MLB superstar Bryce Harper recently signed one of the biggest contracts in league history with the Philadelphia Phillies. Despite slightly above average league numbers and never playing a full season, Harper got a 13-year, $330 million contract because the Phillies front office believes he can help bring the team a championship. Is Harper worth the annual $25.3 million salary? The Phillies think so, and that’s all that matters in a free market.
CEO Pay
Executive compensation is in the news again. Abigail Disney, the affluent granddaughter of Walt Disney co-founder Roy Disney, lambasted executive pay when asked if current CEO Bob Iger is overpaid. She told CNBC:
“If your CEO salary is at the 700, 600, 500 times your median worker’s pay, there is nobody on Earth … Jesus Christ himself isn’t worth 500 times his median worker’s pay.
“We don’t have a society structured around fairness right now. The problem is that there’s a systematic favoring of people who have accumulated an enormous amount of wealth.”
Disney also demanded a millionaires’ tax, so when she was asked why she can’t just write a big check to the government, she pushed back, saying her “measly few hundred million dollars will do nothing.” Of course, this is the logic of leftists: They want others to take the lead rather than serve as an example to others.
Anyway, Iger, who agreed to lower his maximum potential annual earnings by $13.5 million, was paid $65.6 million for his performance in the last fiscal year. It might be an egregious sum to many, but shareholders thought he was worth the gamble – and that investment has paid off since 2005.
Under his leadership, Disney has acquired Pixar, Marvel Entertainment, the Star Wars franchise, and 21st Century Fox assets. The result? The stock has nearly tripled since the financial crisis, Disney generates about $60 billion in annual revenues, and last year’s profit was a record $12.6 billion.
Most important, Iger didn’t “deserve” this money – he earned it.
That said, if a CEO can bring this much success to a business, then the board of directors and shareholders would be foolish to reject paying a chief executive that much money.
This is why many CEOs of fortune 500 companies are paid 500 times more than the gum-chewing intern with a bad attitude and atrocious work ethic or Allen from accounting who keeps showing up late to work.
Once Iger steps down this year, he may receive dozens of offers from a myriad of other publicly traded companies that want to mirror Disney’s success. Whether he can replicate this or not at another company remains to be seen, but it’s no doubt Iger will be in demand and corporations will compete for his services.
What Would Jesus Christ Be Worth?
Disney’s comment about Jesus Christ’s worth is just there for the shock value it adds to her point. But, for the sake of argument, let’s pretend he was the head of a modern company out to turn a profit – just to demonstrate the absurdity of her claim, no disrespect intended to the Messiah. He would be a trillionaire. Sure, he might be the richest man alive because of his brand and his divine connection to God, but it would also be because of his human capital and his services that would inevitably be in demand. His stock would top that of Amazon.
Let’s take a gander at his skills.
First, if he could turn water into wine, then he would save on labor, land, equipment, and other overhead costs that eat away at profit margins in the wine industry. He wouldn’t even need to be concerned about weather conditions. The only potential significant operating expenditures would be packaging and shipping.
Second, he could solve multiple ailments that plague society, from world hunger (he fed 5,000 people with just five loaves of bread and two small fish) to blindness (he healed a man born sightless).
Third, since he had the power of resurrecting the dead, raising people from the grave would be a booming business. Who wouldn’t want to bring back a deceased significant other or a best friend?
Fourth, calming storms would save billions, especially in jurisdictions typically prone to natural disasters, because governments would no longer have to invest in preventative measures and fund vast clean-ups.
The only possible major miracle that would not be as lucrative is walking on water. More a gimmick than anything else, this novelty wears off after the first couple of times – like the Macarena or fidget spinners. But these one-time impulse purchases still could account for a nice portion of Christ’s corporation.
It is important to remember, though, that Christ’s enterprise would be successful only if there is a demand to satisfy. If nobody wanted wine, if nobody wanted to revive their loved ones, if nobody were interested in walking on water, then Jesus Christ would not surpass Bill Gates or Jeff Bezos in global wealth.
Executive Compensation Overblown
Some on the left get perturbed whenever they read a report about hundreds of executives earning more than 150 million Americans. This is evident every year when the AFL-CIO publishes a study highlighting the 300-1 pay gap between CEOs and average workers.
But, akin to nearly every issue the left advocates, this is overblown through manipulation and distortion. This fact often gets overlooked in the discussion: The average salary of CEOs in the United States is just under $200,000, a statistic that would slash the ratio to about 5-1.
Should everyone be outraged that the head of a small business specializing in latex is earning $165,000 more than an entry-level clerk?
Age of Envy
If you think about executive compensation for more than one second of your day, that is one second too long. How much a CEO earns has nothing to do with you, or how much you earn every week. Unfortunately, in today’s environment, envy has become a virtue, and it is politically profitable to exploit this feeling. By claiming that all your failures in life have happened because some suit is making $15 million a year, you can get votes and thus the power to control the people. Who is really worth such handsome pay? We’ll let the market answer that question.
