| | Merlin,
How much pay does a CEO deserve?
From your link:
Mr. Ellison received compensation valued at $76.9 million in the fiscal year that ended in May. ... Profit rose by 8% to $2.19 billion, as revenue ticked up 2% to $8.37 billion.
So ... the dude pulls $77 million in personal profit while the entire company is banking $2190 million in profit (after paying 120,000 workers, insurance costs, research & development costs, legal costs, etc.) out of a total of $8370 million in sales. That means that 3.5% of the profits are getting funneled into his pockets (which is less than 1% of total sales).
Musings (my attempt to actually provide an answer to your question)
That doesn't sound like a lot to me. Especially if the guy is putting good numbers up onto the board (a profits boost of 8% per year). I'm a firm believer in the Rule of 6000. A CEO should be "allowed" to make up to 6000 times what the company employees make, but not any more than that (because that's just 'too crazy').
If you suck so much as a CEO that you cannot adjust factors of production and then find help which is good enough to bring obscene profits to the company (i.e., if the only help you can find after you adjusted the factors of production, leads to a marginal productivity of labor that only allows for a worker's pay of ~$13,000/yr or less) -- then you don't "deserve" $77 million.
In the Stone Age (before the marginal productivity of labor dramatically increased) that kind of a thing would be okay. It would have been perfectly fine to make more than 6000 times what you pay the workers. That is because there wasn't a very good marginal productivity of labor back then. Hell, just building a stone axe took forever. And building a golden temple -- let alone the pyramids at Giza -- was like pulling teeth! Someone whom I admire is going to kill me for saying this but ... er', it's already too late for me (I'm already going to get creamed for what I've said!) ... so ... nevermind. Aaaaaaaaaagh!
:-)
Is Mr. Ellison making anywhere near 6000 times what his employees do (i.e., Do his employees earn less than $13,000/yr in total compensation)? If not, then move along please (because then there is no value to the debate). If he hits the 6000 mark, get back to me though*.
Ed
*One reason where it may be "appropriate" for a CEO to make more than 6000 times what the workers make, is when he is overburdened or under a lot of duress from economic interventionists. This usually takes the form of taxation and regulation (red tape). Under the burden of fully-socialist -- or even semi-socialist -- central planners, the Rule of 6000 would not apply. Rand once talked about an Ethics of Emergencies, and being in business under socialism would qualify as being smack-dab in the middle of an emergency. It is not, nor could it ever be, a normal course of affairs.
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