Sports Analogy.

A recent discussion, okay arguement, about the merits of large pay packets for executives and CEOs left a lot of room for further analysis of what makes for a fair exchange of skills versus dollars. The open debate was held over the most egalitarian of board tables, the local pub, and decisions made over a beer seemed to have the gravity and foresight to fix any and all of the problems associated with the great CEO debate. Throw in a few shots of tequila and sporting analogies of locals made good, being paid a fortune to play a game, and you have all the elements of a truly one sided debate.

Of course no one agreed that CEOs were worth the money being paid, especially today, when the ratio is close to 250-500 times the normal wage. Management guru Peter Drucker once said that companies need to keep executive pay close to 20 X 1 to avoid damaging company morale and creating cynicism towards management. Interesting how time takes care of the mathematics and acceptance of the increase.

There are certain reasonings around the increase in CEO pay packets and most now are aligned in some way with the interests of the shareholders but this assumes that both those beliefs profit by a CEO driven to self serving interest in maximising his pay. Shareholder value is also a selfish view and with both sides wanting to make money they don't often agree on each other's value. So the recent realignment of shareholder power to knock back CEO bonuses unless warranted has become a stumbling block for the future employment of some CEOs. Do CEOs now fear shareholders more than they do their boards?

Having said all of that I still believe that individuals can have enormous effect on company culture, strategy and direction so as to keep all sides happy. These are the special individuals where the consensus of whom to pay is more important than what to pay.

They are the players that want the ball in their hands at the end of the game with 3 seconds to play, with the team down 2 points, who then score the 3 point basket to win. They are the Michael Jordans being paid $90,000 a game plus a new pair of shoes every time they step on court. They are the Tiger Woods ( c'mon he's coming back ) pulling in the GDP of small island nations because they are so good at what they do, their individual skills are never questioned and the results speak for themselves.

What's a Steve Jobs, a Tony Hsieh, a Jeff Bezos or a Larry Page worth? If sentiment tells us that the company would be worse off without these leaders then surely their compensation comes a long way behind their achievements. They have become the player that fans are willing to shell out big dollars to watch, no matter that the grocery money would be better spent on essentials. They are the ones that make a difference in the last minute of the game when everything is on the line and you wouldn't want the ball in anyone else's hands.

Agreeing on all of that, a few beers later, a more pressing question came to light, who are you working for and would you pass them the ball with 3 seconds to go?