The way I look at it, there are two kinds of CEOs. There are the ones that founded the company and have led the company according to their own personal vision. Many of them hold stock worth billions and they're generally looked up to as "captains of industry".<p>The other kind is the CEO who is hired by the board of directors. They're usually very well paid and given a lot of stock, but aren't wealthy the way, say, Bill Gates is wealthy. They also tend not to be as admired, since they didn't build the business from the ground up.<p>People wonder why the second class of CEO receives such lavish compensation, when they're essentially just a regular employee. I suspect that the compensation is actually part of the qualification for the job. It makes shareholders feel good if the CEO holds a lot of stock, because it's a strong incentive for them to put the interests of the shareholders (whom it's easy to stereotype as rich, entitled lazy people living lavishly off of passive investment income) above the interests of the employees the CEO works with every day (who are usually hard-working people who, if the company is successful, generate far more wealth than they're compensated for).<p>Normal human behavior would be to put the interests of the employees above the shareholders. Large stock grants counteract that. Sometimes I wonder if a hired CEO were to refuse to receive large stock grants, would that cause the shareholders to revolt and/or the board of directors to not hire or try to fire him/her, simply because they're not comfortable with a CEO who doesn't have an incentive to pump up the stock value.<p>(It's worth noting that shareholders can change their investments much easier than employees can change employers, so shareholders are more likely to prefer policies that pump up the stock value now even if they're bad for the company in the long run.)
Reasons why CEO's make millions and I don't:<p>- Business Network: If I had a billion dollars, I would never have been able to acquire Instagram. I wouldn't even be able to get a seat at the table. Zuckerberg closed it in record time while talking to a company that wanted to be on it's own<p>- Market Knowledge: I thought the iPad was the stupidest device ever, Steve Jobs didn't. I now have 4 at my house along with two of those stupid iWatches (actually they're pretty nice)<p>- Portfolio: Marissa Mayer wasn't paid what she was paid because the board expected her to perform well, she was paid her salary (and golden parachute) because the company was dying and they had no idea what to do. Mayer had an idea of something that might work, but why on earth would she risk her awesome résumé with taking on the risk of a company on it's last leg?<p>- Access: If my daughter has a birthday, I can schedule an early day to be home and celebrate with the family. When Steve Jobs came down with cancer, he was required to disclose his medical details publicly because of the fiscal impact it could have on the public stock<p>- Job Market: I'm a programmer. There are jobs everywhere for me. If the CEO of Uber loses his job (fingers crossed), it might be a looong time before he finds a new one and even then it's not likely to be remotely similar to what he does now. I mean shoot everyone loves Gabe Newell, but if he lost his job, what are his options? Not as many as me.<p>Look, I'm not saying that some CEO's pay isn't exaggerated. I'm just saying that I'm not worth nearly as much as a talented CEO. If the company your 401k/pension was invested in hired me as CEO, you better believe you'd grab your pitchfork.
> This focus has a devastating impact on the lives of CEOs... Leaders deserve to be happy too... solving the problems starts with communication... we need to wage war on this picture<p>A whole article about how hard CEOs have it, and not a single mention of CEO pay or the ongoing efforts to even get reporting of CEO pay ratios?<p>I mean I agree that CEOs get a ridiculous amount of stress and an unfair share of credit and blame, but if we want to fix it, I wouldn't start with platitudes like 'why don't we talk more', I'd start by paying CEOs less.<p>> The result is that a startling 100% of CEOs report that they suffer from stress and, according to research by Apollo Life, one in four say they struggle with insomnia.<p>Yeah, 100% of the population suffers from stress too. And I just googled it: 30% of the population suffers from insomnia. LOL.
This is reminiscent of auteur theory in film, which essentially says that the director is the author of the film. Similar to corporations, making a movie requires a lot of people with different skills/talent. The director overshadows everyone and is the person primarily credited with authoring a film, they even overshadow the writers of the screenplay. One of the leading arguments for auteur theory is that the director has the vision of the film and they set out to create it. This is the same narrative used in the startup world: the founders have the vision. So this extends to why we credit founders for the invention of products, just like how we credit directors for films.<p>Maybe 100 years from now we will say "Steve Jobs invented the iPhone/smartphone", just like how we say "Thomas Edison invented the light bulb" or "Martin Scorsese made Taxi Driver".
