Thread by @QuinnyPig

Let's kick the Twitter beehive: this is *not* an unreasonable compensation package for the CEO of a close to $2 trillion company. A thread!

https://twitter.com/Reuters/status/1411116276232200193

First, the obvious joke: I'm sure in true Amazon fashion that @ajassy's 10 year vesting schedule has 90% of the stock grant vesting in year ten.

Now then: he already has a bunch of existing stock for, y'know. Being at Amazon for two decades. That's for work he's done, not what he's going to do.

(Amazon doesn't talk about it this way internally. THAT should change.)

Assuming the stock stays flat, it amortizes to $21.4 million a year.

The median pay for the Fortune 500 is a bit over half of that. I think we can safely agree that Amazon is on the larger side of the scale from the median.

What "should" be the case aside, let's acknowledge what *is*. This rounds to market rate for the role!

If Amazon stock increases, obviously those numbers get larger. Long time employees have seen massive wealth flow from that growth.

Now, a lot of folks say that these execs are overpaid, shouldn't make as much, etc. etc.

Well hang on; we've been down this road before.

In the 80s and early 90s, the world looked different. Execs made huge salaries that were divorced from company performance. This was Unpopular(tm).

Bill Clinton campaigned on and implemented a fix: companies could only claim salaries as a deduction up to a $1 million cap.

(For those who may not be aware, virtually all business expenses are tax deductions; companies are taxed on profit. Hence it meant that those large salaries were counted as profit.)

This had the effect of forcing companies to grant stock instead of salaries unless they wanted to be wildly tax inefficient. As stock prices rose, sometimes wildly, so did executive compensation as a result.

Now, let's talk about Jeff Bezos. He was awarded basically no compensation by Amazon. He owns ~10% of all Amazon stock, and that percentage has only ever gone downward since Amazon's founding. It's ownership equity, not executive compensation.

Wealth inequality is a serious concern, make no mistake.

But Twitter (or at least my part of it) seems to have an unhealthy relationship with compensation. It gets mad at engineers being paid $40K but also mad at engineers being paid $800K.

There's a relatively narrow band of how much people are "allowed" to make in Twitter's view, and that's a problem. It discourages folks who are highly paid from being transparent about compensation--something from which we can all benefit!

The problem with the "eat the rich" approach is that I don't trust a lot of you people to *recognize* the rich. You're going to eat the orthodontist while the guy on nesting-doll-yachts laughs!

Invested responsibly (by which I mean index funds), a public schoolteacher could reasonably retire with a ~$2 million net worth.

Please don't eat my third grade teacher.

There are a lot of problems with wealth, and I'm not here to stan for billionaires.

But I don't think that "tar and feather the new CEO of a giant company for making tens of millions a year" is the straight win people think it is, because nobody competent would work for less.

"Hey that's unfair! I'm competent, and I'd do it for less!"

I promise you are not @ajassy competent. Imagine if he said "nah, I'm going to do a startup instead." Imagine how much *more* upside there would be for him!

Okay. Average starting salary according to NEA is $40,154. Assume you sock 15% away, get annual 2.5% raises. Multi-decade average market returns are 10.9%; assume 8% for safety.

You retire with $1,915,973 in cash, not including value of your home.

https://twitter.com/SQLRockstar/status/1411138927709278215?s=20

"Why would you have such a shitty take and not enable replies" say the rando DMs, answering their own question.

Fun fact, I used to moderate /r/personalfinance. I'm taking a few shortcuts here to paper over an awful lot of "it depends."

https://twitter.com/QuinnyPig/status/1411144678632681476?s=20

Not at all! Let's say Amazon was a more humane company, and guessing wildly that meant they were "only" worth $1 trillion. Same compensation package with the lower stock price is ~$14 million a year. Amazon could 10x that (or the current package) at will.

https://twitter.com/killedbygoogle/status/1411144938658598913?s=20

And since it was apparently unclear: Of course I believe that all Amazon employees should be treated well and paid fairly!

Culture flows from the top so I want the CEO paid fairly as well.