Are you talking about the ~$800M in stock-based compensation described here [1]?
Nearly all of that only vests if Robinhood stock hits price targets between $120 and $300 per share. The remainder requires a price of $50.75 to be sustained for 60 days. Since none of these goals have been met, Vlad has not received any of it. And unless the company turns around dramatically - it's currently around $9/share - it's likely he never will.
The same document points out that the CEO and CCO (both co-founders) each realized more than $168M in compensation in 2021. That's the number to talk about I think.
Your math makes no sense. The fewer the employees laid off, the more the dollar per employee will be. What does that mean? If a company lays off only one employee, then all of the CEO's salary could have gone to one person?
I think it just shows that the CEO earned enough to give every laid off employee a whole annual salary, so you could argue that the layoff could have been prevented for at least a year.
Sure, but no doubt a Silicon Valley programmer could take a 50% pay cut, still have plenty to live on, and double the salary of 3 cleaning staff that work at their company.
> Hate to go there on HN but there _is_ a moral side to this.
No there isn’t. Wasting money to keep employing people isn’t good for anyone. The labor market is still tight right now so the employees are better off going to a company that actually wants them.
And if they'd over hired, their business could still be in the same place (or worse) next year. People should just say they don't think executives should earn that much money (in good times or bad) rather than making moral justifications like this.
Their compensation being high is not really relevant imho. It's the hidden assumption that if only the CxO compensation was lower, those workers could've been saved (aka, instead of redundancy, the CxO takes a pay cut to pay for the wages of those workers).
Is this a valid argument? I dont know, but i feel that it isn't.
Are you saying executive compensation should be orthogonal to company performance?
Overpaid executives failed, so workers lost their jobs, but the executives get to keep theirs all the while saying things like "I take responsibility for this" when it is objectively false that they are taking responsibility.
Does that seem right to you? Is that a good way to run a business, to keep failed leadership?
Their failure has already dropped a huge amount of their stock-based compensation. Their base salary shouldn't be determined by the company's failure (only their _future_ salary).
What if you applied this to a worker instead of a CxO? Would you yourself take a pay-cut, after the fact, if the company fails to perform?
> Yes. Yes I would take the CEO's total compensation package.
As in you would accept, without knowing ahead of time, a cut to your salary when the company's performance drops?
I'm not talking about performance based bonuses or commission based pay. I'm talking about a salary that was pre-negotiated at the time of your employment, but upon the company performing badly, your salary is dropped.
This is what the OP is saying - that high CxO pay is the problem, and that they should have been paid less (after the company's performance dropped).
Plenty of ordinary sales people are 100% commission based.
Plenty of CEOs already do (or did during their tenure) take no material base salary and their compensation is tied entirely to the performance of the company.
Is that not reasonable for large, profitable businesses. It has its own issues, but what compensation plan doesn’t?
> Plenty of ordinary sales people are 100% commission based.
that's not what i meant.
The question is whether you would take a pay cut _after_ the company performed poorly, but you didn't know ahead of time that it would cut your pay. Performance based bonuses or commission is obviously pre-negotiated and thus, not subject to post-fact alteration.
Executives also have to hold lots of stock that tanks when the company does poorly. Should workers also be forced to hold 100% of their RSUs as long as they work there and be paid 80% in RSUs? Even senior SWEs make 50% tops in RSUs and can sell their stock as soon as it vests with no restrictions. They get top ups to make up for poor stock performance. Their personal exposure to the company (risk!) is way lower than any executive. The CEO has effectively made negative salary due to their stock tanking.
Should companies be forced to keep unproductive or no longer useful workers? Clearly there is not enough customer demand for Robinhood to continue employing their ops/content/etc. workers. What are those workers going to do then, if they keep working?
If it’s so risky, why do CEO’s end up making 350x the typical employee? Those poor CEO’s taking all that risk to be compensated at a rate equivalent to 351 employees.
