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.

I'm not opposed to profit sharing either. Though, that gets a lot more complicated since the bulk of the increased value goes to shareholders and would have to be an amount of stock to compensate employees without reducing shareholder value, or causing a stock value decline, are these "new" shares created, are they classed different than other shares, what about tax implications, etc.

>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?

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.

"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.

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.