I am confused why CEO salaries are still so high when AI can do most of their work? If companies are looking to improve margins, then decimating CEO salaries is a great place to start. I’d even say it’s a fiduciary duty to act on this sooner rather than later.
No one’s networking is worth hundreds of millions. A reasonable approach is to cap CEO salaries at $2-5M, and invest everything else in the business. How is this already not being done, AI has rendered a lot of their “analysis” common place.
If you strongly feel that AI is doing analysis and decision-making at a level which is comparable to human executives, you and some like-minded people could try to form a PE group that takes over firms, replaces a highly compensated CEO with a lower compensation one and an OpenAI subscription, and see how you do.
However, only months ago Anthropic published about their autonomous vending machine experiment which had both humorous and interesting but not financially successful. I think maybe we're not to the point where AIs can run businesses. https://www.anthropic.com/research/project-vend-1
The skill ladder for humans assumes CEO functions require higher and better skills than a vending machine manager. But there's no reason to assume that AI capabilities map to those jobs in the same way.
It's quite possible that an AI would do a better job at CEO than running a vending machine.
And it's quite possible that successful CEOs would not succeed at managing a vending machine. It's almost guaranteed that many will fail, given that some C-level people are selected for risk appetite and social skills over actual business acumen.
I encourage you to read the Anthropic blog post, which includes situations like:
- hallucinating conversations with fictitious people
- role playing as a real person and telling them they are present in meatspace, or claimed to have visited a fictional location
- hallucinating details of an account involved in payments
- both ignoring lucrative opportunities and accepting loss-making deals
- making commitments before having done any research
While yes, the skills to run a vending machine and lead a company are not exactly the same, I think the nature of failures discussed means they would likely affect both roles.
I think there's every possibility that a present-day AI allowed to act as CEO would make mediocre choices for some period and then decide that it was a character in a scifi novel selling bespoke space-yachts to comet-mining magnates.
I guess you could make the argument that we haven't proven AI can't do a CEO's job until we test it... it would make an interesting experiment, at least.
But it also kind of reminds me of the DAO hype a few years ago where people suggested decentralized, blockchain-based organizations could be the org structure of the future. (Not realizing that they were just putting a co-op on a blockchain :) )
Now that I think about it, I do hope someone tests this theory out. It would be very interesting to see. You could probably start by saying "You are the CEO of a lemonade stand. Your goal is to maximize revenue while [constraints]..."
It's entirely possible... In fact, I'm pretty sure that there are more than a few very wealthy people willing to place bets on that very thing... maybe not everything, but upwards of 1-3% of their wealth.
Now, actually getting in a room and talking to those people and getting in on the execution of that idea... that's a different story.
>No one’s networking is worth hundreds of millions.
I was with you until here. Honestly, some networking is actually just that good. I dont believe this to be the case universally, but some people can connect people so efficiently that its mind blowing.
>A reasonable approach is to cap CEO salaries at $2-5M
The real question is whether their networking has a value of hundreds of millions to the company, or to the CEO: are they getting hired because those networking skills are genuinely providing a huge value to the company, or are they getting hired because they are so good at networking that they can fool a company into hiring them instead of someone else capable of providing virtually the same value at a far lower salary?
> Why is [a CEO salary cap at $2-5M] reasonable?
Why not? It's enough to live a very comfortable life. If you want to, you can retire after a single-digit number of years. Anyone who needs more money clearly has a serious spending problem and shouldn't be anywhere near your company's finances.
And the whole "but look how much money they are making/saving the company" argument you usually hear is bullshit as well. I bet there are plenty of mid-level FAANG engineers who have saved their company literally tens of millions of dollars a year by optimizing some code, but they don't get those obscene salaries either.
It gets even worse once you take into account the bottom rungs on the ladder: paying the CEO tens or hundreds of millions a year would be a lot less problematic if that very same company didn't have workers literally peeing in bottles, having to work around the body of their dead coworker, or having the building literally collapse on their head.
>The real question is whether their networking has a value of hundreds of millions to the company, or to the CEO
And this is an important consideration for the board of directors/shareholders to consider.
>Why not? It's enough to live a very comfortable life. If you want to, you can retire after a single-digit number of years. Anyone who needs more money clearly has a serious spending problem and shouldn't be anywhere near your company's finances.
If someone is good enough to attract a higher salary, then the salary cap will send them to somewhere without the cap. You would likely keep the people simply able to talk their way into higher salaries, but guarantee that any actual talent goes offshore.