> taking all that risk to be compensated at a rate equivalent to 351 employees
Do you understand how risk works? If you take on more risk, you should be compensated for that risk, else it doesn't make sense for you to take so much risk if you can get the same reward by taking less risk.
Executives as a whole (CEOs, VPs, even directors!) take a lot more risk - career and financial risk - than your typical line engineers. Their success depends on the success of the initiatives they lead, which can be subject to macro or competitive factors entirely outside their control. Those initiatives are generally longer timeline, meaning they have less chances at bat (and thus higher variance in outcome) than an IC. And a shitty IC can always be rehired pretty much trivially. If your company fails with you at the helm, you're not getting another CEO job. For example, Carly Fiorina has never held another management role in a large multinational corporation after her failure at HP.
On top of that, executives have to hold a large portion of their compensation as stock which they are barred from selling as long as they work at the company. If the company tanks, they take a retroactive paycut, often times upwards of 50%. They don't get refreshers to boost their comp back to original levels like ICs either.
Yeah CEOs nowadays have quite excessive compensation. But they will never have compensation at a single digit multiple of the average employee. The risk they take is too big for that to sufficiently compensate them.
Exactly - all these articles about CEO compensation are misleading.
Case in point: Intel's CEO's 2021 salary was reported as almost $180M. In reality, he got only about $10M. He hit literally none of the targets that would allow him to get the rest of the compensation (although in theory he has a few years to hit those targets).
Not scientific and maybe inaccurate, but a quick Google search showed the average Intel employee makes $100k. The shift in social norms where 100x the average employee (of a tech firm, which skews towards high salaries) is considered “basically nothing” is something worth talking about.
If you're in charge of managing 121k people - 10x the average salary seems like a minimum. 100x seems in the realm of reasonable.
If the CEO's salary is distributed to all employees, they would get a ~0.05% raise. If distributed to the shareholders, it would increase profits by ~0.01%.
Yet this person's decisions can have much bigger consequences to both employees and shareholders.
The thing is, they aren’t actively managing 121k people anymore than the President is commanding 1MM+ troops. Nobody is capable of actually managing that scope. In reality, they are managing a handful who are also managing a handful who are also managing a handful etc. If you disagree, ask yourself if they could intelligently describe a randomly selected employees day-to-day duties. If they can’t, they aren’t really managing them in a meaningful way.
I agree they manage the strategic vision of the company. The research on whether they make a real difference in the long term trajectory seems mixed.
> If you're in charge of managing 121k people - 10x the average salary seems like a minimum. 100x seems in the realm of reasonable.
Except, that’s not a CEO’s job. Even remotely. At best they “manage” a few department heads who each manage a few middle managers who each manage a few direct managers who then manage the workforce.
Even then, that’s a misrepresentation however. They are in charge of managing and directing overall company strategy in the interests of the board. The COO (and, sometimes, the CTO; in tech firms) is usually (indirectly) in charge of managing people.
I think it’s a valid point that they bring large value to a corporation, but it would be very difficult to quantify that value to be anywhere near 100x any other non-Csuite employee.
And yet, CEOs for decades (the 50s-80s) did just fine at a fraction of wealth disparity compared to today [1]. In fact, in just the last three years; the overall disparity has increased 31% despite corporations failing to properly manage the pandemic or their workforces.
It’s a reasonable point. But I think the distinction is SW wasn’t creating the economic value it does now. Similar to why firmware jobs don’t pay FAANG type salaries, the scale of economic impact isn’t there. (Not to be confused with societal impact).
So the question becomes, are CEOs pay commensurate with their added value? Put differently, is the rise in production mainly attributable to the CEO (as wages were largely stagnant prior to 2020, yet CEO wages increased rather dramatically.) Are they adding more value now than they did before and, if so, can we actually measure it?
Considering I’m the only one that has sourced anything in this thread and that the response I was responding to made an easily disproven claim in such a snide/sarcastic manner, it’s hard not to respond in kind.
But sure, from a super simple query on any search engine:
Feel free to gate your query to anytime between 2003ish to now, the results are all the same with a few exceptions (MLE and DeFi jobs, for instance): stagnant or decreasing.
