“Hostility to corporate CEOs may never entirely subside,” John Tamny writes for The Wall Street Journal. “Democratic presidential candidate Hillary Clinton, for example, has spoken about the struggles of the average American family ‘when the average CEO makes about 300 times what the average worker makes.’ Rolling out her economic program on July 13, Mrs. Clinton promised policies that would be better for ‘hardworking families, not just for successful CEOs.’ Yet much would be gained if the public better understood the logic behind business leaders’ seemingly outsize compensation.”
“When Robert C. Goizueta took over Coca-Cola in 1980, the company was worth $4 billion. When he died in October 1997, the company was worth $145 billion. Goizueta transformed a global brand,” Tamny writes. “A few months before Goizueta died, Steve Jobs returned to run Apple Computer, the company he co-founded in the 1970s. Apple had been a highflier but was hurtling toward bankruptcy, and Jobs was brought in to fix what appeared irretrievably broken. Soon enough the innovations that have defined the modern Apple began to roll out. First was the iMac, followed by the iPod, iPhone and iPad. Jobs died in 2011, and while he did not live to see it, Apple is now worth $746 billion, the most valuable company on earth.”
“Goizueta died with an estimated net worth of $994 million thanks to his Coca-Cola stock. Jobs’s 5.5 million Apple shares were estimated to be worth $2.1 billion when he died,” Tamny writes. “The achievements of Goizueta and Jobs help explain why CEO pay is so high. Since one man or woman can potentially affect the fortunes of a corporation to the tune of hundreds of billions of dollars, CEO pay mirrors what is possible—even though it is by no means certain.”
“Yet compensation does not always match performance. Exhibit A is former Home Depot CEO Bob Nardelli. Despite $64 million in pay, and a share price that languished during his six years at the top of the retail giant, Mr. Nardelli’s forced departure in 2007 came with a $210 million exit package,” Tamny writes. “Perhaps incoming CEOs should be paid the way company founders are generally compensated. If chief executives were paid mostly in company stock, and comparatively little in annual salary, then the interests of the CEO, the shareholder and the worker will be much better aligned.”
Read more in the full article here.
MacDailyNews Take: It’s tough to argue that Steve Jobs wasn’t, and Tim Cook isn’t, worth every single penny and then some. Plus, of course, Jobs famously took only $1 in annual salary. The rest of his compensation was in Apple stock (and a Gulfstream jet, of which the operating costs were reimbursed to Jobs when the aircraft was used for Apple business. That jet was sold by Laurene Powell Jobs to none other than Jony Ive.)
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]