The Rise of CEOs That Don t Show Up To Work 2

The average public CEO now makes nearly 400 times more than the average American as their pay has increased by an average of 1,460% since 1978. Now you probably already know the old joke that no, they are not working 400 times harder than their employees. But being a CEO is still a serious commitment that normally involves making lifelong sacrifices to climb the corporate ladder or start a successful business all while being constantly accountable to shareholders and a board of directors. The pay is good, but the work is hard. And if you want to be a CEO, you need to be on call 24-7 to put out fires or your time at the top will be very short-lived. That's the story anyway. So then what the f**k is behind the massive rise in CEOs that only work part-time if they show up to work at all? Elon Musk is a controversial figure, but love him or hate him, the one thing that nobody has been able to take away from him is that he works incredibly hard. That was until recently when people started to notice that the man has been playing an awful lot of Diablo 4. According to other players, he would have had to spend as much as 17 hours a day playing the game to reach the levels he has shown off in various live streams. Now it is possible the world's richest man could have paid someone else to play video games for him. But a potential Diablo addiction aside, it did raise questions about how any mortal man could possibly be an effective chief executive at SpaceX and Tesla when he also has a full-time role at four other major companies. Even seasoned executives have to dedicate enormous amounts of their time to running just one company. The reality is that Elon Musk is far from the worst offender of a major company CEO showing up to their job less than you do. Brian Nichol is the newly appointed CEO of Starbucks. To join the company, he was offered a sign-on bonus which could be worth as much as $113 million within his first year. Now some of that bonus was to compensate him for the stock options he will be giving up leaving his previous job as the CEO of Chipotle. But it's still a record-breaking package which is especially generous when you consider that the man won't even be moving to the same state as his new company's HQ. He will instead be permitted to work remotely from his current home in Newport Beach and will be allowed to commute using the company's private jet when he has to be in the office. Oh yeah, and in case you were wondering, yes, Starbucks and its remote CEO did introduce a return to office mandate for all of its lesser office staff. Jack Dorsey, the former CEO of Twitter, rarely showed up to the company's offices, allegedly spending most of his time at his other company Block. Just last month, it was announced that the new CEO of Victoria's Secret would also be allowed to work remotely so that they didn't have to move to the company's HQ in Columbus, Ohio. And yes, Victoria's Secret has also made it mandatory for everybody else to work from the office. There are tens of thousands of highly qualified candidates that would kill to be the CEO of one of these companies, so the hiring board can be picky with who they choose to hire. So then why the f*** are these top employees allowed to work from home and dedicate their time to a second or third job when doing the same thing would get anybody else fired? Well, there are actually three reasons, and they are each more disappointing than the last. The first is that CEOs have become little more than a cheerleader for their company. Brian Nickell's offer to join Starbucks may sound obscene, but to the board of directors and current shareholders, it's so far actually been a pretty prudent investment. Since his announcement, the company's value has shot up by over $20 billion on the news, which means investors just see that his astronomical pay package has covered itself 20 times over. The new investors buying in also know that no matter how brilliant Nickell might be as the chief executive, he is not single-handedly going to be able to turn the company around or individually going to add $20 billion in valuation by himself. The actual reason why so many new investors bought in upon the announcement of the new CEO was because of what he represents. Nickell, in particular, has built a reputation of being an absolute hard-ass against unionization efforts and someone who is quite good at reinvigorating brand image. The new CEO is obviously a master at public relations as well, because if you google his name and union, the only thing you will find is an identical article from about 20 different outlets all reporting on his announcement that he was willing to engage with workers, whatever that means. But for investors, declining brand appeal and the union efforts are the issues facing the company. So appointing someone to do the job who has become infamous for fixing these issues is a display that the company is taking these issues seriously. A better example might be someone like Musk. He now has as much or more brand presence as the companies that he leads. A lot of his business's actual success may have very well been achieved by the engineers and level-headed executives working behind the scenes. But he is at least partially responsible for employing those people in the first place, so now he has a reputation as a serial entrepreneur that builds the businesses of the future. A very appealing pitch to investors. Even old Dorsey of Twitter, who apparently hated his job as CEO, presented an image that aligned with the company's investment pitch as an alternative communications channel This is all a relatively new phenomenon. Even 20 years ago, people didn't know big company CEOs unless they were extremely high-profile founders. Do you know who the CEO of Johnson & Johnson, Eli Lilly, or Exxon Mobil is? Unless you are an industry insider or highly informed investor, probably not. But thanks to social media, new marketing techniques, and a new cultural interest in business and finance, CEOs, especially CEOs of modern consumer-facing companies, are just as much influencers for their businesses as they are someone performing executive functions day to day. Do you know who the CEOs of Apple, Berkshire Hathaway, Facebook, Nvidia, or Tesla is? Even if you don't care about business that much, you probably do. And that's because these men have become just as important to these companies' marketing strategy as celebrity endorsements and advertising campaigns. Now some of these men still work incredibly hard in addition to being a spokesperson for their company. But for some of them, it's become possible to offload the boring work onto other employees and spend the rest of their time elsewhere. And for a lot of