I believe people should be able to make obscene amounts of money.  Huge ridiculous piles of cash.  Stacks that reach to the moon.  I even believe those who earn it should even get to keep some of it.

At the same time I have huge problems with executive compensation packages.  In fact, for a guy who works hard to stay healthy, a lot of what I read about executive comp makes me sick.  I think I am getting a sore in my mouth just thinking about it now.

I cut a deal once with a consultant who said during the negotiation that he did not want to be “unduly enriched.”   I was inclined to agree with him; especially not on my blood and sweat.   Those two words are what throw the wheels off my proverbial bus when I think about executive compensation.  Or in many cases, executive overcompensation.

Bill Gates, has made billions of dollars over the years. Obscene money by most average Joes’ standards.  As far as I am concerned, he earned every penny of it.  The guy, besides being brilliant, had an idea (or a dozen) figured out how to execute, market and sell it and in the process made himself, and a lot of other hard working folks a spitpile of cash.  While he certainly was enriched, he was not “unduly enriched.”

However, when I look at say, Lloyd Blankfein of Goldman Sachs who earned $42.9 Million in compensation in 2008 (down from $53.9 Million the year before),  or the CEOs of say Bank of America, American Express, and JP Morgan Chase who, between the three of them made nearly $200 Million from 2007-2008, the sore in my mouth begins to swell.  There is a pretty good chance these guys didn’t invent anything, they didn’t take a lot of personal risk, they didn’t personally created something novel that is changing the world, they didn’t part the sea and lead their employees, customers and shareholders to the Promised Land, nor did they cause manna to fall from Heaven.   In fact, I’m of the opinion that often times the thing some of these executives did best, was not to “F” their companies up.  These types of executives fall into the category of “unduly enriched” in my opinion.  For your own mouth sores, you can check out the AFL-CIO website on executive compensation and draw your own conclusions.

I actually own a small amount of stock in two of these companies.  One I’ve owned for a couple of decades and the other for many years as well.  One is worth 4x what was paid for it and the other a couple of bucks more than was paid for it.  I only have enough of one of the stocks to wish I had enough to be worth something.  As for the other…whatever…I don’t have enough to do much good either way.  For my loyalty and risk, I have been neither duly nor unduly enriched.  I think I could say I have been unduly unenriched.

A lot of times when executive compensation is bandied about in the media, we hear compensation is high because it is a competitive thing.  We are asked to willingly suspend our disbelief and buy into this line that the talent is so thin, and the demand for top talent is so high, that Boards have to offer obscene packages to their execs to obtain and retain them.  I would argue that the Boards are out of touch and/or have personal agenda’s as it relates to their own compensation at the companies for whom they work. 

If this is the case then tell me, why is it that a guy like Steve Ballmer at Microsoft, pulled in a whopping $1.3 million last year and has earned about $5.5 Million over the past 5 years according to Forbes Magazine?  He’s also been at the company about 30 years to boot.

Under normal market conditions I don’t believe it is the Government’s job to dictate executive compensation.  When huge tax dollars are involved with a company’s survival, I think the Government as the voice of its own shareholders, does have a say in the matter.  While I don’t think corporate Boards are intentionally corrupt, ones that approve obscene executive compensation packages are out of touch, improperly influenced by personal and institutional agendas and are not properly representing the individual shareholders of the company.

Obscene executive compensation is merely a symptom.  The cure involves treating the cause.   When Boards and shareholders align around addressing the cause, then perhaps the collective sores in our mouths will begin to subside.

Will someone please pass the lactobacillus acidophilus?