Google is safe offering him $100M without offending the other employees, because the other employees at that level at Google already earn that much, if not more.
Giving him $100M was more of a correction because he arrived at the company later than the other equiv execs. Most of the top tiers of employees at Google, which is where he would be, are worth hundreds or millions and more through vested stock, new options, bonuses, etc.
I find that very hard to believe. I'm ok with the talk about hackers being 10x more productive than regular developers. But a $100m bonus would mean that guy is about 1000 times more valuable than the average. It defies common sense in every way. And it's not just because I'm jealous and resentful I'm thinking that, no ones time is that valuable.
A person making decisions that may lose $100 million or make a $100 million profit can be thought as "1000 times more productive", because large losses/profit depend on his actions.
Of course the average software engineer at Google can't make similar decisions, so they can't be worth that much even in theory (unless they happen to invent something revolutionary).
So my point is that yes, CEOs can be "worth" thousands of times the salaries of the average employee, but that's not fundamentally about the skills of the CEO, but because the CEO happens to be in a position where his choices/strategy/etc have extremely large consequences. (In this example Mohan is not CEO though, but makes similar choices that a CEO does).
A real world example would be Stephen Elop at Nokia: some say that he has made Nokia lose billions of dollars, when another CEO might have made Nokia save that money.
Why stop at $100M? A company worth $250B could justify $50B salaries following this argument. And the same exact argument can justify outrageous salaries for traders who gamble huge amount of money that's not theirs. Yes, large losses/profits depend on their actions but it's unclear how much of that depends on their skills. A lot has to do with chance or market dynamics that nobody really grasps. And if they win, they win big bonuses, but if they lose, at worst they lose their job.
For traders, Daniel Kahneman has shown that they have no skills whatsoever (see http://www.nytimes.com/2011/10/23/magazine/dont-blink-the-ha...). I do believe that CEOs have some skills but the expected value of these skills is much lower than the potential impact of their decisions. Having been a company owner, I have learned that how CEO decisions are executed (by all the other people in the company who don't make outrageous salaries) is often much more important than the decisions themselves.
That seems to say that stock pickers and fund advisors have no skills, not very much about professional traders. whatsoever. I've read some stuff that said that the military has studied pit traders at NYMEX due to their skill in handling vast amounts of information and making split second decisions on it.
You are right. I used "traders" a bit too vaguely. Kanheman's research applied more to stock pickers and wealth advisors. But I think the argument applies to all: none of these people's skills justify the 8 or 9 figure bonuses that Wall Street has been distributing.
Sure, CEO:s have a much greater impact on the company than the average employee. And they should get paid "lots," I don't disagree on that. But that's not the scale we are on here, we're talking 1000 times more productive. It's a larger difference than between peasants and the kings of feudal Europe.
Google either gets 1000 extra engineers or gets this probably really smart guy. I guess we just have to agree to disagree since there is no way to measure how valuable a CEO is. I do think that the burden of proof is upon those that think those salary differences is justifiable since "extraordinary claims require extraordinary evidence."
> A real world example would be Stephen Elop at Nokia: some say that he > has made Nokia lose billions of dollars, when another CEO might have > made Nokia save that money.
Not a good example since Symbian has been a dead end for years and Nokia has failed to make desirable smart phones. Putting all the blame on him ignores all the bad decisions all the other people at Nokia did.
Yes! My problem with the "CEOs make big decisions so they should get paid a lot" thing is that it encourages CEOs to set up companies where they make all the big decisions. And of course to draw all the attention to themselves. And to focus everybody on trying to figure out what the CEO wants, rather than what the customers want.
Contrast that with, say, 3M. The Post-it Note was a bottom-up invention. One guy came up with the adhesive. Another person figure out what to do with it. They've sold billions of dollars worth of the stuff. As far as I'm concerned, that makes the 3M CEOs much smarter than the hands-on ones. Instead of treating the company like a giant prosthesis, they created an ecology.
Well I know a dev at a major publisher recently messed up a canonical meta implimentation on a single job site and that cost over 1/2 a million £ in less than a week.
And in the past I was admin in charge of a billing system for British Telecom and when we had our first million pound month (about $5,000,000 in today's money) the CTO (one of Vint Cerf reports I believe) Nudeged me and said this had better be right or we are both out of a job :-)
Seems perfectly sensible to me. Are you telling me that there aren't developers out there who have thousands or even millions of times greater impact than an average coder? Some people write code that impacts literally millions of people (or even billions), code that generates literally billions or even trillions of dollars in value.
This isn't about productivity, it's about impact.
Google started out as a very small company and yet had many cornerstones of their core technology stack laid early. And the technology of pagerank, treating data centers as giant computers, massively automating IT operations, etc. is what allowed the company to dominate search and is a key factor behind their multi-billion dollar annual revenues of today. The people that built that technology are easily millions of times more valuable than the average coder in terms of their contributions to the world.
>Are you telling me that there aren't developers out there who have thousands or even millions of times greater impact than an average coder?
“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
Slightly off-topic, but your statement is the programmer's equivalent to that. We all want to be the developer that is a million of times more important (and end up making huge sums of money/having a worldwide impact/whatever). This argument appeals to the ego of a lot of people here I think.
The people aren't more valuable. Their contributions were more valuable.
I know plenty of Google millionaires, and they are indeed really smart. But no smarter than the other top-tier people I know. The reasonable explanation for their wealth versus equivalently good people is, depending on how you view it, either circumstance or luck.
That this guy can extract $100m from Google is certainly true, but that orthogonal to the point you were replying to, which is about it being right.
Giving him $100M was more of a correction because he arrived at the company later than the other equiv execs. Most of the top tiers of employees at Google, which is where he would be, are worth hundreds or millions and more through vested stock, new options, bonuses, etc.