My Compensation: One CEO's internal monologueApril 6, 2009: 10:56 AM ET
Oh, goody! Look at my package... so big and shiny! The New York Times and Wall Street Journal just put me in the top 50 big earners of the year in their annual blockbuster overviews of executive compensation. They say I made more than $50 million last year! Hooray!
Except wait a minute. Hm. I'm looking at my bank account and it doesn't look so hot. If I'm so rich, how come I don't have a whole lot more money? Not that I'm poor or anything. But there's no question I'm going to have to keep working if I want to keep all the moving pieces in place.
How the frig did they calculate my number? Let's see...
Well, first there's my actual salary. $200,000 isn't chump change. I'm not complaining. But I haven't had a raise in that department in three years, because they "took care of me" on all the other front. And how! What generosity!
Except, you know, then there's the whole thing about my bonus, which is less than half of what it was last year. That's okay. I get why. Business was terrible. Of course, it was terrible for everybody. And our stock was down. Of course, so was everybody's. And I didn't give out a bunch of sub-prime mortgage loans. Nor did we get any government bailouts. But there you have it. It is, as they say, what it is.
So far it all adds up to about $7 million. I know it sounds like a lot. And it is! I know it is. But it's not more than $50 million, is it? I mean, my background is in Marketing, but even I know there's a decimal point missing there somewhere.
I guess they must be counting the stock I received at its face value. I wonder why. True, when it was issued to me it was worth about $20 million. That was at the beginning of '08. It doesn't fully vest for another three or four years. That means two things are true. 1) They're worthless to me now, even if they retained their value, and 2) They're worth a lot less than the number they put into the chart even if I could sell them, which I can't, not for a really long time. So that's $20 million they say I have that I don't have.
Now, a bunch of stock DID vest last January, so that's in there. Except it's valued at what it was worth then. That not what it's worth anymore, not by a long shot. What's interesting is that I had to pay taxes on the original amount, and they didn't withhold enough back then, you know how that is. So I owe additional tax on a fictional amount of money that I can't cash in because the stock is really too low to sell.
And then there's my stock options. I'm looking at their calculations and they say my options are worth $30 million. Right now, they're worth nothing, even if they were vested, which of course they're not.
I find that vaguely mysterious. Who made up these rules? Mr. Black? Mr. Scholes? I can understand that if I exercised some of them, and got the cash, that would be income... but right now all they are is paper. If they ever go above water, every shareholder of the corporation will be dancing in the aisles. But that could take years.
So let's add it up. The papers say I made more than $50 million. I'm looking at a little more than $7 million, before taxes. And everybody hates me.
There's only one solution for it, I think. I gotta get fired. That won't take too much doing, the way things are going! I guess that proves there's a silver lining to every dark cloud, huh? In the meantime, I wonder where I'm having lunch... Thank God I still have my plastic. As things stand, I really need it.