Because it’s about decency. A CEO conducting mass layoffs should be seen as a failure, not as a success worthy of a 63% pay increase. I also wonder how many employees didn’t get a rise this year because "times are tough" or "we just don’t have the cash". This is a slap in the face, if I worked at Microsoft I would quit over this.
You could pay 300 employees with just his pay rise.
I dont share your sentiment, but I agree that this is what drives it.
Some people seem to have the idea that Companies are supposed to run as a charity operation, maintaining employees they dont want or need on staff.
Companies use excuses like "times are tough" or "we just don’t have the cash" because most people have fragile emotions that cant handle the truth "market value for your work has not gone up" or "We arent worried about your retention".
I read about this "conundrum" that a CEO doesn't work 1000 times more than a regular employee, so why should he get paid that much, in the book "The Winner- Take-All Society" by Frank and Cook. At the time the argument sounded reasonable.
But it's not. A CEO doesn't work 1000 times harder, but his work is for sure 1000 times more impactful that the work of a regular employee.
Just compare Nadella with Ballmer. Ballmer was running the company into the ground, so much so that Paul Graham wrote an essay declaring the death of Microsoft [1]. One way or another Nadella found a way to turn the ship around and bring it back to be one of the top 3 companies in the US, and maybe in the world.
Now, take a random sample of 1000 regular employees at Microsoft. They work hard, but if they leave tomorrow and are replaced, and sometimes even if they are not replaced, Microsoft will be just fine. If Nadella leaves tomorrow, it's not at all clear that Microsoft will be fine, because we know of times before him when it wasn't fine.
What’s far more rational given a population of meat suits millions of which believe in sky wizards is the propaganda you were raised under worked on you
Occam’s razor; simplest explanation is a lot of people are just stupid
You don't know about knight? It went to zero from $400M in 45 minutes due to a bad deployment. Or about the power outage in 2003 due to a software bug which is estimated to have cost billions. The power a single well placed programmer has in a company is devastating. Much more devastating then a CEO. The CEO, no matter how incompetent has other intelligent people at least try to not make the company go bankrupt.
Are you sure about that. In most cases it seems stuff like market factors beeing much more important. Take Nvidia for example. Without lucking out on AI or bitcoin it would not even approach the current level of valuation. It really didn't take a genius to take advantage of this. There are only really a few key moments when a CEO can truly go boom or bust. Which is similar to an IC really. For example do you think Nichia Corp would still exists today without Nakamura? The more I think about it. Key IC and market factors are way more important to a company. CEO is relatively fungible. There are unicorn CEOs. Steve Jobs and Elon Musk for example who can not be replaced however.
>Without lucking out on AI or bitcoin it would not even approach the current level of valuation.
Lucking out on AI? didnt they spend a lot of years working on CUDA, working with researchers to enable them to use parallel compute with CUDA, to create and define ecosystem and now the bet just paid off?
yep! It is trivial if you are giving instructions to 230,000 employees. One dumb idea or sentence can waste the work of 1000s of man years. Same for one good idea.
Still, what is the worst that happens to ceo who says dump sentence, they are dropped, probably with some compensation. Why do they not have proper skin in the game? Surely that would be greater motivation if they could lose more than they earn that is end up these millions if not billions in debt to shareholders.
Having to make up the losses with their personal property and their future work. Garnish some large cut of any future earnings.
Make a bad decision that looses company 100 million. Now you owe company 100 million. And that would not be dischargeable.
Seems fair deal, you do well you earn a lot. You do badly well you will make up for it with your own money. Board should be able to make them pay with their body.
That already happens. People usually hear about the exceptions where someone has such good connections they fail upwards or sideways, but mostly if you fail at being CEO that's the last job you'll ever have. You can't really drop back down to being an IC at that level, and if you get fired from the CEO role then it's very hard to get another one. You're basically self employed or retired from that point on, which is why CEOs demand such high compensation.
Examples of CEOs who failed and then never got another real job:
- Marissa Mayer. Not even clear Yahoo!'s failure was her fault, but after she stopped being their CEO she had to make her own no-name startup and has been there ever since.
