domain:preview.redd.it
This feels like a Pascal's Mugging type of argument though. Or more specifically the petersburg paradox
Is there any specific reason to pay the CEO $95 million? It's not like there's a standard market rate for CEOs. It varies wildly and depends heavily on the subjective opinions of the board members. Why not go out and find another CEO for $200 million? A $200 million CEO should be even better than a mere $100 million one, right? Starbucks makes about $36 billion in annual revenue right now, so even $200 million is (like you said) a drop in the bucket. A mere 0.5%. If the new, better CEO can increase performance even 1%, he's worth it.
But then you can play the game again, and again, and again. There's no upper limit for CEO pay! Where does it stop? Their stock is kind of struggling right now- would a $10 billion CEO lead them to greatness? Or should they just cut costs and try to remain in their nice, small, profitable niche? Most sane people would say they should just stick to selling coffee, but you could do the math and imagine that even a 1% chance of becoming the next hot tech stock is worth gambling the entire company on.
Starbucks is admittedly a weak example for this. They have a lot of part time hourly employees, and they all get health benefits, so their biggest expense by far is already employee compensation. It just doesn't go as much to salaries.
For a different extreme, look at Tesla. 125,000 employees right now. Market cap 1.3 trillion. Elon Musk right now earns about 8$ billion a year under current conditions, but it goes up by 1% of Teslas total market cap for each additional trillion in their market cap. If he hits just the easiest goals, he gets $36 billion a year. If it goes up to 8 trillion, he clears an eye watering $878 billion in 10 years, almost $90 billion a year. (yes that's in stock, not cash, if that makes a difference)
Doing the same math as you, that could be ($90 billion)/(125,000 employees) = $720,000 per employee, per year. Is that still just a trivial cost? I dont' think so. In that case he's being given a large chunk of the company as his compensation. (And that's just the CEO, non including any of the other executives who also get paid a lot)
You could argue that in that situation he deserves it since the stock went up so much. But like... how do you know? How does anyone know? If some Tesla employee delivers full self driving while the government decides to tax gas cars and promote EVs, does Elon really deserve that much credit? Surely there should be some limit where we decide that a CEO is just too expensive, but there doesn't seem to be any mechanism in corporate America to limit it. Meanwhile, managers are very much incentavized to cut expenses, which heavily includes limiting employee salaries. There isn't any mechanism in the corporate structure to say "OK our stock didn't grow much. But on the plus side, we were able to consistently raise salaries for all our employees every year."
in history they sometimes talk about "the great man model," where history is heavily shaped by a few exceptional individuals. They mostly bring it up to disparage it, saying how history is far more complicated than just what people like Caesar and Alexander did. They'd be laughed out of the room if they tried to give all credit for an entire country to just one person. But apparently corporate leadership still believes in this line of thinking- they value the CEO far more than anything else. I can't help but worry that our largest corporations are under the control of middlebrow business majors who vastly oversimplify everything.
So sure, the CEO's pay has little to do with the hourly pay of workers. But, what kind of boot licker looks at a $95mm salary and says he earned it without asking what his VORP is? Because I'm sure they couldn't have done too much worse for $50mm.
Well. How much would you demand to be CEO of Starbucks?
EDIT: I'm not trying to be flip. Being the CEO of Starbucks sounds terrible. They're in decline, having been badly mismanaged, and competition is becoming more fierce than ever. And a ton of their stores have become unionized and the NLRB is saying shit like you must re-open closed stores. Figuring out how to stick your nose up Trump's ass is almost certainly in your future.
If I'm hot shit enough to be taking interviews with boards of directors of $100 billion companies I would not come to Starbucks for cheap.
Again, none of this is to say my OP is about what the CEO deserves. That's separate.
FiveHourMarathon
Wawa Nationalist
1d ago
It's not missing the point, it's bringing up another separate point that bears on the argument.
If Starbucks paid I-beam X Kendo $200mm per year for a sinecure as grand czar of diversity equity and inclusion it also wouldn't have anything to do with worker pay, but it would be manifestly unjust and many people would point it out. The CEO is manifestly overpaid and everyone is going to point that out to their own ends.
Costco, for example, doesn't have this problem. Costco is well run, pays its people well, treats them well, and has had an excellent run of fairly compensated CEOs. Costco pays a total of $20mm including stock. Is Starbucks doing better than Costco? (No) Is Starbucks more complex than Costco? (No) Why does he make 5x for a worse performance? Why do GM and Ford perpetually pay their CEOs multiples of what Toyota and Honda pay while Toyota and Honda completely muscled Detroit out of the car market?
