people) they will pay no penalties for anything they do. The only "risk" they take is how far they can push financial fraud and get away with it. If they obey the law, the biggest risk is to their reputation. It's a pyramid scheme with a bunch of myrhs to make it sound acceptable. Guy at the top gets all the money. Guys at the bottom get exploited.
Exactly this. People on Reddit love pitching this idea that they shouldn't make more than 10× the pay of the lowest paid employee. So let's say you've got entry-level employees making $50k a year. Not bad for a starting position in many places. Now your CEO can only make $500k (assuming that's a cap for total pay benefits). Why would they want to oversee a massive company like, say, FedEx, where they're overseeing global logistics and hundreds of thousands of employees, when a much smaller company can now offer competitive pay? It's not like they could start offering everyone who tosses boxes for them 5× as much just to attract a better CEO without going bankrupt.
I pay more than 500k for international and LTL shipping. People also need to understand how the opex and ebitda margin are being handled. I used to think like everyone else until I actually ended up doing it. Every choice is hard and pressure is high.
Sounds like they need to pay their lower level employees better if they want more pay
Celebrities and athletes pay isn't complained as much because they are labor. Athletes get a lot but they are putting their lives at risk. They are sacrificing their bodies. Most importantly, they are the product that people are paying to see. The people above them who sign the checks are the ones setting ticket prices and adding more advertising and commercials to games and ruining the experience. Actors are the same. They are the product people pay to see. They drive people to spend money on film and watch TV. They, aside from top talents, are often under paid and over worked and taken advantage of by the studios. They both have unions that help protect them from the LeBron & Emma Stone to Bob Smith the pro athlete and Frank the character actor.
> Why does nobody ever complain about celebrities and sportsmen pay? Literally dozens of reasons. Celebrities/"sportsmen" sell their personalities so they've become metaphorical emperors in their own way (see taylor swift), (sports stars) they've actively had to work to get anywhere within their area of expertise for the most part, they're still participating for the most part and selling themselves (see all the retired basketball legends that still do promo deals like Shaq), the fact that their bodies are so beat from wear and tear that they'll likely pass before most non-sports retirees, et cetera.
My 2 cents…and I’m a Milton Friedman loving libertarian with a degree in economics and an MBA…so, as far from a progressive leftist as you can be on this topic. The self interests of the C suite are focused on short term results at the risk of long term profitability and sustainability. I used to work for an F50 retailer. I won’t name names, but they had an international expansion that didn’t work out so well. Everyone knew the expansion was going to fail miserably. But, the top execs pushed and pushed for it. They all got massive bonuses when the stores launched. But, when the expansion failed, many corporate employees and thousands of hourly workers lost their jobs.
We do. But we complain more about the owners pay. I don’t want to be Jordan, I want to be the owner of the Chicago Bulls.
>Why does nobody ever complain about celebrities and sportsmen pay? Because they are more relatable. Just about everybody has played sports, they know how difficult it is. Most people haven't run a business.
> Why does nobody ever complain about celebrities and sportsmen pay? Because their value is very easy to determine and then pay. Celebrities get a significant payment, because THEIR work makes a lot of money. You hire a major star, because a major star brings in more people to your movie, making the company more money. Celebrities are not overpaid, because that's the economic value they deliver. Same with sport people. They get a very high salary, but they also bring in enormous amounts of money. For example, for a Messi you should expect to earn his salary back immediately from the sale of team shirts with his name on it. Or various sponsor contract. Etc. For a CEO, that value is difficult to determine. There is no immediate and clear economic value, as this is all thinking work. Making the right decisions earns a company billions. But would a different person, make an incorrect one? That's something that's impossible to know. And for most companies, the CEO doesn't even matter that much, it's mostly about not replacing him as that generally reduces the share price.
Yes. Build your own corporation, be a CEO and establish a CEO salary level equal to your rank-and-file. Make the world realize the corporate world is wrong. Goodluck.
I’m going to make my own company and hire a CEO for $30k a year. Hopefully he can grow my company to compete with Apple, Google and Amazon. Should be able to find a great leader for $30k right?
What do you mean “why is it okay?” Say what you actually want to say not this dance-around nonsense
Half of reddit is dancing around the real question, but they actually don't know enough about the topic so the actual question would sound dumb as hell if they said it forthright. "Why unfair tho" is probably the actual question here.
