Tom Ramcigam (magicmarmot) wrote,
Tom Ramcigam

In the advent of $140Million CEO compensation packages, there is some talk of new laws limiting the compensation of corporate officers to no more than 100 times the lowest pay rate of any employee in the company.

Consider that if the lowest-paid employee makes $5.15/hr, that equivalates to a maximum salary of $1.03Million (based on a 2000-hour year).

Some folks feel that's too high a figure, some too low.

I think it's just not that simple.

Aside from corporate salaries, there are other compensation methods (stock grants, stock options, deferred benefits) that don't fit within that model. Even if we assume for the moment that that would be a limitation of the total compensation and not just salary, it opens up some interesting avenues.

Let's say that I'm the CEO of a large enough company that I'd like to be making a salary of $10Million. That means that the minimum salary in that company would be $100,000/yr. Obviously I can't pay such exorbitant salaries to everyone or the company would go bankrupt, so here's what I could do:

Fire everybody who makes less than $100k and replace them with contract workers through an employment agency. I now even effectively save the company money because I have cut the overhead on employees, workman's comp insurance, unemployment insurance, IRA contributions, and the like.

Incidentaly, $140Million annually comes out to $70,000 an hour, or $19.44 per second. Considering that the average fart is three seconds long, the man earns almost sixty dollars every time he farts.

A stack of 140 million one-dollar bills would be more than nine and a half miles high and weigh over 150 tons.

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