These kinds of numbers are synthetic, P.R. stunt, numbers. Does it really mean anything when Steve Jobs is being paid $1 a year at Apple? Would Intel be a better company if Craig Barrett reduced his salary to a similar token level (but had options on 15 million shares)?
I agree that cutting salary when execs are taking millions in stock options packages is a joke, so I think we need to look at the total compensation packages. And I think it also reasonable to view founders differently than hired guns. It seems reasonable to me that if you are going to hire a non founding manager to run a big company like Cisco or Intel, some stock option compensation may be desireable and be a good idea. But I don't know why founders need more and more stock options to keep coming to work every day with plenty of incentive, and apparently both Buffet and Gates are of this same opinion, since I don't believe either of them have ever taken additional stock option compensation after they founded their respective companies. But we still have founders like Jobs and Siebel continuing to take (until very recently in the case of Siebel) huge total compensation packages on a yearly basis. And if I am not mistaken, both these companies are only marginally profitable when all expenses are taken in to account.
An important factor to consider when looking at the value of these yearly compensation packages, is that this money comes directly out of what would otherwise be shareholder earnings---even if it is not reported as such. And many companies who do not really have anything impressive in the way of legitimate earnings are continuing to pay execs and sometimes employees as well, as if they are performing profitability miracles, when in fact, the only miracle that they have managed to perform is that of convincing the investing public that their companies are much more profitable and fantastic than they actually are.
Imo, Buffet is one of the most talented managers in America, and with a compensation package apparently totalling only $356,000 a year with no stock options, shareholders are certainly getting their money's worth by hiring him to run the company. It is hard not to view getting a manager of his caliber for that kind of money as a complete steal. But the thing that really makes Buffet a steal, is that he truly tries to manage for shareholders interests and value, rather than for the purpose of lining his own pockets at shareholders' expense. Execs like Buffet, that view shareholders as important partners in the business, and whom consider themselves stewards of shareholders interests for the long run, are hard to find imo.
Regards, Huey |
