2008-06-26

What if $650,000,000 Weren’t Enough?

There are many things for which I am grateful. Lovely wife. Joy-of-my-life kids. Job I can stand and sometimes even enjoy. Reasonable health. I could prattle on at some length, I suppose.

But considering the ambition of my financial goals, and considering that I am now trying to write regularly about how to “get rich,” I wasn’t particularly expecting to report this.

I’m grateful I don’t have too much money.

Because apparently, at some point, you have so much money that you become completely disconnected from reality and essentially insane.

The June 23, 2008 edition of The Wall Street Journal ran an article, Firms Measure a CEO’s (Net) Worth, discussing how some companies were considering adjusting their CEOs’ pay if they happened to notice just how vast the hoards of wealth were that they had already bestowed to the individual:

The median CEO in Equilar’s study of 338 large companies held $56.7 million in stock, outstanding stock options and accumulated retirement benefits. Its analysis doesn’t include gains from stock-option exercises, another big source of wealth…. When directors realize how much they have given executives, there are “eye-opening, Holy Cow” moments,….

One CEO frowned in response to the idea that some companies would consider past compensation in potentially reducing CEO pay going forward:

Aflac Inc. Chief Executive Daniel P. Amos, who holds 9.9 million shares valued at about $650 million, says he views equity awards as a way to keep score of his performance and that he would be less motivated if his pay were cut below that of other CEOs.

Less motivated? Amos's net worth is presumably well over $650,000,000—as I can’t help but think he has other stocks, money in the bank, equity in his home, and so forth, outside of his company stock. If Amos were to get paid $10 million this year, that’d likely be well less than 1.5% of his net worth. Would it really matter if his equity awards were reduced a little bit this year?

Would he even notice any even miniscule effect on his life?

No, which means he really is just “keeping score”—and from my perspective, he’s not really looking out for the interests of shareholders, let alone customers. His company Aflac is the supplemental health and life insurance company that prominently features a duck in its television commercials (that quacks out “Aflac”). And with a CEO that out of touch with the general population of the world, I think I’ll steer clear of doing any business with Aflac, whether as a customer or shareholder. That’s not the guy I want running a company to which I am bringing business or of which I am trying to own a piece.

Sheesh, if you’re that obsessively greedy, or your ego’s that gargantuan so that you have to “keep score,” at least be smart enough not to announce it in The Wall Street Journal.

At least not every CEO’s so insane, or tactless. From the same article:

Richard Brooks, chief executive of apparel maker Zumiez, Inc., says his 3.7 million shares—valued at about $72 million—are adequate incentive. Mr. Brooks hasn’t received stock options or equity since 1993,… “At some point [getting more stock] doesn’t change behavior,” says Mr. Brooks. “So how is it going to change performance?”

I’ll keep writing about trying to “get rich on a salary”—and I’ll keep trying to get there. But if I ever start sounding like the Aflac CEO, I hope you’ll reach through your computer screen and slap me.

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