>And the whole "but look how much money they are making/saving the company" argument you usually hear is bullshit as well.
Arguable. CEO isnt meant to be peak sales guy, but it often is peak sales guy. The issue with this line of thinking is that it ends with "Well lets just pay them performance/sales bonuses" which is actually how a lot of them are getting big payments, but people are also already mad about those for some reason.
If you land a 20 million dollar recurring revenue contract, and you had a previous commitment to 5% of that as a bonus, your previous commitment should be honored. If you get an offer to come do that for someone else for 10 million per year, that's reasonable.
> I bet there are plenty of mid-level FAANG engineers who have saved their company literally tens of millions of dollars a year by optimizing some code, but they don't get those obscene salaries either.
If an engineer negotiated a contract that included such a provision it would be great. I imagine most engineers aren't as capable as a CEO to negotiate such a contract. Its not impossible I am aware of an engineer that resolved a technical issue for a stock exchange nabbing a few mil in bonuses that year. Mostly these things exist in the contract/consultancy space.
>It gets even worse once you take into account the bottom rungs on the ladder: paying the CEO tens or hundreds of millions a year would be a lot less problematic if that very same company didn't have workers literally peeing in bottles, having to work around the body of their dead coworker, or having the building literally collapse on their head.
Ok, is that a fixed goalpost or is it on wheels? Mike Cannon-Brookes is worth a few billion. Is anyone peeing in bottles or wrangling dead bodies at Atlassian?
I always thought a cap of 100x the lowest paid employee as a raise all boats kind of thing. That said, I think stretch goals with generous monetary incentives should always be possible. If someone increases the value of a company by $10b, I'm not going to be upset if they make $100m, assuming they aren't doing anything shady, immoral or illegal.
What would that cap do then? It's almost like that right now, most executive compensation comes from stock packages.
Distribute that across all employees as well, relative to their position, just like any profit-sharing system should work: all workers were part of increasing value, without them no CEO/C-level would generate any value.
Doesn't management always want loyal people? That's how you make people loyal, paying them for what they achieved, having a stake in the company's future.
> but some people can connect people so efficiently that its mind blowing.
People don't connect people, money do. It's the golden rule and more...
> Why is this reasonable?
Because that's where work stops and corruption starts. Anyone who's seen companies prepared for acquisitions by board-installed, "connected" outsiders, knows that side of the story. Or companies sank on purpose by the same method.
>Because that's where work stops and corruption starts. Anyone who's seen companies prepared for acquisitions by board-installed, "connected" outsiders, knows that side of the story. Or companies sank on purpose by the same method.
Like theres plenty of information thats not public, but isnt confidential either. Accessing that information can be exceptionally lucrative. Now if that information is used to trade publicly traded shares, that can be criminal (the ethics of the situation are another matter) but if you were to instead, provide product or service on that basis, you are in fact just a well connected salesman. Not everything that doesn't go to a public tender is corruption.
To get to the level of hundreds of millions in value over the standard process, would indicate a breech of shareholder responsibility to make the best returns instead of cutting a deal for someone you know. This can potentially undermine market integrity. Even on a smaller scale, most people disapprove of nepotism and chronyism.
>To get to the level of hundreds of millions in value over the standard process, would indicate a breech of shareholder responsibility to make the best returns
That doesn't make sense? Like if I know someone who can make your product, and you are happy with the price per unit, connecting you to that someone isnt a breech of shareholder responsibility to either party.
The connection isn't worth hundreds of millions unless you're getting hundreds of millions over the normal market channels. This means that you must be getting a better price not available through the normal market. The only reason you could get that price with a connection vs without a connection implies some sort bad action.
You normally get zero until you acquire a customer. Then you get money in exchange for contracted goods and services.
>This means that you must be getting a better price not available through the normal market.
No?
>The only reason you could get that price with a connection vs without a connection implies some sort bad action.
"Bad Action" is doing a lot of work here. I have seen a lot of things done in the name of networking. I only really get concerned when there's no replacement mechanism, like a not for profit. A not for profit has generally little understanding of market forces, and they can be convinced to pay a lot things they don't need and don't feel that pinch due to competition.
But if Manager A has a 400 million dollar budget, and Provider B can provide service their needs under that budget and turn a profit, and has the capability to land Manager A as a customer, what "Bad Action" are you possibly afraid of? If the leader of Provider B has also a personal relationship with several decision makers, who will follow him to Provider C because they enjoy his services, why do you take offense?
