[removed]

[removed]

Please read this entire message

Your comment has been removed for the following reason(s):

• Top level comments (i.e. comments that are direct replies to the main thread) are reserved for explanations to the OP or follow up on topic questions (Rule 3).

If you would like this removal reviewed, please read the detailed rules first. If you believe it was removed erroneously, explain why using this form and we will review your submission.

After being in the corporate world for a while you will realize that some people are good at failing upward. With a potent cocktail of skills including shitty ethical standards, opportunistic behavior, moxy-laden performance art, social positioning, and aesthetic physiology, they are are able to bypass the standards that most others are forced to adhere to. Literally some people can just throw themselves away and be proud of it.

It’s frustrating that our economic system rewards these people, but welcome to modern “leadership.”

Depends on what the goal of the CEO was.

Having a low share price is good if buybacks are the goal. You also have the scenario of a failing company needing a CEO, but nobody wants to captain a sinking ship, so you have to make the offer VERY enticing. There are also executives that specialize in pre-bankruptcy management, where it might look like they utterly failed, but actually reduced the bleeding or avoided bankruptcy altogether.

People at the C-level are not hired by workers but by shareholders. Their interests are not always consistent with workers so even if they see a company go bankrupt they will still be judged by how much money was made leading up to that point. Of course if every company they become a CEO of immediately dies then that will draw negative attention from shareholders and will not lead to better paying positions

Because the CEOs are playing a different game than you think they are playing.

CEOs are part of a club where they end up with golden parachutes - they make a lot of money even if the company does poorly - and their compensation is decided by their corporate boards, where board members are paid to be on the board.

This is true to a lesser degree in management in most companies - you become successful in management by how well you fit in and play the political games in the company. Being better at your job is not required and can actually be problematic as it makes others look bad.

Yes, it’s a great question. The prevailing mindset is that lower rank employees are held responsible for everything they did wrong AS WELL as things they aren’t responsible of. Today they are letting people go from big tech companies. That includes employees who were promoted or granted bonuses for excellent performance.

But the same doesn’t apply when dealing with executives. If the company slumping - the market conditions are unfavorable. The bad decisions by top executives do not count. Their contracts often specify high bonuses even when the company loses money. Then let’s not forget the “golden parachute”. Regular workers are disposable and do not enjoy any parachute.

But there is another thing that separates between top executives and regular employees. There is an exclusive CEOs club. Once they get membership of the club. they start playing musical chairs. CEO is a lifelong title. When one leaves a company, another one (who was let go from a different place) comes in. They play musical chairs. Lower rank employees from the company (including some with long experience) are rarely promoted to the top. The board prefers someone form outside that usually has no clue about the business. One day they can be the CEO of Home Depot, next they move to Ford, followed by a stint at Macdonald’s. Then a company that makes automobile tires. Anything goes.

Good CEOs don't need to work for failing companies. A failing company is a lot of work to make successful, or even just to fail less hard. If their compensation was based on how well the company they run does then good CEOs would want to work for companies that are already doing great, concentrating their skills on companies that don't need them as much.

The Board of a failing company needs a good CEO. A good CEO might be able to save the company, and it doesn't really matter how much money you save if the company continues on a downward spiral ending ultimately in their going out of business. But you aren't going to attract a lot of talented CEOs by offering them a crappy job with a relatively low chance of success while only promising to pay them a bunch if they succeed.

CEOs generally have their pay composed of two parts: A baseline pay they get no matter what, and additional tiers of compensation for if they do well. For example a company might expect 5% growth and agree to pay the CEO a certain amount, but if the CEO can get more than 5% up to 10% growth they get a bonus, and if they can exceed 10% they get a huge bonus!

In the case of a successful company a CEO might be willing to accept a lower base pay because they think it is more likely they can get those extra bonuses. But in the case of a failing company those bonuses are probably much less likely to obtain so the CEO will want a higher base pay (since that is likely all they will get). The offered bonuses might be higher too considering if they can take a company losing money and grow it 5% then it is way more of an accomplishment than the company that did that normally.

Finally, just because a CEO doesn't succeed in saving a company doesn't necessarily mean they are a bad CEO. Turning a company around isn't a guarantee, and there are even ways of relatively gracefully managing the failure of a company such that shareholders lose less money than they otherwise might. This is why a CEO might preside over a company going under and then be hired away by another company wanting their talents.

Anheuser Busch did this a few years back. Hired a new CEO he slashed and cut departments and budgets, showed the shareholders how much more profit they had, took his bonus and left. New CEO came in and had to refill necessary positions that were cut by the previous regime.

Good answer, this thread has triggered a lot of ignorant responses. This one is correct.

Also, sometimes good athletes lose the game. Sometimes it's about how you lost.

A post about CEO pay on Reddit has received a lot of ignorant comments? That's weird.

Please read this entire message

Your submission has been removed for the following reason(s):

• Loaded questions, or ones based on a false premise, are not allowed on ELI5 (Rule 6).

If you would like this removal reviewed, please read the detailed rules first. If you believe this was removed erroneously, please use this form and we will review your submission.

Please read this entire message

Your submission has been removed for the following reason(s):

Loaded questions, or ones based on a false premise, are not allowed on ELI5. A loaded question is one that posits a specific view of reality and asks for explanations that confirm it. These usually include the poster's own opinion and bias, but do not always - there is overlap between this and parts of Rule 2. Note that this specifically includes false premises.

If you would like this removal reviewed, please read the detailed rules first. If you believe this submission was removed erroneously, please use this form and we will review your submission.