CEO overpayment is an obvious and manifest injustice, so of course people are going to latch onto that. Saying well it's a big company with a lot of money sloshing around so stealing a few bucks is no big deal is the morality of the shoplifter and the lazy employee, not the profit maximizing shareholder or the diligent corporate steward.
Starbucks probably had problems under Howard Schultz, but no one ever really complained about his pay in the same way, because the company was growing like a weed and treated its workers better at the time.
DaseindustriesLtd
late version of a small language model
1d ago
Should I read the book or can you briefly explain the motives of Willoughby here?
FeepingCreature
1d ago
Yep, and this mechanism should be "I'll call up my bank and take Microsoft out of my personal index." Sadly, while this does exist, it's not really percolated down to a consumer product yet.
orthoxerox
If you can read this, you're using a custom theme
1d ago
This sounds like something a Douglas Coupland's character would say.
zPvQINBQvfFR
1d ago
Perhaps Scott would be a race scientismist.
WhiningCoil
Ghost of Quokka's Future
1d ago
The hard part, though, is that if that is true, if you know for certain that they are eating their seed corn, then my friend you have tremendous alpha and should put all your money betting on Microsoft going belly up.
If there were an open ended mechanism to short a stock that didn't require exquisite timing, I'd think about it. But the market can remain irrational longer than you can remain solvent.
coffee_enjoyer
☕️
1d ago
Rallying the lower class requires simplifying things. It is easier to rally people around CEO pay than the more complicated “if you unionize you can redirect more of Starbuck’s yearly profit to its 4 billion workers, giving each worker an extra $11,000 per year”. Starbuck’s should not have a high profit margin as it has maxxed its expansion in America and it is a predictable business that doesn’t need to “innovate”. Literally just sell the pumpkin spiced latte. It should have the profit margin of a grocery store.
naraburns
nihil supernum
1d ago
Designed to be perfect, but disturbingly generic.
That's the movie's whole shtick. It's the emotional equivalent of ludicrously empty calories. This takes real skill to accomplish, and I'm genuinely impressed with how well the movie and the music really present as the apotheosis of pop. It's the perfect emotional dessert--utterly devoid of nutritive value.
phosphorus2
1d ago
As opposed to wildfires, which apparently pose no danger at all to the apparently fireproof plant....
It's funny, because Braunton's milkvetch relies on wildfires to reproduce. "The beanlike seeds require scarification from fire or mechanical disturbance to break down their tough seed coats before they can germinate."
are there ways to legislate outside of tariffs to prevent this sort of major sell off of strategic business to adversarial nations?
The classic way to do this is just subsidies. If you want strategic resources or production capabilities to stay domestic, you can always just pay for it. This has - across many different nations and decades - worked mostly OK, especially for strategic essentials like food and energy production. Most western nations spend around 2% of GDP on that.
You could double that spending and easily get everything from domestic batteries to chips, from steel to rare earth metals for it. It's an absolutely enormous amount of money, after all.
And while it's probably not the most efficient way to do it since you distort/steer the market (that's the whole point), and if you overdo it you might need some export tariffs (you probably do not want to use tax dollars to subsidize foreign consumers - unless you're China and want to bankrupt your competitors production capability), it will get results.
zPvQINBQvfFR
1d ago
Not if it comes with risk of being sanctioned for violating EU environmental regulations and losing access to the cash money.
orthoxerox
If you can read this, you're using a custom theme
1d ago
I have been absolutely addicted to the song "Golden" from k-pop demon hunters on Netflix.
It sounds to me like one of these songs that parody a genre by ticking every box. Designed to be perfect, but disturbingly generic. Like a "house style" PonyXL face.
RandomRanger
Just build nuclear plants!
1d ago
Later on in the thread it brings up the closing of Mountain Pass for environmentalist reasons, one of the richest rare-earth mines in the world.
Lizzardspawn
1d ago
Probably because being CEO is heads I win, tails you lose. There is no downside, no penalties, no risk and no repercussions for doing their job poorly. If we had a tradition of skinning the CEOs alive if the company was not doing well, I would be ok with their obscene pay.
Drinniol
1d ago
Companies producing weapons and military vehicles already have tons of laws on them that would prevent them from being purchased or suborned by a foreign power.
Literally all that needed to happen was for the government to identify that REE was critical to defense and apply the same rules to them that they do to other defense critical industries.