I know a guy, he provides services to the hospitality industry. His customers are 4 local booze barons. Each baron brings 4-5 pubs/clubs/restaurants/strip clubs each. These guys have issues finding service providers who work all hours in less than admirable working conditions. They can get bartenders, security etc themselves, but they cant find management/IT/telephony/communications and other service industry side troubleshooting at all hours, that's actually competent. This bloke does all of it. He is a one man band, and he makes himself available 24/7/365. He has told me stories about working all night, taking a lady home, getting a call, paying for her uber and heading back to the city. He isnt defrauding anyone by being really good at what he does, and building on that a really good working relationship with his customers. And thats when things become personal, those booze barons would 100% follow him to any future employer if he decided to stop working solo. He could personally bring something like 900K of recurring revenue to an employer, possibly (i suspect) a lot more than that. That's a micro scale example but it does scale. I know another guy who can hold down 3-4 million of IT contracts from various customers. Just a really good sales engineer. And he gets paid accordingly by any of his employers. An ISP sales manager probably handles 30-40 million of contracts. If they don't give him a non compete, and he wanders to another employer, same again.
It also could probably incentivize some unintended behaviors like clever financial engineering for short term stock gains at the cost of long term company health.
It could (??) also lead to comp going up for CEOs, as I imagine (??) they would demand more in stock because stock is riskier than cash.
Having gotten to know several CEOs I have come to the conclusion there is no good way to identify if someone is capable of being a CEO other than having personal connections to investors.
Ideally, it's similar to any commissioned sales position, just with larger numbers as it's based on the performance of the company as a whole not just one set of sales connections. The more you increase the overall value of the company, the more you get. You increase the value of the company by $10B, your commission of 1-5% is $100-500m in stock, so even your wealth is tied to the success of the company.
IMO, the role of government this is to establish societal baselines in terms of criminality of certain actions and to ensure a baseline of competition. Actually acting on the former and the latter... the former by affecting the financial wealth of executives and board members when a company's neglegence harms society. The latter by not giving outsized govt contracts to a single provider for anything and to establish that if there are restrictions (medication, for example( that multiple providers/manufacturers must be present in the market, and that a certain portion is produced domestically (for security).
I think your complaint is about CEO comp, not CEO pay. CEOs generally don't make a ton of cash (for example the CEOs of Netflix get $3M a year, which is just a bit more than the VPs get). However, they get a bonus based on company performance and a ton of stock.
CEO comp is so high because of the stock, and the fact that stock buybacks are legal. They were illegal until the 1980s.
A quick fix would be to outlaw stock buy backs. The problem with buybacks is that the people who control when they happen are also the ones who benefit when they happen.
It is, but the point is that it's not huge compared to other people at the company. Directors at Netflix make over $1M (and some of the engineers too).
In the Bay Area that's a big number, but not unfathomably huge.
The point of high CEO salaries is to align their incentives with the board and shareholders (the people paying them), so that when they are faced with the decision of losing their job vs. fucking over the tens of thousands of people working with them to increase shareholder value, they choose to fuck over the people working with them. Most people would not normally make that choice; it takes a few tens of millions in stock options before someone might contemplate it.
> I’d even say it’s a fiduciary duty to act on this sooner rather than later.
You said it like nobody hasn't attempted it. Many people are trying to solve this. They've replaced small mechanical works like scheduling meetings and reaching out already.
The majority of CEO job is excellent judgement and motivating people. It's difficult to replace that function.
A lot of CEOs are founders and owners. You can bet they want the business to run by itself, so it would free up their time to go do something else. That's the dream. You do realize that these people will earn regardless who runs the business, right? because they are significant shareholders. In a way, you wish for CEOs/founders to be much much much richer.
Because in some companies the CEO compensation is a significant portion of the expenses so obviously cutting it would free up cashflow to do other things - but also on a simple human level hearing about yet another CEO getting tens or hundreds of millions in compensation while they announce how sad they are they have to let go 10% of their workforce is just simply gross. I think even in private companies you are allowed to care when this happens, and voice your displeasure with this clearly visible idiocy of the situation.
When your observation is that the entire financial world is being irrational and you have an obvious solution, many thoughtful people would reflect upon their own priors.
Most companies have no idea what exactly AI is or what it does.
My company just spend months on several AI initiatives. They created several power point presentations about how we can use AI to automate all of the teams repetitive tasks. Our senior leadership didn't even know that we've been doing automation for almost ten years now.
