Key insights
- The author argues that Reddit executives are vastly overpaid compared to their market value, especially when contrasted with highly valued sports stars. This excessive stock-based compensation (SBC) is seen as detrimental to shareholder value and a signal that the stock's upside potential is limited.
|||Contract Value|Term|annual salary| |:-|:-|:-|:-|:-| |Shohei Ohtani|Baseball|$700m|10y|$70m| |Nikola Jokić|Basketball|$276m|5y|$55m| |Kylian Mbappé|Soccer|$250m|5y|$50m| |Patrick Mahomes|Football|$450m|10y|$45m|
These players could get the same salaries from a number of teams. If anything, their true value is higher, as these salaries are often constrained by salary-cap rules that don't exist outside of sports.
Now, imagine a free-agent market for executives. There would be no bidding wars for Jen Wong or Drew Vollero, as there are thousands of executives like them available at all times. Jen Wong and Drew Vollero would get paid a $500,000 base salary and up to $2M in options. That's their market value. Jen Wong got that from her most recent employer, Time Inc., which fired her after revenue declined from $3B to $2.5B; and Drew Vollero got that from a company providing security for buildings.
||Market Value|annual salary| |:-|:-|:-| |Reddit Executives (Wong, Vollero)|up to $2.5m|up to $250m|
However, for no reason other than robbing shareholders, at Reddit they are now paid up to 100x their market value in the most precious asset any company has: its shares.
JEN WONG IS PAID THE COMBINED SALARIES OF OHTANI, JOKIC, MBAPPE, MAHOMES. let this sink in. There are certainly other companies with similar issues, but Reddit probaly has the most overpaid executives of them all right now.
Reddit is a freak show, a farce, a scam. Call it whatever you want. But don't expect the stock to go up anymore with this kind of executive SBC scheme.