I really hope that we can end the cult of the entrepreneur as well.<p>It's not some special thing to incorporate and start a company, and it's not inherently superior to any other line of work.
Over 60 years ago, Frederick Lewis Allen published "The Big Change". He noted that we do not live in a Capitalist Society, we live in a Managementist society. Capital is too often diced up and spread around so that it has no bearing on decisions and the "owner" has no responsibility or even ability to track things.
Yeah, it's time to end human nature.<p>Please, how often do you see anything credited to more than 10 people, even though maybe thousands worked on it?<p>It's human nature to look for the leader, or leaders if there's no clear leader or if that seen leader is actively advertising the others, but no one will ever credit 100+ people actually working on anything.<p>A single death is a tragedy, a million is a statistic.
Good this topic gets brought up. I've blogged about this in the past: <a href="http://blog.translusion.com/posts/CEO%20Salaries/" rel="nofollow">http://blog.translusion.com/posts/CEO%20Salaries/</a><p>Studies by Gabaix and Lanier, who were in favor of performance based pay showed that the difference between the best CEO and the 250th best was 0.016 percent.<p>Meaning if one replaced the 250th best CEO with the best, then the companies market capitalization would grow by 0.016 percent.<p>Perhaps what really matters is how bad the CEO is not how good he/she is. E.g. it is like studies of parenting, there is no difference in outcome for kids with awesome parents and those with average middle-class parents. The big difference is between bad parents and average parents.<p>Something similar with IQ. There is no difference between having 130 in IQ and having 200, with respect to your chances of winning the nobel prize. But there is a noticable difference between having say 100 and 130.
i can't read this without shaking my head. boo hoo. when CEOs' compensation starts to mirror their output/tangible contribution to the company, i'll be able to take stories like this more seriously. i.e., i agree that CEOs are given far too much credit and cannot possibly be looped in on everything that leads to the successes or failures of a company, but they certainly pay themselves as if this was the case.
I'd say the CEO acts as the primary role model and the employees/company often reflect the attitude of the CEO. Think of the workplace stereotypes of amazon - customer focused, google - side projects, spacex - mission, uber/oracle - aholes, apple - design, microsoft - developers , facebook - hackers, etc.. the CEO sets the tone and if you agree with it you'd probably like working there :)
This is just how humans view the world. We attribute everything the government does to the President, we attribute everything in a film to the director, and everything in a company to the CEO. We view the world this way, when in reality things happen at every level.
Pack order mentality is probably not something humans will ever be able to overcome.<p><a href="https://www.theatlantic.com/magazine/archive/2015/06/why-it-pays-to-be-a-jerk/392066/" rel="nofollow">https://www.theatlantic.com/magazine/archive/2015/06/why-it-...</a><p>edit: typo
This is true. And not true.<p>It is SO true that a company is a team effort. It is also sadly true that CEOs get most if not all the credit of what their teams accomplish even if they didn't have much of a part in it. The current CEO "God" Jobs said as much, and in fact had wrong intuitions on a number of the most critical things today in Apple's business... a gigantic one being a hesitance to open up the iPhone to 3rd party apps. I think other Apple team members eventually convinced Jobs (probably didn't take that much effort) to open things up. Jobs was rightfully concerned 3rd party apps could crash your phone which wasn't a good idea!!<p>That said, when Apple didn't have a strong product-focused leader we saw where it went earlier, and one can see how it's floundering today -- under Cook, Apple was maybe 2 years or more late with a large screen phone and the iWatch is not good at all. Tesla under a certain CEO has in less than 15 years what's widely considered the world's best car...beating few dozen companies with long histories of making cars and limitless resources. Amazon took big risks with AWS, Prime, and many other things and failed miserably many times e.g. the Fire phone...but they have a leader who kept pushing things forward. Compare Amazon to say Walmart (to my view largely the same company it is today that it was 20 years ago) or any other e-commerce company. The visionary leader who can deliver revolutionary products relentlessly really does matter.