Automation is so much more general than AI. Automation can be predictable and reliable, whereas AI can be (if you're lucky) easy and powerful, but rarely the reliable.
Automation with code = time consuming because you must build the instructions but will execute correctly basically 100% of the time once written
Automation with AI = less time consuming especially with elaborate rule sets, but it’s a probability model so by definition it will be wrong a percentage of the time
Do these people think that when they open a file on their computer there is literally some Susan walking down to some basement somewhere and retrieving a manilla folder with a ladder.
My coworker is supposed to translate React webpage with 100% text and links into html and put in the WYSIWYG editor of the CMS. These are legal pages.
Q: What did he do to solve the problem?
A: pasted the raw react code and asked an Llm to translate it to html.
The Llm did a terrible job. For example, it converted unordered lists to paragraphs with break tags. When I asked why he didn’t just copy the rendered output from the browser, he didn’t know how to do that.
When he was shown how to do that, he said it would be too much work because the rendered output still contained css tags. So he would have to get the Llm to remove the tags for him.
This is an engineer who’s been developing software for at least 10 years, well before Llms even existed. Yet he cannot figure out how to do a simple regex find + replace. He has no clue that he’s wasted a huge amount of time fiddling with Llms.
Everyone thinks AI is a cheat code to their employment video game and I’m looking for a new job now because I’m surrounded by the downfall of humanity.
This is wild to me. For the vast majority of businesses, AI is not the primary product. The message from the CEO should be: "we are welcome to, and will support you in developing AI solution if they can be proven to provide value to the key metrics and missions of the company". I wouldn't honestly expect most CEOs to be in the position to make the risk/reward evaluation, so I'd be pushing this down on people who knew more about it and who were willing to risk their careers on it. The CEOs should be protecting the quality of their brands and products.
There is a winning move. That’s not to play the game.
AI automation is a high risk and the rewards are questionable at best.
Nobody ever got fired for running a profitable business with real employees, creating value for their customers and executing well.
Note the word AI is NOWHERE in that sentence.
That's insanely high. I'm surprised 74% of CEOs can even admit that their job is at risk. I've been made to believe these people are suppose to be narcissistic.
I kept reading and quickly realized this entire report reads like a bunch of bull,
"94% of CEOs believe AI agents could provide equal or better counsel than human board members."
Board members hold CEOs accountable. How is an AI agent going to do that? "hey chatgpt, can I have a raise this year?"
I am confused why CEO salaries are still so high when AI can do most of their work? If companies are looking to improve margins, then decimating CEO salaries is a great place to start. I’d even say it’s a fiduciary duty to act on this sooner rather than later.
No one’s networking is worth hundreds of millions. A reasonable approach is to cap CEO salaries at $2-5M, and invest everything else in the business. How is this already not being done, AI has rendered a lot of their “analysis” common place.
If you strongly feel that AI is doing analysis and decision-making at a level which is comparable to human executives, you and some like-minded people could try to form a PE group that takes over firms, replaces a highly compensated CEO with a lower compensation one and an OpenAI subscription, and see how you do.
However, only months ago Anthropic published about their autonomous vending machine experiment which had both humorous and interesting but not financially successful. I think maybe we're not to the point where AIs can run businesses. https://www.anthropic.com/research/project-vend-1
The skill ladder for humans assumes CEO functions require higher and better skills than a vending machine manager. But there's no reason to assume that AI capabilities map to those jobs in the same way.
It's quite possible that an AI would do a better job at CEO than running a vending machine.
And it's quite possible that successful CEOs would not succeed at managing a vending machine. It's almost guaranteed that many will fail, given that some C-level people are selected for risk appetite and social skills over actual business acumen.
I encourage you to read the Anthropic blog post, which includes situations like:
- hallucinating conversations with fictitious people
- role playing as a real person and telling them they are present in meatspace, or claimed to have visited a fictional location
- hallucinating details of an account involved in payments
- both ignoring lucrative opportunities and accepting loss-making deals
- making commitments before having done any research
While yes, the skills to run a vending machine and lead a company are not exactly the same, I think the nature of failures discussed means they would likely affect both roles.
I think there's every possibility that a present-day AI allowed to act as CEO would make mediocre choices for some period and then decide that it was a character in a scifi novel selling bespoke space-yachts to comet-mining magnates.
I guess you could make the argument that we haven't proven AI can't do a CEO's job until we test it... it would make an interesting experiment, at least.
