I like creating simple algorithms to solve complex social issues. My 28th, 29th and 30th Amendments, FED tax schedule, college tuition, inequality tax and dividend maximums, among others, are examples.
One of the bizarre social numbers out there is CEO pay (or corporate executive pay). Generally, these numbers are incomprehensible. Some examples (BI):
|Steve Wynn||Wynn Resorts||$28.2 million|
|Leonard Schleifer||Regeneron Pharmaceuticals||$28.3 million|
|Ginni Rometty||IBM||$32.3 million|
|Jeff Bewkes||Time Warner Inc.||$32.6 million|
|Brian Roberts||Comcast Corp.||$33 million|
|Robert Kotick||Activision Blizzard Inc.||$33.1 million|
|David Zaslav||Discovery Communications||$37.2 million|
|Bob Iger||Walt Disney Co.||$41 million|
|Les Moonves||CBS Corp||$68.6 million|
|Tom Rutledge||Charter Communications||$98 million|
What is reasonable? Certainly not $100 million a year! Some say that executive pay is necessarily high as it needs to attract the best (the best sociopaths…) who are willing to take the heat and dish out the sometimes oppressive company actions that keep a corporation healthy.
But as I asked, what is reasonable? What is a logical maximum salary? What simple algorithm could we create to deduce this? How about this. I’ll admit that someone might be:
- twice as smart as me
- twice as skilled as me
- twice as educated as me
- twice as experienced as me
- twice as industrious as me and
- twice as lucky as me.
(Twice being 100% better. “Me” being the average Joe.)
That’s 2 x 2 x 2 x 2 x 2 x 2 = 64 times “better” than me.
If the median household salary is $59k (US Census Bureau 2016) then:
64 x $59k = $3,776,000
That is the maximum logical pay anyone could possibly be paid based on the reasonable comparison of people’s abilities. $3.7M is a pretty hefty paycheck in my book. Plenty, I’m sure, on which to live a lavish life.
But there are 482 CEO’s of the S&P 500 paid more than this number.
The highest, Sundar Pichai of Google fame, gets $100M. That means that he’s effectively 1694 times “better” than me.
Boy, that sure is one-hell-of-a-lot better! I’m sure he’s worth it.