Was anyone else bothered by the way studies were cited in this article?<p>> 100% of CEOs report that they suffer from stress
Anytime I see 100% I assume the study was bullshit.<p>> the death of a CEO causes a company's value to fluctuate by $65 million more today than it did 60 years ago (adjusted for inflation)
I'm guessing the sample size here is pretty small or at very least a measure of absolute "fluctuation" doesn't seem like the right thing to measure. I can imagine a world where the death of Steve Jobs alone could have caused this effect. Also what was the fluctuation before was it $100 million? $1 million?
The "cult" underlying this phenomenon is our celebrity culture. We fetishize the 0.01%. The role of overpaid CEO is established; it no longer needs any more special justification than top athletes, entertainers, or TV "personalities."<p>Conveniently, we have lots of companies that need saving. And it seems to me that, for a country where people still like to pretend there's a "free market," we sure hate to see companies fail. I think of the old saying, "Many a good hanging has prevented a bad marriage." But hey, who asked me.
> Think of a prominent global-company CEO. Sir Martin Sorrell? Indra Nooyi? Elon Musk?<p>> Now, name the CFO and CMO. I bet you can’t.<p>I can't, but it's because it's not the CFO and CMO representing the company on the public realm, so they're not the faces and names I see when there's news about a company in which I do not work at or with.<p>If this "exposure" happens within a company as well, that's an issue for each company to assess and deal with accordingly.
I always wonder why people happily give up the rewards they earned for their hard work. Prestige, connections, bonusses. I think that's a big part for the guy at the top getting most of it as well.<p>And the reason is self-preservation. While all these things are nice, to most people it is more important to not experience the opposite: public criticism, haters, losing your job. In many situations it is also reasonable, since for a middle-income person a save reliable income is usually the most valuable asset they have. Losing it is much more hurtful to their lifes than losing a bonus. Therefore they give up some higher-risk opportunities for safety.<p>Summary: The employees probably also want the success and failure associated to their boss not themselves.
I found it hard not to disagree with this article. I am not sure I agree with the premise but this argument wasn't persuasive. Of course a stock drops when the CEO abruptly dies. Of course 100percent of people responsible for the well being of others (employees and shareholders) and countless decisions is stressed.<p>A counter example to jobs (cliche pic on every article like this) is Ive. The cult of personality is an obvious way to humanize a company. It can be good or bad. Kalanick bad right now; Musk good right now.<p>Being a good CEO is more important than simply branding yourself.<p>IDK, article fell flat for me I see both sides and it's subjective in my book
I'm guessing a possible resolution is to disseminate the responsibility that a CEO holds.<p>I've never been at that level of management, but it appears that other players (inside and out of an org) require a single point-of-contact, or ultimate authority.
I think this might be better, simply because 1:1 relationships are easier to coordinate than 1:n (chair and council), or n:m (council and lieutenants), which dissemination might bring.<p>My counter question is: where would the buck stop?
》The result is that a startling 100% of CEOs report that they suffer from stress and, according to research by Apollo Life, one in four say they struggle with insomnia. Many multinationals have launched expensive well-being programmes in response, but these just wallpaper over the core problem: CEOs unnecessarily carry the full weight of company performance on their shoulders.<p>It is the job and responsibility of the CEO to delegate so that decisions can be made elsewhere.
I think this article misunderstands one of the roles of the CEO, which is to be the face of the company, the individual to whom the media can attach its narrative. Group stories don't have the same appeal. Harder to tell. Even if they're more true. CEOs are traveling salespeople. They represent a larger group. They persuade. And one of the groups they sell to is the media.
I'm sure the majority of the article is valid, but Apple's stock skyrocketed after Job's death. I'm sure it's an outlier but kind of wish that had been acknowledged given the image used.
Given that a fair chunk of today's NY Times front page is devoted to Steve Cook rebuking Travis Kalanick, I'm not going to short to incense stocks quite yet.