But it also kind of reminds me of the DAO hype a few years ago where people suggested decentralized, blockchain-based organizations could be the org structure of the future. (Not realizing that they were just putting a co-op on a blockchain :) )
Now that I think about it, I do hope someone tests this theory out. It would be very interesting to see. You could probably start by saying "You are the CEO of a lemonade stand. Your goal is to maximize revenue while [constraints]..."
Because it's impossible. CEOs are rooted in place not for skill but because of a web of social connections and class divide.
It's entirely possible... In fact, I'm pretty sure that there are more than a few very wealthy people willing to place bets on that very thing... maybe not everything, but upwards of 1-3% of their wealth.
Now, actually getting in a room and talking to those people and getting in on the execution of that idea... that's a different story.
Your latter point is my point...
It's technically feasible but practically infeasible because parasites won't willingly leave a host.
>No one’s networking is worth hundreds of millions.
I was with you until here. Honestly, some networking is actually just that good. I dont believe this to be the case universally, but some people can connect people so efficiently that its mind blowing.
>A reasonable approach is to cap CEO salaries at $2-5M
Why is this reasonable?
The real question is whether their networking has a value of hundreds of millions to the company, or to the CEO: are they getting hired because those networking skills are genuinely providing a huge value to the company, or are they getting hired because they are so good at networking that they can fool a company into hiring them instead of someone else capable of providing virtually the same value at a far lower salary?
> Why is [a CEO salary cap at $2-5M] reasonable?
Why not? It's enough to live a very comfortable life. If you want to, you can retire after a single-digit number of years. Anyone who needs more money clearly has a serious spending problem and shouldn't be anywhere near your company's finances.
And the whole "but look how much money they are making/saving the company" argument you usually hear is bullshit as well. I bet there are plenty of mid-level FAANG engineers who have saved their company literally tens of millions of dollars a year by optimizing some code, but they don't get those obscene salaries either.
It gets even worse once you take into account the bottom rungs on the ladder: paying the CEO tens or hundreds of millions a year would be a lot less problematic if that very same company didn't have workers literally peeing in bottles, having to work around the body of their dead coworker, or having the building literally collapse on their head.
>The real question is whether their networking has a value of hundreds of millions to the company, or to the CEO
And this is an important consideration for the board of directors/shareholders to consider.
>Why not? It's enough to live a very comfortable life. If you want to, you can retire after a single-digit number of years. Anyone who needs more money clearly has a serious spending problem and shouldn't be anywhere near your company's finances.
If someone is good enough to attract a higher salary, then the salary cap will send them to somewhere without the cap. You would likely keep the people simply able to talk their way into higher salaries, but guarantee that any actual talent goes offshore.
>And the whole "but look how much money they are making/saving the company" argument you usually hear is bullshit as well.
Arguable. CEO isnt meant to be peak sales guy, but it often is peak sales guy. The issue with this line of thinking is that it ends with "Well lets just pay them performance/sales bonuses" which is actually how a lot of them are getting big payments, but people are also already mad about those for some reason.
If you land a 20 million dollar recurring revenue contract, and you had a previous commitment to 5% of that as a bonus, your previous commitment should be honored. If you get an offer to come do that for someone else for 10 million per year, that's reasonable.
> I bet there are plenty of mid-level FAANG engineers who have saved their company literally tens of millions of dollars a year by optimizing some code, but they don't get those obscene salaries either.
If an engineer negotiated a contract that included such a provision it would be great. I imagine most engineers aren't as capable as a CEO to negotiate such a contract. Its not impossible I am aware of an engineer that resolved a technical issue for a stock exchange nabbing a few mil in bonuses that year. Mostly these things exist in the contract/consultancy space.
>It gets even worse once you take into account the bottom rungs on the ladder: paying the CEO tens or hundreds of millions a year would be a lot less problematic if that very same company didn't have workers literally peeing in bottles, having to work around the body of their dead coworker, or having the building literally collapse on their head.
Ok, is that a fixed goalpost or is it on wheels? Mike Cannon-Brookes is worth a few billion. Is anyone peeing in bottles or wrangling dead bodies at Atlassian?
I always thought a cap of 100x the lowest paid employee as a raise all boats kind of thing. That said, I think stretch goals with generous monetary incentives should always be possible. If someone increases the value of a company by $10b, I'm not going to be upset if they make $100m, assuming they aren't doing anything shady, immoral or illegal.
What would that cap do then? It's almost like that right now, most executive compensation comes from stock packages.