- Carly Fiorina. Fired from HP in 2005, never worked in a corporate executive role again. Had a few board memberships but switched into non-profit and politics.
- Steve Ballmer. Early retirement in 2013 aged 58 after saying he planned to stay until at least 2018. Post-MS he did some philanthropy but hasn't worked.
- John Sculley. Fired from Apple in 1993, never worked as a corporate executive again although he did have a good career as a tech investor, board member and the like.
- Ellen Pao. After being exited from Reddit she never worked as a corporate executive again, instead spending time on non-profit feminist advocacy.
- Tony Hayward. After the Deepwater Horizon disaster he was fired from BP and has had no executive positions since.
There are lots more examples like this. Failure at the CEO level is usually failure for life, so like in professional sports that pushes up the comp people demand to take the job, as if they get booted out they need enough saved resources to last a long time.
That I agree might put more skin in the game, but I don't think it would drive up performance.
Imagine you offer a scaled down version for an office job. Do you think you will get better candidates and performance? Candidates would avoid it like the plague and you would be left with crazy gamblers or those with nothing to lose.
You compete for talent with making good offers, not terrible ones.
Microsoft has grown by leaps and bounds under Satya. The stock is up >1300%, which amounts to having added ~260B in market cap per year over ~11 years. Their previous CEO (Ballmer) was at the helm for 14 years, during which time the stock was down ~20%, amounting to an average annual loss of ~10B per year in market cap.
Same under any socialist mode of production. But on top of that, they get to have indirect or direct democratic control of their business, something that is utterly alien in liberal democracies. So utterly alien that most westerns think that the republicanisation of the workplace is totalitarian.
How it is different then (genuine question)? If you are stakeholder you have direct or indirect control.
You can add more restrictions like only people who are still employed can have shares (not sure what English term for this type of ownership).
Or enforce business to always give shares to employees.
Still doesn’t explain how large company will start if it needs large capital.
I know it’s probably covered already but I never got deep into topic.
If workers need capital to start their business, either they bring it with them, or they can borrow money from a bank, or even create a hybrid structure where the State owns shares in the said company (it's very common in China nowadays through State-owned investment firms). There are then plenty of options left!
For very large projects then, like chip-making or space exploration, the State needs to step in; its way too complexe for "casual" workers to start. But then this institution will be very likely under indirect (through parliament) democratic control.
I see. So it’s like capitalism but state is owner and everyone in country is shareholder (at least on paper). As opposed to having smaller subset of shareholders.
This is not uncommon, even in countries that don’t promote themselves as socialist. At least in Russia many companies are state owned. And in recent years even more nationalized to become state owned. And big companies that are not state owned still have a lot of control from state (like media companies).
Jack Welch it all the way to the bank! Someone else will deal with rehiring if they cut too deep. And don't look behind the curtain at the over hiring that preceded these layoffs.
Doing a job in any company is literally a transactional deal. Employee shouldn't work if not paid, employer shouldn't work with them if they are not increasing value. Assuming as long as there is decent severance.
OK ... And society shouldn't allow such massive pay offs to incompetent executives who get celebrated for buying the competition, cooking the books, and lining their pockets and those of their friends.
Someone keeps downloading hidden Microsoft apps on my phone it is cyber prime and Microsoft will not help me find out who's doing it I'm going to go to the authorities why won't you help me
I don't get it. Why can't tech companies conspire to pay the employees minimum wage and then give the CEOs the remainder? If anything, tech CEO pay is relatively low compared to what it could be.
So... He's doing his job, managing a company with over 200k employees, increasing revenue and company value, and earning 0.0003% of the company yearly revenue (0.0008% of net income) for it...
#shocking
But yeah, MSFT closed few game studios and this news is from a website about gaming industry, so it has to be bad, it is evil, people are losing jobs...
On the other hand barely anyone complains about SEs making 400, 600, 800+ TCs - and it's OK, why would anyone complain about it?