Hacker News Reader

Comment by TheRealPomax | Hacker News Reader

The best engineers I know want to work on interesting problems for a pay that is high enough to cover quality of life.

If your company shows a slowdown in growth--not loss: less growth--the idea that you're suffering from macroeconomic effects and need to cut spending makes very little sense. You're still making a profit quarter after quarter, where's the financial hardship?

(You might go "what about that 4 billion dollar fine from the EU??" To which the response is "did you look at their earnings report? Google made just shy of 20 billion in operating income last quarter alone, on a 30+% profit margin. $4b is literally still a trivial amount as a fine, constituting less than a month's worth of earnings)

View on HN

The unfortunate truth with any publicly-traded company is that the CEO's job depends on that growth.

The simplistic relationship is as follows: - The share price is (theoretically) a reflection of the future earnings expectations of that company - Slowing growth means lower share price/lower dividends - Lower share price/lower dividends means reduced profits or losses for shareholders - 80% of stock is likely owned by institutional investors that have automatic triggers for sale of stock based on certain performance thresholds (think pensions like CALPERS) which further incurs losses for shareholders in the event of sustained periods of lesser growth

So when the shareholders band together and demand growth, they will expect the CEO to deliver it or they will replace that CEO with someone who they think will deliver that growth, simply because the system is structured such that growth is expected/required with some minimal level of risk.

Personally, I think there are better systems we could come up with that would ensure better stability for employees and shareholders even in the face of temporary slowdowns in growth that are caused by structural economics, but any of them would likely lower shareholder returns by some small amount, and the institutional investment plans would balk at that. (That small amount would translate to billions of dollars in projected future equity and would likely make the institutions insolvent at some point in the future.)

The fun thing about Google, though, is that Page and Brin still have majority stockholder voting power because even though they own less than 15% of the shares, they also own pretty much all the super-vote stocks. The shareholders can't vote out the CEO (or really, vote for anything to pass) unless Brin and Page are on board (or don't care). So really, the only threat a Google CEO has is from the board.

While your argument might work when it comes to regular publicly traded companies, Google is nothing like a regular company. As a tech giant LLC, the general public can buy shares, but those shares buy them nothing except for a cut of the profits.

> The unfortunate truth with any publicly-traded company is that the CEO's job depends on that growth.

Well, boo hoo for him. That's what he gets the comically outsized paycheck for.

We as an industry need to stop accepting that as an excuse for CEOs cutting wages, hiring, and perks for regular employees (not talking about the executives here) when the company is still making massive profits. If there's a genuine cash-flow problem, then yeah; it sucks but it happens. But screw this "We've got record profits, so now we need to shaft the lot of you that got us there so that we can juice those numbers even higher in order to further increase our high scores!"

People respond to incentives. If you want to change behavior, you need to change incentives.

Not seeing how that's related to this comment sub-thread?

The CEO's stock is tied to that performance. The better the company is doing profit-wise, the more payout the CEO gets. That's why it doesn't make sense for us, the ground employees. But makes perfect sense when you look at it from who calls the shots. Always follow the money!

A month's worth of earnings isn't trivial for any company. Agree that Google can weather it easily though.

It is when you are guaranteed to make it, with a cash reserve many times the fine itself.

Reply on news.ycombinator.com