> SWE’s straight out of school made 90-100k in the late 90’s.
They absolutely did not with just a BS. Perhaps a few companies paid that high, but 100K would be an easy outlier.
To give you an idea, even in 2010 most non-big names outside of SV and Seattle paid under $100K right out of school. Many companies in my city were offering $70-80K. Even my big name company paid under $100K in those days.
According to BLS data [1], the median computer scientist salary in 1997 was $82k, adjusted for inflation [2]. The same data has software developers median salary today at $121k. It seems SWE are getting paid much, much better today.
Granted, the occupation titles don't align perfectly. There was no "software developer" role in the 1997 dataset, but most of the computer science positions have a median salary in the low $80k-range in todays dollars. Also note that the timeframe you chose was at the peak of a tech bubble. Probably not the best for comparison, just like you wouldn't want to use 2006 or 2021 for a gauge on housing costs.
Relevant to this thread, Robinhood numbers are way down yet the CEO still made significant salary by historical comparison. To me, that points more to a change in social norms than in productivity.
But you bring up an interesting point. The CEO may be incentivized to promote wealth disparity. If they are measured by profitability only, without regard to the larger systemic effects, it incentivizes them to take a myopic view. This could mean implementing policies that help hit short term targets without regard to long term health, suppressing wages, etc.
To a certain extent, whichever side we’re on is really just a narrative we tell ourselves since there doesn’t seem to be conclusive data about CEO impact.
The research is a bit mixed on whether a CEO of a large corporation (S&P 500 size) really matters so I’m not sure the risk statement can be said with conviction.
Meh … just like the President … a CEO’s performance is highly correlated to business cycles and stages of a company’s growth. Most of the decisions made are not earth-shattering; they go through the motions and hire the same contractors and make the same decisions that most of their competitor company CEO’s make … after all most of them went to the same business schools and learned the same “cutting edge” business tactics from the same professors.
Nokia and RIM got clocked by the iPhone. I don’t care who their CEO could have been, these companies were on the downward trend and headed for tough times.
What about CEOs like Jack Welch, who everyone lauded as a paragon of management? He was handsomely paid but his decisions crippled the company years later because of bad foresight? I think the main issue ITT is that it’s very hard to measure and distinguish a good CEO from a bad one, yet they are almost all paid as if they are great leaders.
> yet they are almost all paid as if they are great leaders.
The board of directors are the ones who measure CEO performance and set compensation but most of the times they just rubber stamp whatever the CEO does.
One of the criticisms is that the boards are incestuous. Another issue may be that stock options are much more common now. I know the argument is this should align the CEOs interest with the shareholders but the counterpoint is it incentivizes a short term outlook.
Certainly a point worth making, and I might even be inclined to agree, but I think my point stands. Comparing against similarly noteworthy companies, Intel's CEO doesn't make all that much.
That speaks to another point though -- the incentive to return shareholder value, often times to the detriment to the company, the employees, the customers, and sometimes to public safety.
Well, the shareholders provided the money that allows any of it to exist at all. If there's was nothing flowing back, there'd be nothing for institutional investors. IPOs would be worthless which means there'd be no exit for VCs. Everyone would love to just get money with no obligation to give anything back, but that's not the way the world works.
Journalists have no idea how corporate compensation works. At one point in Yahoo's history they reported Terry Semel's compensation as $300m. In actuality he got just his base salary that year as the options were all underwater. And they vest over 4 years. Further, they thought you multiply the stock price by the number of options to figure out how much they are worth. He would have never made that much under any circumstances.
Nearly all of that only vests if Robinhood stock hits price targets between $120 and $300 per share. The remainder requires a price of $50.75 to be sustained for 60 days. Since none of these goals have been met, Vlad has not received any of it. And unless the company turns around dramatically - it's currently around $9/share - it's likely he never will.
[1] https://www.sec.gov/Archives/edgar/data/1783879/000178387922...