Distribute that across all employees as well, relative to their position, just like any profit-sharing system should work: all workers were part of increasing value, without them no CEO/C-level would generate any value.
Doesn't management always want loyal people? That's how you make people loyal, paying them for what they achieved, having a stake in the company's future.
> but some people can connect people so efficiently that its mind blowing.
People don't connect people, money do. It's the golden rule and more...
> Why is this reasonable?
Because that's where work stops and corruption starts. Anyone who's seen companies prepared for acquisitions by board-installed, "connected" outsiders, knows that side of the story. Or companies sank on purpose by the same method.
>Because that's where work stops and corruption starts. Anyone who's seen companies prepared for acquisitions by board-installed, "connected" outsiders, knows that side of the story. Or companies sank on purpose by the same method.
Corruption starts at 2-5 million? How so?
> Corruption starts at 2-5 million? How so?
You're right, it starts way before that but let's cut them some slack until we figure out a better working system.
Whats the dollar value where corruption starts?
"Honestly, some networking is actually just that good."
Only if we include corruption. Any deal that takes special consider is arguably corrupt.
How do you figure?
Like theres plenty of information thats not public, but isnt confidential either. Accessing that information can be exceptionally lucrative. Now if that information is used to trade publicly traded shares, that can be criminal (the ethics of the situation are another matter) but if you were to instead, provide product or service on that basis, you are in fact just a well connected salesman. Not everything that doesn't go to a public tender is corruption.
To get to the level of hundreds of millions in value over the standard process, would indicate a breech of shareholder responsibility to make the best returns instead of cutting a deal for someone you know. This can potentially undermine market integrity. Even on a smaller scale, most people disapprove of nepotism and chronyism.
>To get to the level of hundreds of millions in value over the standard process, would indicate a breech of shareholder responsibility to make the best returns
That doesn't make sense? Like if I know someone who can make your product, and you are happy with the price per unit, connecting you to that someone isnt a breech of shareholder responsibility to either party.
The connection isn't worth hundreds of millions unless you're getting hundreds of millions over the normal market channels. This means that you must be getting a better price not available through the normal market. The only reason you could get that price with a connection vs without a connection implies some sort bad action.
>over the normal market channels
You normally get zero until you acquire a customer. Then you get money in exchange for contracted goods and services.
>This means that you must be getting a better price not available through the normal market.
No?
>The only reason you could get that price with a connection vs without a connection implies some sort bad action.
"Bad Action" is doing a lot of work here. I have seen a lot of things done in the name of networking. I only really get concerned when there's no replacement mechanism, like a not for profit. A not for profit has generally little understanding of market forces, and they can be convinced to pay a lot things they don't need and don't feel that pinch due to competition.
But if Manager A has a 400 million dollar budget, and Provider B can provide service their needs under that budget and turn a profit, and has the capability to land Manager A as a customer, what "Bad Action" are you possibly afraid of? If the leader of Provider B has also a personal relationship with several decision makers, who will follow him to Provider C because they enjoy his services, why do you take offense?
I know a guy, he provides services to the hospitality industry. His customers are 4 local booze barons. Each baron brings 4-5 pubs/clubs/restaurants/strip clubs each. These guys have issues finding service providers who work all hours in less than admirable working conditions. They can get bartenders, security etc themselves, but they cant find management/IT/telephony/communications and other service industry side troubleshooting at all hours, that's actually competent. This bloke does all of it. He is a one man band, and he makes himself available 24/7/365. He has told me stories about working all night, taking a lady home, getting a call, paying for her uber and heading back to the city. He isnt defrauding anyone by being really good at what he does, and building on that a really good working relationship with his customers. And thats when things become personal, those booze barons would 100% follow him to any future employer if he decided to stop working solo. He could personally bring something like 900K of recurring revenue to an employer, possibly (i suspect) a lot more than that. That's a micro scale example but it does scale. I know another guy who can hold down 3-4 million of IT contracts from various customers. Just a really good sales engineer. And he gets paid accordingly by any of his employers. An ISP sales manager probably handles 30-40 million of contracts. If they don't give him a non compete, and he wanders to another employer, same again.
right, I would say more people could be compensated more directly with the company’s performance, revenue, and market tolerance of the shares
as opposed to saying CEO’s should be compensated less
a muuuuch greater amount of dilution would come with that though, I’m for it
It also could probably incentivize some unintended behaviors like clever financial engineering for short term stock gains at the cost of long term company health.
