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Culture War Roundup for the week of December 2, 2024

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I'll try to steelman the high pay.

Let's take Musk. In the counterfactual where he leaves Tesla in 2018, the stock is down at least 95% from its current levels. So he gets paid $56 billion for generating something like $950 billion in shareholder value. I think that's fair.

What's the situation like in Europe? Well, it's grim. Twitter search sucks, but I saw a graphic comparing new companies started after 1980 in the US vs Europe. The US has huge numbers of huge new companies. The EU has only a handful of new companies that have reached a market cap of $10 billion. The US has something like 50 times as many, and the ones that do exist are much larger.

Edit: Found the chart

There's no reason to give a European CEO high pay. They are mere shopminders who are so hamstrung by regulations they can't build a big company anyway. You can't grow a redwood in barren soil.

What I can't steelman is high CEO pay for people like Mary Barra or Marissa Mayer who do an awful job as CEO, do real damage to their companies, and still get paid hundreds of millions of dollars.

What I can't steelman is high CEO pay for people like Mary Barra or Marissa Mayer who do an awful job as CEO, do real damage to their companies, and still get paid hundreds of millions of dollars.

Aren’t most CEOs compensated in equity/options, precisely to align their incentives with those of their shareholders? A CEO who is paid in shares, or in at-the-money call options struck at the beginning of her tenure will, by definition, stand to make no money by tanking her company’s share price.

I don’t know the details of the two cases you mentioned, but potentially the steelman is that from the perspective of shareholders/the board of directors/whoever decides executive comp, hiring these folks was a positive EV bet ex ante, which turned out to be a dud ex post. That a given instance of a positive EV bet pays out negative is not evidence that taking the bet was a bad decision.