The Real Problem with CEO Pay, and Why Young Men Don’t Volunteer Anymore

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This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question for next time, you can send a voice recording to office hours of PropGemeet.com. Again, that's office hours of PropGemeet.com, or post your question on the Scott Galois

sub-ruttet, and we just might feature it in enough coming episodes. Our first question comes from Reddit user, and Stigmat, and asks, OK, in 2025, C.O. Paced by 20 times faster than worker pay. Do you still think there is nothing we can do or should do to regulate this emerging class of oligarchs?

I'm not sure I've ever said that boss. So OK, so let's look at the data. According to an Oxfam study, S&P 500 C.O. pay rose, 26% between 20, 24 and 20, 25, while the average hourly earnings for private sector workers rose just 1.3% in real terms, meaning C.O. pay grew 20, 21 times faster than workers wages in the U.S. alone.

The report covered 1,500 companies across 33 counties and found that the average C.O.

could have $8.5 million last year from 5.5 million in 2019.

So some more data. C.O. is a major U.S. companies were paid 21 times as much as the typical worker in 1965. That ratio grew to 31 to 1 by 78, 60 to 1 by 1989, and searched to 380 to 1 in 2000 at the height of the stock market bubble in 2024. It was 281 to 1.

C.O. is a paid excessively, even relative to other high earners between 1965 and 1978. The average C.O. to large firm was paid almost 3 times as much as the average top 0.1% earner by 2023. The ratio had risen to 7.5x. I'll just give you some examples.

The Starbucks C.O. Brian Neckle received $98 million in 2024. That's 6600 times more than the medium Starbucks worker. The worker would have had to have started working in 4,600 BC just to earn what the C.O. made in one year. Tesla's proposed a pay package for Elon Musk worth up to $1 trillion over 10 years.

I mean, it just gets worse and worse. So what to do about it?

“I think capitalism is about not putting ceilings on earnings.”

And I believe in a market demand versus supply-based labor pool with higher minimum wage. I don't think. As in the Board of Urban Outfitters and the C.O. there said, when we came under fire for some of the retail workers at Urban Outfitters stores, not making a lot of money, came under fire for paying them so little.

And he said we believe in supply and demand or on the labor force. Now having said that, he also agreed at the end of the year to share a decent chunk of

He's a, anyways, the company is controlled by the Haney family. I found it would be very decent people. Anyways, I don't have a problem with C.O. making billions of dollars. I don't have a problem. I don't want the government to regulate ratios.

“What I think the government should do is the following.”

I don't have a problem with Elon Musk making $1 trillion. I think he should pay 70% marginal tax rate on that trillion dollars. I think corporations should pay an alternative minimum tax of 40%. They're paying about 22%, I think the average is probably closer to 17 or 15% when they, they stitch in all their loopholes.

So I have no problem with people making a ton of money. What I want is a more progressive tax policy. What happens now is that because the majority of CEO compensation comes in the form of equity, equity is tax at a lower rate than salary. That makes no fucking sense.

I go back to Reagan. Reagan, you see, it was just income. It wasn't. The battleism rich versus poor so much as it's owners versus earners and everyone versus the super rich. If you're making a million dollars in salary as the head of the M&A practice for

a law firm and you're living in New Jersey, you're probably paying 50% tax rate. But if you get to a point where you own or you're the general counsel of a firm with public equity, and you get a million dollars in stock, you pay a lot less in tax rate. That makes no fucking sense.

“So when did we decide money is more noble than sweat?”

So I think we need to equalize and lower the rates for earners and increase the rates. So the alternative minimum tax are the rates that owners pay because essentially they're wealth compounds annually with no friction. If you're a stock and every year you increase by $100,000 at your salary, we're going to take 20% or 30% of it every year.

So it just doesn't never grows that big.

But if you own $100,000 for the stock, it can grow tax deferred and keep compounding without every getting clipped unless you sell it. So I'm all for enormous pay packages. I think anything to try and get on the way of that is just going to create all sorts of weird perverted behavior.

What do we need to do? We need to ensure that a minimum employee is making 25 bucks an hour. Certain urban counties in America, which would put chicken processing plants out of business fine, then you could adjust it down for certain territories where you can manage a middle class household on 20 bucks an hour.

Okay fine.

“But for most of us, most places in the nation, 25 bucks an hour minimum wage.”

It would be 23 if it had just kept with productivity and inflation since the 70s.

In addition, have at it, pay the CO Starbucks 87 million, he should be tax 60 70% on that

money. Why? What you want is a tax system that is the least taxing. And when you tax the CO Starbucks, so I'm sure it's a lovely man, 70%. This is what happens.