It could (??) also lead to comp going up for CEOs, as I imagine (??) they would demand more in stock because stock is riskier than cash.
> I am confused why CEO salaries are still so high when AI can do most of their work?
maybe thats why you're not a CEO
Having gotten to know several CEOs I have come to the conclusion there is no good way to identify if someone is capable of being a CEO other than having personal connections to investors.
Inverting that makes an interesting test of CEO potential: "if you can understand why CEO salaries are so high, you may be CEO material!"
Ideally, it's similar to any commissioned sales position, just with larger numbers as it's based on the performance of the company as a whole not just one set of sales connections. The more you increase the overall value of the company, the more you get. You increase the value of the company by $10B, your commission of 1-5% is $100-500m in stock, so even your wealth is tied to the success of the company.
IMO, the role of government this is to establish societal baselines in terms of criminality of certain actions and to ensure a baseline of competition. Actually acting on the former and the latter... the former by affecting the financial wealth of executives and board members when a company's neglegence harms society. The latter by not giving outsized govt contracts to a single provider for anything and to establish that if there are restrictions (medication, for example( that multiple providers/manufacturers must be present in the market, and that a certain portion is produced domestically (for security).
This one is a great read because it's true whether or not you value CEOs!
I think your complaint is about CEO comp, not CEO pay. CEOs generally don't make a ton of cash (for example the CEOs of Netflix get $3M a year, which is just a bit more than the VPs get). However, they get a bonus based on company performance and a ton of stock.
CEO comp is so high because of the stock, and the fact that stock buybacks are legal. They were illegal until the 1980s.
A quick fix would be to outlaw stock buy backs. The problem with buybacks is that the people who control when they happen are also the ones who benefit when they happen.
> CEOs generally don't make a ton of cash (for example the CEOs of Netflix get $3M a year, which is just a bit more than the VPs get)
this is a nit, but HEY. THREE MILLION DOLLARS is a LOT of money. like, an unconscionable amount of money in terms of annual salary.
It is, but the point is that it's not huge compared to other people at the company. Directors at Netflix make over $1M (and some of the engineers too).
In the Bay Area that's a big number, but not unfathomably huge.
The point of high CEO salaries is to align their incentives with the board and shareholders (the people paying them), so that when they are faced with the decision of losing their job vs. fucking over the tens of thousands of people working with them to increase shareholder value, they choose to fuck over the people working with them. Most people would not normally make that choice; it takes a few tens of millions in stock options before someone might contemplate it.
> I’d even say it’s a fiduciary duty to act on this sooner rather than later.
You said it like nobody hasn't attempted it. Many people are trying to solve this. They've replaced small mechanical works like scheduling meetings and reaching out already.
The majority of CEO job is excellent judgement and motivating people. It's difficult to replace that function.
A lot of CEOs are founders and owners. You can bet they want the business to run by itself, so it would free up their time to go do something else. That's the dream. You do realize that these people will earn regardless who runs the business, right? because they are significant shareholders. In a way, you wish for CEOs/founders to be much much much richer.
But why are you caring about how much private companies pay to their CEOs?
Massive wealth inequality is a societal problem.
Because in some companies the CEO compensation is a significant portion of the expenses so obviously cutting it would free up cashflow to do other things - but also on a simple human level hearing about yet another CEO getting tens or hundreds of millions in compensation while they announce how sad they are they have to let go 10% of their workforce is just simply gross. I think even in private companies you are allowed to care when this happens, and voice your displeasure with this clearly visible idiocy of the situation.
When your observation is that the entire financial world is being irrational and you have an obvious solution, many thoughtful people would reflect upon their own priors.
It isn't irrational if you frame it as people with power aligning with the choices that reward them with power.
The same financial world whose rationality has led companies[1][3] and economies[2] to ruin over and over?
Rational doesn't mean sustainable or wise.
[1]: https://bhc3.com/2009/05/11/when-being-rational-kills-your-b...
[2]: https://en.wikipedia.org/wiki/2008_financial_crisis
[3]: https://news.ycombinator.com/item?id=45745382
- CEO salaries are usually quite low as their compensation is mostly stock, not cash.
- CEO salaries, even when they are high, are still a drop in the ocean compared to the company’s revenue or profits.
- Elon Musk and the CEO of Starbucks have very famously been able to boost stocks just by existing…
Most companies have no idea what exactly AI is or what it does.
