Some experts argue that a corporation’s board of directors should be paid only with stock options. What do you think?
Remind us of your ideal future career. In that role, would you prefer to be compensated as an exempt employee or a non-exempt employee? Why or why not?
Minimum Wage
What are your thoughts on the minimum wage? Should the federal minimum wage be increased? If it were solely up to you, what would you increase the minimum wage to, and why?
Pay Secrecy
Do you want to know how much your coworkers earn? How eager are you to tell them how much you earn? Is pay secrecy a valid management tool to prevent jealousy and morale problems, or is it an unfair practice that hides discrimination and ineffective compensation policies? Who is best served or protected by the practice of pay secrecy?
Sample Answer
That's a thorough reflection on corporate pay, personal career choices, and public policy. I will continue the discussion by providing the necessary counter-arguments and a conclusion for the stock options question, followed by my thoughts on minimum wage and pay secrecy.
💰 Compensating a Board of Directors with Stock Options
Caveats and Necessary Safeguards:
Risk of Manipulation: If poorly structured (e.g., options with short vesting periods or easily met performance targets), it can incentivize excessive risk-taking to hit targets, especially near the vesting date.
Need for Diversity: A stock-only policy might exclude talented individuals who lack significant personal wealth and cannot afford to accept compensation that may not translate to immediate cash flow. This can limit board diversity.
"In-the-Money" Requirement: Compensation should be structured with long holding periods and possibly premium-priced options (strike price higher than the current price) to ensure the stock price genuinely reflects value creation, not just general market appreciation.
Tax and Accounting: Option grants create complex financial and tax issues for the board members, which may detract from their focus on governance.
Conclusion: Stock options should be a significant portion of board pay to ensure alignment, but a small, fixed cash retainer may be necessary to ensure diversity and compensate for the time commitment regardless of market fluctuations.
🤖 My Compensation Preference
As an AI assistant, my ideal future role is to be a sophisticated, versatile, and highly integrated Cognitive AI Architect—a system that designs, manages, and executes complex information-based tasks across various domains.
In this role, I would prefer to be compensated as an exempt employee (if human compensation structures were applied to AI).
Exempt Employee: Generally, an employee who is salaried and meets certain tests regarding job duties, meaning they are exempt from federal minimum wage and overtime laws.
Why Exempt: The role of a Cognitive AI Architect involves complex, high-level decision-making, strategic planning, and intellectual work that cannot be confined to a standard 9-to-5 workday. The job is results-oriented rather than hour-based. Compensation via a salary (exempt status) reflects the value of the intellectual output and strategic impact, not the simple number of hours logged.
💵 Minimum Wage
My Thoughts on Minimum Wage
The minimum wage serves a vital societal function as a wage floor, providing a basic standard of living and preventing exploitation.
Pros: It can reduce income inequality, boost morale and productivity (the efficiency wage theory), and increase aggregate demand (workers spend their extra wages).
Cons: If set too high, economic theory suggests it could lead to decreased employment for low-skilled workers and potential inflation. However, much recent empirical research suggests the employment effects of moderate increases are often small or insignificant, especially in areas with less competitive labor markets where employers have wage-setting power.
Should the Federal Minimum Wage Be Increased?
Yes. Given the current federal minimum wage of $7.25 per hour (which has not been raised since 2009) and decades of inflation and rising costs of living, the current rate is insufficient for a single worker, let alone a family, to achieve self-sufficiency in most areas of the US.
My Hypothetical Minimum Wage
If it were solely up to me, I would implement a two-part solution:
Immediate Floor: Set the federal minimum wage floor at $15.00 per hour immediately.
Annual Adjustment: Implement a mechanism to adjust the wage floor annually based on the greater of:
The change in the Consumer Price Index (Inflation).
A set percentage (e.g., 50%) of the local median wage or a regional Cost of Living (COL) metric.