companies, that may very well be for the best. So it's time to learn how money works to find out why else companies have become so happy to pay millions of dollars to pay people who barely show up to work. This week's video is brought to you by Brilliant. Brilliant is an interactive learning platform designed to help you truly understand complex topics in math, data science, programming, and even AI. Instead of passive learning, Brilliant's lessons are all about getting hands-on and solving real problems, making learning six times more effective than just watching videos. Each course is built by experts from top institutions like MIT and Google, so you know you're learning from the best. Their data science courses, for instance, use real-world data sets from platforms like Airbnb and Spotify, giving you practical insights while you learn. I recently took Brilliant's creative coding course, and it's been a game-changer for building problem-solving skills. It's super interactive, and each lesson builds directly on the last, so you feel your progress as you go. Brilliant's also perfect for fitting learning into your day, whether you're on your computer or just have a few minutes with your phone. Try everything Brilliant has to offer for free for 30 days by visiting brilliant.org forward slash how money works. And if you like it, you'll also get 20% off an annual premium subscription. The role of the CEO has changed so much that even an competent business leader like Mark Zuckerberg has had to rethink his image as a technically proficient lizard person into something at least resembling a human. Now, it's possible that he is having a midlife crisis, but as several outlets have pointed out, it's probably much more likely that someone in his company has told him that human beings like human beings, so his business would probably be doing a lot better if he played the part. Now, getting CEOs out of the office and into the public eye as a branding tool might win over some users, investors, and potentially even some regulators. But unsurprisingly, there is one group that isn't as easy to win over. A survey conducted by the research firm International Workplace Group found that 93% of the 500 CEOs surveyed don't go into the office full time and instead have adopted a hybrid or exclusively work from home arrangement. That's compared to 64% of workers who make less than $38,000 a year who are expected to be in the office full time. Now, this study was conducted in the UK and there is no concrete numbers like this that could be found in America, but unfortunately, the attitudes are very similar on both sides of the pond. Unsurprisingly, this has caused a bit of a morale problem because people are being told to go back into the office or start filing for unemployment while simultaneously watching the very public antics of their CEO. Even if they are going on podcasts, building custom Porsche minivans, traveling to remote seminars, or putting in hours at a completely different business exclusively for the good of their company's brand image, it can be hard for someone filling out TPS reports to accept the hypocrisy that they have to be in their office. Now, according to the survey, company CEOs are aware of this frustration. They just don't care. It's no secret that return to work mandates have been used by companies as a sneaky way to do layoffs without having to actually publicly announce layoffs which could impact their stock price. Unfortunately for them, that's not really working, as people have seen the news and are trying to hold onto their jobs even if it means going back into the office. From a business management point of view, this can also be fine-tuned to other staff as well. High-performing staff on uncompetitive salaries can be given the option to work from home, where average or below-average staff or employees that were hired with higher wages can be told the office is mandatory for them. Just this week, KPMG announced official layoffs, and they weren't even hiding it anymore when they admitted it was because not enough people were voluntarily resigning. To an absent CEO, staff being frustrated at the clear double standards is a feature, and not a bug. Of course, another reason that CEOs can get away with not showing up to work is that they are only answerable to the board of directors, and if the company is doing well, most boards simply don't care. In a lot of companies, the boards are packed with people friendly to the CEO, so unless they really f**k up, they are free to offload whatever work they want. Nobody wants to be responsible for a big change for no reason. And that's probably the biggest reason why absentee CEOs have become so popular so quickly. According to data from Standard & Poor's, outside of the lead-up to the dot-com bubble in 2001, the world's biggest companies are now on average younger than they have ever been. A large share of the world's largest businesses, especially in America, were only founded a few decades ago. A huge venture capital financing has made scaling certain companies faster than ever, but that means that most of the time, the businesses get to where they are with their founders still in a leadership position. The problem is that being the founder of a rapidly scaling startup and being the CEO of a large company are two completely different jobs. Having the skills and experience to do either job is rare. Having the skills to do both is almost unheard of. The problem is that most founders want to maintain control of their company for as long as possible, even if there would be more qualified people to run it once it reaches a certain scale. In my own experience working on mergers and acquisitions deals, one of the biggest sticking points would be the role of the founders if their company was acquired, or once they lose majority control of the company in financing rounds. Getting rid of a CEO founder is difficult and often unpopular, so instead investors and often the founders themselves will appoint people to do the managerial work, while they just stick around as the face of the company as the CEO in name only. There is nothing necessarily wrong with this, although having a company linked to personal image of its founders can be risky, especially if they aren't in the office where an eye can be kept on them. The more controversial bonus reason is that the role of a CEO is slowly becoming extinct with new corporate practices. I'm going to be writing a piece this week on the fading relevance of the typical CEO in some companies on my completely free email newsletter linked in the video description. You can also watch this video about why another group of CEOs are being asked to kindly but firmly retire now or else, to keep on learning how money works.