My company just spend months on several AI initiatives. They created several power point presentations about how we can use AI to automate all of the teams repetitive tasks. Our senior leadership didn't even know that we've been doing automation for almost ten years now.
They think automation IS AI.
Just like Wi-Fi in Internet, and image editing is Photoshop, definitions get very lost and tangled. Couldn't agree with you more
Automation is so much more general than AI. Automation can be predictable and reliable, whereas AI can be (if you're lucky) easy and powerful, but rarely the reliable.
Automation with code = time consuming because you must build the instructions but will execute correctly basically 100% of the time once written
Automation with AI = less time consuming especially with elaborate rule sets, but it’s a probability model so by definition it will be wrong a percentage of the time
Do these people think that when they open a file on their computer there is literally some Susan walking down to some basement somewhere and retrieving a manilla folder with a ladder.
My coworker is supposed to translate React webpage with 100% text and links into html and put in the WYSIWYG editor of the CMS. These are legal pages.
Q: What did he do to solve the problem?
A: pasted the raw react code and asked an Llm to translate it to html.
The Llm did a terrible job. For example, it converted unordered lists to paragraphs with break tags. When I asked why he didn’t just copy the rendered output from the browser, he didn’t know how to do that.
When he was shown how to do that, he said it would be too much work because the rendered output still contained css tags. So he would have to get the Llm to remove the tags for him.
This is an engineer who’s been developing software for at least 10 years, well before Llms even existed. Yet he cannot figure out how to do a simple regex find + replace. He has no clue that he’s wasted a huge amount of time fiddling with Llms.
Everyone thinks AI is a cheat code to their employment video game and I’m looking for a new job now because I’m surrounded by the downfall of humanity.
Well, AI is changing so fast nobody can really tell you what it is.
This is wild to me. For the vast majority of businesses, AI is not the primary product. The message from the CEO should be: "we are welcome to, and will support you in developing AI solution if they can be proven to provide value to the key metrics and missions of the company". I wouldn't honestly expect most CEOs to be in the position to make the risk/reward evaluation, so I'd be pushing this down on people who knew more about it and who were willing to risk their careers on it. The CEOs should be protecting the quality of their brands and products.
Pssssh. CEOs have the luxury of not having to worry about that sort of thing. And that fact is proved time and time again.
Even if your buddies don't get you into a cushy position, a multi million salary for a decade or so sets you up. No tears shed.
You're not thinking about the millions more they could have. These people don't want some of the money, they want all of the money.
Of course, but it's easy for them to give into that when the worst possible consequence for royally screwing up is a comfortable early retirement.
I wonder if the remaining 26% worry that AI successes will cost them their jobs.
> 74% of CEOs fear losing their jobs within two years if they fail to deliver AI-driven results...
so... "within 2 years" appears to be the runway for which we can expect a more conclusive verdict on AI investment?
100% of them don't care that AI is costing OTHER people their jobs.
There is a winning move. That’s not to play the game.
AI automation is a high risk and the rewards are questionable at best.
Nobody ever got fired for running a profitable business with real employees, creating value for their customers and executing well. Note the word AI is NOWHERE in that sentence.
Ironic, I've been thinking of AI-chasing CEOs as NPCs. But in this case as you point out, not playing the game is the more original move.
They should hedge their bets with blockchain and update their golden parachutes.
They shouldn't be shoving AI on everyone then to appease investors who got overhyped about it. Otherwise they reap what they sow.
CEOs: AI TOOK MY JERB
CEOs afraid of losing their jobs because AI is a hype cycle rather than being concerned they'll put millions out of their own jobs.
Average CEO in a nutshell. CEOs should be reviled.
It's the money people funding the bubble... CEOs are largely just responding to it as part of the money class.
As well they should.
That's insanely high. I'm surprised 74% of CEOs can even admit that their job is at risk. I've been made to believe these people are suppose to be narcissistic.
I kept reading and quickly realized this entire report reads like a bunch of bull,
"94% of CEOs believe AI agents could provide equal or better counsel than human board members."
Board members hold CEOs accountable. How is an AI agent going to do that? "hey chatgpt, can I have a raise this year?"
Since when have CEOs been held accountable? When they get let go they get a huge payout and jump to the next place through social connections.
> Board members hold CEOs accountable. How is an AI agent going to do that?
The lack of oversight is a feature, not a bug, in this case.
"74% of CEOs worry that not feeding the AI delusional hype cycle could cost them their jobs."
[dead]
What are they worried for? They have severance packages.