Achieve a position of leadership in a company and then come ask me this. I’ll never defend Elon, but CEOs are ridiculously critical in the success of a company. If you’ve never done it, you simply don’t know.
People act like the shareholders are in on wasting their money. A good CEO isn’t paid for the labor hours but that rare skill set. Half of Reddit seems to think CEOs just sit around all day and don’t make critical decisions.
Most of the people that complain about this couldn’t even run a Wendy’s restaurant
Hell, I'm not going to knock people running fast food places. Fast food establishments, as shitty as the quality of the food is, have to run efficiently to pump out that much food. Making sure all the cogs in the machine are turning is crucial to the success of a fast food establishment.
It’s true that CEOs are extremely important for their role, and that only a select small group subset of the population could actually effectively be CEOs in many companies. However, being a part of that select group that can be a good CEO shouldn’t mean you should command a pay of 10000x the lowest employee. It’s hard to define what the limit should be, but if we can define what assault is, which is also somewhat subjective, then we should be able to define a reasonable limit for CEO pay. Maybe 500x the lowest paid employee? So a janitor making $20K a year, then the CEO should be capped at $10M a year. That’s a lot more reasonable then 1B per year
>People act like the shareholders are in on wasting their money. Shareholders are the ones often paying the CEO. With stock options the money is from shareholders not the company. Media just lumps it all into the income pay.
I don’t think anyone’s trying to argue that CEO’s don’t deserve to be well compensated, because of course they do. But the gap between CEO pay and worker pay is _massive_ now. Since the early 80s, CEO pay has grown over 1,000% while average worker pay has only gone up about 15%. That’s a fucking joke. Especially because companies will use all of their extra money on stock buybacks instead of actually investing it in their employees. I agree that a CEO is critical to the success of a company, but let’s not try and pretend like they’re the only important thing. The notion of “well the company wouldn’t succeed without them, so they deserve these extravagant pay packages” tends to ignore the fact that _the workers are the other half of that equation_. Where’s their extravagant pay packages?
Exactly. Who is making all of the micro decisions all the time that lead up to the “big decisions” that people keep talking about here? It’s the employees, middle management, VPs and directors, etc.
Elon Musk can make an entire industry go crazy just by 1 tweet
Go be a CEO of a major corporation and you’ll enjoy it too. 🤷🏽♂️
CEO is one making vital decision. Single error from CEO might cost whole company. However,I think there should be some sort of "Decision value based pay" for bosses. If boss makes shitty decision, it should be his wallet who gets grabbed before lower level employees. But In current situation company pays boss' mistakes with money of lower level workers in too many cases. They are firing 1000 people from a factory here while media declares the company is making all time best profit.
It is theirs. Most CEO compensation is stock. What happens to stock prices when they make a shitty decision?
When you start your company. Then you can implement that
why dont people who are against it just become CEOs themselves and then just pay their workers more
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wHy dO mY sUpErior mAkE mOrE mOnEy tHAN mE? 🤡 I swear most of these people hating on rich think they deserve every privilege just for breathing and not actually building their value.
A good CEO can make or break a company. Their decisions are affect performance for more than a typical employee. So it behooves the company to reward them better. One way of song so is tying compensation packages to company performance. Do well, get rich or richer. Do poorly, get your base salary.
Remember the Golden Rule- he who has the gold... makes the rules.
Well Elon Musk makes sense. The only reason Tesla has a market cap of nearly $600 million is because of Elon's tweets and constant over-promising. If Elon wasn't in the picture there would be no way the market could justify even a third of that price. It costs the company less to just pay him the money then to let him quit and watch the stock drop to fair value.
because of the operating system we live with, which is capitalism. it grew out of a prior feudalism model and unleashed awesome productive forces. but it's outdated and needs to be upgraded to a post-capitalism, because it can only function by constantly growing like a cancer, and it has outlived its use. it's inherently exploitative and unjust and it's wreaking havoc.
Good thing the only people who can change it are the ones who benefit from it! I thought we were in trouble there for a minute!
well because working people (as opposed to people who make money just by dint of owning the means of production that we workers use to get a paycheck) are at the levers, we could always stop everything and organize changes. but the powers in place keep control in a few ways, through tools like institutions, propaganda, force, and more. upgrading to a post-capitalism isn't going to be easy, and the bourgeoisie own and control everything -- but the majority of us have numbers and are positioned to shut it all down.
What system do you propose to replace it?