Unfortunately, the time to do that was around 30 years ago. But in 1995, with the Soviet Union having fallen, and the Tiananmen Square demonstrations in recent memory, and HK still under British control, the government just wasn't thinking about China as a strategic level threat. Thinking ahead 30 years? Eh, they'd probably collapse like the Soviet Union by then anyway, right? Mid/late 90s US was on top of the world, why worry about some rinky dink mining company or two getting bought out by the Chinese?
pigeonburger
1d ago
But profits go up, share holders are happy, so every year it continues. At least on paper. It's almost impossible for me to reckon that this can continue forever. That they aren't eating their seed corn in some fundamental way. That at some point the tech debt they continually accumulate won't cause the Microsoft ecosystem to be such a risk to run, that there is an institutional push to abandon it.
The hard part, though, is that if that is true, if you know for certain that they are eating their seed corn, then my friend you have tremendous alpha and should put all your money betting on Microsoft going belly up.
These risks are not separate from the valuation, they are priced in. And while I also really, really dislike the direction Microsoft has taken, they are making a killing on cloud licenses, especially Office 365. Pretty much every company I work with and for has to pay a monthly per employee tax to Microsoft.
sarker
It isn't happening, and if it is, it's a bad thing
1d ago
This is missing the point. Do you think anyone complaining about starbucks unionizing would be satisfied if starbucks stock instead grew at 10x the rate of the s&p500?
FiveHourMarathon
Wawa Nationalist
1d ago
Really, Starbucks is your example? Starbucks? In the year of our Lord 2025, Starbucks?
The CEO of Starbucks has been around for a year. Starbucks has lost 16% of its value in a year that the SP500 has gained 13%. Relative to just parking your money in an index fund, the CEO of Starbucks has during his regime lost you 30%.
Same store sales sank year over year continuing a downward trend. 70% of customers plan to visit less. Corporate plans to emphasize Starbucks as a 'Third Place' have fallen as pearls before swine. Starbucks' customer base is getting older, cutting their spending, and less committed than they used to be. Starbucks is closing locations at the same time that competitors, from Dutch Bros to Wawa (sieg heil!) are expanding their espresso offerings to take bites out of Starbucks' market. Dutch Bros stock is up 65% year over year. Starbucks is cutting jobs and locations at a time when their competitors are growing.
So sure, the CEO's pay has little to do with the hourly pay of workers. But, what kind of boot licker looks at a $95mm salary and says he earned it without asking what his VORP is? Because I'm sure they couldn't have done too much worse for $50mm.
It's one thing to talk about Elon Musk's pay package, as without Elon Tesla's valuation probably halves overnight. It's one thing to talk about Jeff Bezos' wealth, who built a dominant and revolutionary company. But Starbucks? GM? HP? It's hard to justify what these guys are getting paid to be mediocre.
No one has quite solved these kinds of incentive problems.
fmac
Ask me about bike lanes
1d ago
I think it's all of the above, but is largely operationalized as a gut reaction/feeling versus a conscious choice. Person doesn't like thing, person chooses the "negative" option, whether that's a downvote, 1 star, or whatever. I think it's almost entirely a system 1 decision though.
It's also really funny because that behavior in endemic here as well. It's a very human reaction.
"But where is a social network for the people who aren't sewage?"
"The what now?"
MollieTheMare
1d ago
I had an apartment with almost the same layout as your build. Very functional and reasonably comfortable for two. Of course we only had windows on one side, unlike your build. We did host another couple for a total of four for a while, and it was fine. Probably could have squeezed another person in if needed. I wouldn't want to live that way long term, but seems very reasonable for two for now, hosting up to five.
Given current construction prices and the size of your build, you either got a great deal or live in the middle of nowhere or both. If you really are staying for a while, I think the splurge is worth it. We can't all build a Monticello, but there's something to be said for living in a house of your own design.
Opening a window is a good option for ventilation as long as the weather is good and there's not too much outdoor pollution. Unfortunately the number of places that have good weather most of the year, don't have wildfire smoke or car exhaust outside, and are affordable is pretty small. For a house that small though, you probably are fine with just exhaust fans and some makeup air to a small air handler. The extra energy cost over an ERV/HRV is probably pretty small given the small square footage.
dr_analog
top 1% of underdog fetishists
1d ago
I really enjoy getting downvoted on Reddit for doing the "CEO pay"/"# workers" = "incredibly small number"
This is like 50% of what drives me crazy. What are people clicking downvote even doing? Do they think you're making the very easily checked facts up? Are they mad that you're spoiling a good circle jerk? Have you simply signaled that you're a member of the outgroup and must be destroyed? This is a fact that should cause a complete crash to their worldview and it does. not. register.
So we're at "Neutral vs Progressive"?
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