Nothing. I mean, you put more money into the government so we can reduce our deficit and invest in schools and the Navy and parks and would have you. But nothing happens to him or his family in terms of happiness. Daniel Coniman, one of my intellectual models did a study, talked a lot about money, above

a certain amount, money can buy happiness up until a certain point. And then once you can afford health care, nice vacations, housing, an economic shock, which is a lot of money, it levels out now, another myth, billionaires around happy, no billionaires or no less happy than millionaires, but they're no happier. So if you're going to get no incremental happiness from, if you're going to get no incremental

happiness from that trillion dollars, but hundreds of thousands of households would get a lot of incremental happiness from universal childcare, then my attitude is let's go back to the 50, 60s and 70s where we had a much more progressive tax structure. In some, I don't believe you can get in the way of market dynamics around CO's making a shit ton of money.

A good CO adds a lot of value. Let me add some nuance. I've been on the compensation committee of a bunch of companies and this is how it got out of fucking control.

Every year a tower's parent comes in to the board and we pay them a quarter of a million

dollars to do a compensation study and they say, okay, Janet Robinson, I was on the board of the New York Times, is a CO of a $5 billion media company. This is what the average person at 50 percent makes of CO's a $5 million media company. It's they make $3 million dollars. And we say, but wait, Janet's nice.

We don't want to just pair of 50 percent, we want to pair at 60 or 70s so we pay Janet 3.8. But here's the problem. When you pay people 20 percent above the median, that doesn't sound like a lot. But then every other company that the median starts to explode and every company has to

keep up with the Joneses, meanwhile the people who aren't don't play golf or have relationships

guy who you get to know, who, by the way, put you on the board and you're making a quarter

of a million dollars a year on the board of the New York Times, you want to pay her

above average. So if you pay 20 percent above average, which doesn't sound like a lot, that's just at the 60 percent tile, that means every 3 and a half years you're doubling CO compensation because everybody else has to adjust as well. So we have seen a skyrocketing and an explosion in compensation.

This is about tax policy more than the government trying to interfere with compensation. I appreciate the question. Question number two comes from Andrea. Hi, Scott. I'm a liberal, super rude, having tote bag carrying rural Christian white woman, but as an

economic realist, I found myself agreeing with you about 75 percent at the time. Each week I volunteered to distribute breakfast bags, the homeless outside my church, and we frequently host student groups from schools to help us move heavy bulk items, make sandwiches, pack paper bags, and hand them out to anyone who needs and asks. And each week, I find that my volunteers are always girls, even when it's athletic teams.

It's only girls teams.

When I first started teaching, I knew that boys were always less involved in clubs and

extra curriculars in general. But 10 or 15 down the years down the road, good testosterone has even harder to find. I don't know whether to blame the manosphere, Trump, the parents, etc. But rather than focusing on the problem, my question for you as an economist is about incentives.

“How do we incentivize our young men to engage more in community issues?”

How do we incentivize their parents to lead them on the way they should go? How do we incentivize schools, coaches, organization leaders, etc. Start holding their young men to a higher level of citizenship, because obviously someone is the incentive as them. Thanks again, and trust me.

I hear you when you say the building stronger men makes for safer women and children in the long run. Thanks, Andrea.

Hello, super-redriver, so first off, I can't, it's as if no one, everyone was such the same

thing. I don't know as a grievous guy, I get the 75% a lot. It's hilarious, and most of my comments are with people who are embarrassed to just agree with me. They say, "Well, I don't know as a grievous guy, I agree with the 75% of the time."

And I'm fascinated by that ratio, because the 75-number comes up a lot. One, I do get a wrong one, constantly. I'm trying to be as unfiltered as possible, and sometimes results in hot takes that are quite frankly, they're just the wrong take, but what I would also say is, I appreciate people tolerating me, because I do think it's important to listen to people that, if you

listen to someone who was agree with, you're probably not going to learn a hell of a lot, or it's just going to submit your opinion and probably put you further than the sending or bubble. Anyways, I wish I had a more thoughtful answer. I had two emotions.

The first is when you sound lovely, and you sound like the kind of thing that, or the person that really is the fabric of America.

“And my second emotion was, it's just such a bummer, right?”

It's such a bummer that I see this everywhere, talk a lot about the importance of mentorship, especially male mentors in young boy's life, wearing young men's life. There are three times as many women, applying to be big sisters of New Yorkers, there are men. And I'm embarrassed to say it, I think I was one of those men.

I think I've been to the age of 40, I just wasn't very philanthropic. I don't know if it's the feminization of non-profits, it's seen as more feminine. I don't know if it's because women are more nurturing, I don't know if it's in stingsual. I don't know if it's women are brought up to be more service-minded, more sensitive to be please.

The honest answer that I don't know, what can be done? I think that as a standard practice among organized sports and just organized clubs or has to be a service component, in addition, femininity and masculinity are social constructs. And we get to fill those, we get to fill those vessels with whatever we want. And I've been thinking a lot about our masculinity and I was saying basically the three

“legs of the stool are provider, protector, procreater, I think where I've missed it.”

And I missed a lot is I'm trying to figure out an elegant way to incorporate an aspirational vision of masculinity that includes service. And I think a decent test for masculinity in your actions, and when I talk to young men, especially when they get social media following, are you optimizing for service or for attention?

and not for actual service.