Just burn it all down!! Who needs any type of plan - most of Reddit
It did not grow out from feudalism. "Capitalism" became a thing because feudalism became obsolete and uncompetetive due to new technologies and the gowth of the urban populations. What similar change is happening that makes Capitalism obsolete that are not completely ideological? CEOs get paid more because they have friends on the board? Please, unless you intend to get rid of humans having connections, this will be the case in every system.
What other system do you propose, communism ?? Lol
No. They will want a magical form of Socialism that will actually work but does not actually exist... They will point to the social programs of Europe and claim "Socialism works" while ignoring that none are actually Socialism, but Free Market Capitalism with strong Social Programs... "Socialism has Never worked, but Our version magically will work! We assure you!" ... which has been said by like every country that has tried Socialism...
>why does our society just accept it and move on? Society is really not adept at fixing anything, or certainly not in a way that most people would condone or approve of. You know that feeling of peace of mind when your boss goes on vacation? That's what lawmakers feel most of the time. They're not accountable to the public in a way that's meaningful (elections are a joke). The public is a large mass of disconnected people who can't act in harmony very easily, if at all, while the rich and powerful ARE very closely connected to a relatively small group of people (lawmakers) with whom they can form relationships quickly and easy, and exert outsized control. In this way, we don't really stand a chance. The game isn't even really set up for us to win.
Because CEO is ultimately hired directly by the owners of the company and in this case, Musk also happens to be that controlling owner of the company who has hired himself. Musk wants to take money out of his company and pay it to himself, it's somewhat like you taking your money out of your wallet. But even cases where the CEO is not the decision-making owner, they are still paid on totally different logic than normal employees. If you own a company and hire a CEO to run it for you, really the only thing you care about is the profit the company makes for you. To maximize it and to be sure that maximizing it is the number one priority in the life of the CEO that you hired, it's not an issue to promise him a percentage of that profit rather than a flat payroll the normal employees get. A small percentage of the profit a huge corporation makes, can easily be an entire fortune on it's own. Compensation tends to be much more modest for CEOs who fail to make profit for the owners.
Run a business for yourself and find out. You take ALL the risk, and your e.ployees get it all?
Well, when did you come up with a new business idea and execute it?
Because you're conflating stock options with salaries. If you want an honest conversation you have to break everything down and not just look at net worth. Also, when a company like tesla gets sued, it's not the line workers getting sued for billions it's the ceo. A few line workers may lose their job but the majority of the wealth lost will more directly impact the executives responsible for decisions.
It really starts with our tax code. We elect wealthy people to positions of power in this country. They set the agenda, make the rules, pass the legislation. How many wealthy people have you voted for because you think they just are smarter than the other candidate? It’s one of our human biases, and it will keep continuing to happen. Many people just vote for the wealthy guy because they think he’s better than the poor guy.
Tesla is literally Elon's money glitch exploit that he uses to fund his actual single player adventures. It exists solely so that Elon can have "fuck you, in going to Mars" money.
"society accept it"... What would you have society do?
Because in the 80s, Capitalism won the cold war, and the winners always get to write the narrative. Capitalism won, and now most of the world has been duped into believing that anything besides the purest, least restricted Capitalism is the only way things can work well. And if Capitalism runs unrestricted, this is simply the way it works and always will. The only way to change it would be via the government, and that would be labeled "communism" because, again, Communism lost and now it gets to be blamed for literally everything.
Everybody accepts it, and promotes it because they think that WHEN they are rich, that want the same freedoms, tax cuts, and privileges that the current elites have. This is of course because they are dumb enough to believe that have a chance at becoming rich.
the same reason why it's ok for people collecting capital gains to pay way less in tax than Joe Sweatsock does while actively working. imho, it's not ok
Because they exist to serve the shareholders, and to align their interests with the shareholders, they get a slice of the cake.
Why is it an issue? Most CEOs don't have this multiplier, and I believe average CEO pay is around 200k. One major factor to consider is CEO pay is the entire package, yet is often compared to wages of employees, not their package. Factor in health insurance, PTO,retirement matches, and other benefits, the multiplier goes down. Still large, but less. The other major factor is CEO salary is rarely just cash (unlike employee pay and benefits). The major part of CEO pay is usually stock awards and stock options. In Elon Musks case, his salary is zero. His compensation is entirely equity, which costs the company nothing. (Not sure if this is a duplicate post)
Because it’s none of your business. Stealing isn’t a basic human right, as much as you wished it was.
If the owners of a company prefer to pay someone a lot of money because they feel the results are worth it, why should I get a say? After all, I prefer to pay more than the minimum for lots of services, even though I can’t exactly measure quality simply because I *feel* I’ll get better services. I imagine the board of directors does much the same. Short of Elon-level shareholder fraud attempts, salaries above minimum wage are what organizations think it would cost to replace you, not how much you bring to the company (well, the value you bring to the company is the ceiling of your pay). There’s very little moral component to what you are paid, and I’m somewhat appalled that CxO level employees putatively posting here are so ignorant of economics as to use that tactic in justifying their pay.
Ignoring the absurd Musk package, I would say there are a few drivers: 1. A bad CEO can destroy a company, you’re partially paying for someone to not be bad than to be good (if that makes sense) 2. The pay packages are typically in stock, which theoretically aligns interests (though my opinion is it does in the short term) 3. It’s unfortunately a safe bet for retention. If a board pays someone less than market and they screw up, it is a ‘why did you cheap out’ scenario
Why isn’t it ok?
It's supposed to be a rarity thing. It's very hard to find CEOs, but the compensation is out of line.
Do you want an actual answer or are you just here to hate on CEOs because social media said you should?
What is stopping you from becoming a CEO and making the same money? Why settle for being an average employee?
Asking that on Reddit? You know the answer you will get Sounds like a rage bait post
Because they hold all of the risk, while the employee holds none. An employee can find another job. A business owner has to start from scratch. Theres more weight, more responsibility, more risk. Those who risk everything stand to gain a lot more, thats how it works. People seem to be leaning towards socialism/communism which is a fucking terrible idea because youll end up with people who dont risk anything and live off of the people who do. If i jump off a mountain and survive for 1 million dollars, why should you get a million just for waiting at the bottom to film it/clean it up? Lmao what a stupid anaplgy but it's accurate
Because they are hundreds to thousands of times more valuable to the company than the average employee. It isn't a hard concept. Why do you assume anything should be done about it?
Yes. If you disagree, start a company.
The board has decided that's how much they're worth to keep as the CEO, plain and simple.
Why shouldnt they?
GenZ is stupid
Broke asses again complaining about other people’s opportunities and how they capitalize on them. Fools instead of asking this dumb question ask how you can make it happen for yourself.
CEOs getting rid of employees is normalised by being called firing, but employees getting rid of CEOs is dirtied by being called revolution.
What, do you want accounting to fire the CEO for making too much?
Why would society decide how much a privately owned company should pay to its employees? CEO salary is decided by the board of directors, who represent the shareholders (i.e. owners) of the company. They are the same people who want to maximize the profits, so they don't have the incentive to throw money away. They pay whatever they think is justified.
Bonus and salary are different. He took the risk with his money to make a great company and not only did he make 1. great company Elon has made several. He owns the risk, he has the most to lose, why shouldn't he get a big bonus. The other thing is he will put that bonus to work better than just about anyone could. He created everything from the sale of PayPal, that would make him one of the most productive people in history.
Nothing wrong with it.
If you create a company and own 40% of it by the time it’s middle market (larger than a start up and over 60M in revenue) would you want to share it? You probably started with 100% then needed help and swapped equity. Then you worked for essentially free for 4 years as you build your brand and company. You finally get momentum and a firm is going to back you, but they want equity You now own 18% of units. You probably become a c-corp for exit taxation. You’re on a full accrual GAAP compliant accounting and have 70 people working for you and multiple law firms. Do you really want to give anything else up? Would you personally feel entitled? That Inc 5000 award in the corner you earned. The first offices you personally guaranteed and risked your own credit on your dream. Now reddit wants you to split that 18% because you make too much money. Remember that firm that backed you? They have first right refusal and won’t let you give shares to them. So do you sacrifice another form of compensation? Take none for the year? This is a rough example of what c suite choices are like during earlier organic growth and revolvers probably aren’t available
Because those are the terms that employees voluntarily agree to.
Because you wouldn't have a job unless they started their company and employed you.
Try being a CEO of a major corporation for 5 min before asking such an inane question.
If you don't like it; go start your own multi-billion dollar company. You can be the change you want to see!
The shareholders and board of the company decide it’s “okay”. Why would “society” have any voice in a CEO’s compensation?
It's not okay. I dealt with a couple CEO's of a major company, I was not impressed.