And some people would say decent definition of character is doing the right thing when no one's looking. But I wonder how we can incorporate, especially when young men through our schools or religious institutions that masculinity and the strong man has a strong foundation in service. And a lot of religious institutions do a great job of this.

“And I remember my dad was married in divorce four times as far as we know.”

And I remember going to, I was remember, we remember a press material in church out in West Lake, California. And on a regular basis, the whole, what you call the whole parish, the whole community, would go provide service. And my son school, they are forced to hear a London, you know, engage in some sort of volunteer

service. I wonder if some of the male role models, if we can do a better job of encouraging them to highlight their service. And I do think actually a lot of athletes do a good job. But I don't have like a silver bullet here.

And I find it just so disappointing to hear that. And when you say it, it just resonates. So let's try and summarize. I don't think this is about men being less generous. And I'm holding out that's not the case.

I think it's about incentives, identity, and social structure. Volunteering is, to assume you said how we've designed pathways for young women, that to be more nurturing, to be pleasers. And it doesn't map us clearly to how young men are wired or rewarded. They're expected to be providers, ballers, make a ton of money.

And I think volunteering as seen as low ROI.

“Or more bluntly, if you want more young men volunteering, you have to make it look more like”

status, skill building, or a team-based activity, not just service if you will. But it's an issue. It's when we should address it a very young age. And I want to finish where I started. I think that people such as yourself are the fabric of this country and very much appreciate

you and your service. I hope you have boys and girls, I hope you have kids, we'll be right back after a quick break. Support for the show comes from Bill to rewards.

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“Early on as a business owner hiring has always been one of my most important responsibilities”

as we've grown. More of our recent horrors or specialized roles where I have less direct involvement. What I'm navigating now is less about hiring and more about managing people whose motivations differ from the company's core direction. For example, I have an employee who has been passionate about pursuing B2B partnerships

in frankly, it's been wildly successful but at our core we're a B2C business and that's the mission I want to protect. Scott, have you experienced something similar where an employee is driving results or generally impressive but their vision pulls in a different direction than where you want to take the company?

How do you avoid the employee's contributions without signaling to your long-tindered mission in the line team members that the company's direction is shifting? This sounds very situational and I would argue that if this person is that successful, it probably means you may want to calibrate or, I don't know, manicure the positioning. Every company I've started is ultimately ended up doing something different than I'd originally

envisioned. My first one was Mark a research firm and then we dropped Mark a research and called it strategy. I had started going all night when I was a guest for last minute gift giving and we went more aspirational and became red envelope initially I'll too was benchmarking luxury brands and it just became about benchmarking.

“So I would be, I think like that's why you get paid the big box so you've got to decide”

if it's bad for the culture and not helping.

We have a really robust speaking business, we probably do four or five million bucks a year

and property markets, I used to be the only speaker but now we have two or three people get paid speaking gigs. That's not the future of the firm. No one's going to buy it, we're not going to buy it but they're not going to buy us and we're not going to create a ton of shareholder value through speaking but it's

a great way to fund the company's strategic initiatives so we can hire more tech people and more launch more podcasts, et cetera, pay people better. So I just think it's situational if they're doing, you know, if they're doing something totally different that's bad for the culture and taking off course and I'm making a lot of money, yeah, then shit can it.

But if this person is really while they're successful, milk it and take the cash or maybe rethink the direction of the company, if that's a division that should, you've kind of stumble onto something that's maybe better and bigger than your core business but again it's situational and I don't, if not bothering anybody or, you know, I just don't, to me this sounds like a good problem and it's a question of proportions if this individual

is garnering a ton of incremental high margin revenue and ring fence them, let them have out it and also reevaluate if this means if you've stumbled onto what might be a nice adjunct for the company or maybe requires serious consideration around complimenting or or changing the direction of the company and some I don't know without having more specifics and also the fact that you even ring this up maybe things that gives me the impression

that maybe you don't like this person's approach to work and that they just make so much

“money that you have to put up with them.”

I've had a lot of those and that's what it means to be a manager is unfortunately usually

the most talented people in the company, often not always, but oftentimes the biggest

assholes because they know they have leverage anyways, I apologize I don't have a real and unless I knew more about the specifics, the size of the incremental revenue from that B2B business but if it's not, if it's, yeah it's an easy one, if it's not offering a ton of marginal revenue and it's a distraction, then shit can it, but I think you have to, I think you have to meet with some people, lay out the numbers, lay out your concerns

around this. Thanks for the question.

That's all for this episode.

“If you'd like to submit a question, please email a voice recording to office hours of”

profitingmedia.com. Again, that's office hours of profitingmedia.com or if you prefer to ask on Reddit, just post your question on the Scott Galois subreddit and we just might future it in an upcoming episode. This episode was produced by Jennifer Sanchez and Laura Jenerer. Tammy Reakers, our social producer, Brad Williams, is our editor and Drew Burroughs, is our

technical director.

Thank you for listening to the Prophecy Pop from Prophecy Media.

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