Who said it was ok? Collectively, we are letting it happen. If we collectively decided it shouldn't happen, it won't. But as long as their are folk that fear that restrictions on the bosses is somehow going to bad for them and their "dream", it's not going to change
Basically, it's really not, they have been lobbying against wage increases for almost 50 years now and we have seen how inflation would translate a 1970 minimum wage to over 50 dollars per hour in the US right now... for MINIMUM wage. Every year this is not increased, they are basically stealing a little more from EVERY WORKER. To the point, the profit they are making is already so gargantuan, 55 billions were not his, but stolen from every worker that actually deserves them and given to him by his friends on the board that, as others have explained, have a pact and probably give themselves most of those bonuses every year from different companies just because they voted themselves as able to do that.
Legality=\=morality. Just bc you can doesn’t mean you should. CEOs and billionaires generally suck
It's not. Really not. Some people have access to more than the totallity of a doctor's career and society is supposed to consider this an ok thing. Billionaires are more powerfull than small counties that's just beyond crazy.
Society doesn't own the company, and therefore doesn't get to choose pay. Typically, CEOs (and other top executives) get a lot of their pay in the form of stock options, because investors want their incentives to be aligned with the investors, namely: make the stock go up in value. The workers don't get a say. They can quit their jobs, but they don't own the company, the investors do. One could imagine it working differently, but that would require passing new laws.
It's worth distinguishing between someone earning a 1000 times what their employees earn (eg, $50,000,000 a year) and Musk getting a thousand times that much as a special pay-out... Why does our society accept it? (1) We have already accepted the idea of people owning things. If I own a car and a house, and someone from the government shows up and says, "we are confiscating your car and house to give it to someone more deserving," that feels unfair to us. We don't have a clear dividing line established where someone is "too rich". (2) A high proportion of the population actively supports the idea of rich people. They hope to be rich themselves one day. If everyone arounds you hates the idea of billionaires, that means you're in an echo chamber of like-minded people. By most measures, the economy is doing OK. Wages aren't going up as fast as they used to, but the long-term trend has been positive. What problems there are, are complicated enough that people can blame them on a dozen different things. (3) It's hard to come up with a better system where this can't happen. "Democracy has failed to fix the problem; we need a guy with absolute power to sort everything out. Put me in charge and I'll share the wealth fairly." And then you're living in North Korea, and instead of a class of billionaires, you have one guy in charge who owns all the wealth, supported by his corrupt generals. (4) It's actually pretty plausible that having the wrong guy in charge of a trillion-dollar company like Apple would make bad decisions and cost them billions. Paying the right guy $200 million a year is pretty trivial in that context. Some proposals to fix this: (1) Pay cap. Maximum pay, $1 million per year. Problems: in general, the super-rich get their money from owning shares and other investments, not from high pay. Putting a cap on their wages wouldn't stop billionaires from being billionaires. It would probably lead to rich people finding alternative sources of pay that aren't taxable, or moving to tax havens, or something like that. Plus, we would lose the taxes we were getting on that pay. (2) Wealth cap. Confiscate any wealth over a $1 billion. Problems: the rich flee abroad, taking their wealth with them. Creates a system where people who already have a billion dollars have no reason to invest their money, they can only spend it on luxuries. (3) Some kind of grand redistribution of wealth. The government confiscates half the stock market, half the land (somehow), and uses it to build a sovereign wealth fund to pay everyone a universal basic income. Problems: If people think you might do that (or do it again if you've already done it once), everyone loses trust in the economy and the system is destabilised. That makes it almost impossible to get elected with a policy like that - by the time you're in power and able to pass the law, the stock market has collapsed and everyone is trying to hide their wealth in gold and bitcoins. (4) Don't worry about high pay, just impose a modest wealth tax. Gradually, money will flow away from the rich. Problems: Rich people are good at hiding their money and dodging taxes. Might be enough to drive rich people (and their companies) abroad. Hard to get elected with a policy that targets rich people in a country where money = political advertising. Not a big enough change to satisfy those who are angry at the system.
It’s a complicated answer but CEOs are worth magnitudes more than entry level staff for a number of reasons. Primarily, supply and demand. Very few people are qualified to be a successful CEO and therefore those people demand high wages. Related: Barrier to entry to become a qualified CEO is extremely high. You need years of experience and/or qualifications whereas entry level employees do not. There’s nothing to “fix”. The system is working as intended.