Is It Wrong to Make a Lot of Money?

Many of The Huffington Post readers think that it is wrong to make a lot of money. I disagree. When I disclosed in a recent post that I'd made over half a million before becoming unemployed, the reaction was swift and merciless. Here's one example.

"What you don't get is that a salary of over a half million IS greed. LOL. Do you really think you, or any other human being, is worth $500,000 a year? You're out of touch."

Although there were also a few comments that put things into perspective.

"How many of you would have risked a 500k job by being a whistleblower. Google his name and you will see that he does not deserve your sarcastic and patronizing comments."

So when is it bad to make a lot of money? If you make all that money by robbing a bank, that's not a good thing; most of us can agree with that. Or if you employ slave labor and get rich on the work of indentured servants that is also a horrible thing.

But what if you study hard, get your degree and a good job with a high salary, is that bad? Is it a fair reward for hard work? Or is it a system manipulated to reward the already privileged?

Let's take the compensation I used to enjoy once upon a time . . . half a million and more. Why would someone get this kind of money? In my case I delivered the #1 performance as measured by sales vs. budget within all of Pfizer. Let me translate that. My work resulted in Pfizer making $50 million they hadn't expected. Out of that I got about 1%. That's less than the cut a real estate agent receives when she sells a house. And since the company will continue to make this additional $50 million year after year, they might end up making an additional half a billion. Pretty good return on investment for paying a guy half a million. I still can't figure out how they could isolate me in an empty building after such a performance . . . but I guess it proves not everything is about money in a big corporation.

Anyway, was I worth it to Pfizer? Of course I was. Do I feel bad about this? Not at all.

But what about the other example I used? Pfizer has lost 40% of its stock value during the five years Hank McKinnell has been CEO, while competitors "only" lost 20%. Is this CEO worth tens of millions in salary every year and close to $100 million in a retirement package? This is a tricky one. We all know that if the company value had increased by 40% Dr. McKinnell would have taken full credit for that increase and claimed that's the reason he deserved his payout. But that's not the case. He did worse than most of his friends in PhRMA and perhaps no one could've done better. We just don't know.

But why the big payola? That is not pay for performance. That is pay based on how much money you have the power to grab out of shareholders pockets. You think his employees are upset about this? Just read the comments about Dr. McKinnell on Café Pharma.

I realize all of this is moot to someone making $20,000 a year or living on unemployment. So here's the next point. We are not getting paid what we are worth; we are paid based on what we can negotiate. A doctor in Africa or Russia makes less money than an automotive worker in Detroit. Isn't the doctor in Africa worth more? Saving lives, after all, commands more skills and more value to society than putting together a car. But the doctor in Russia doesn't have the power to negotiate a higher salary.

And a teacher who helps one of our children become everything he dreams of and in the process builds a better future for all of us, gets paid less than most corporate employees. None of this is fair, and we don't live in a fair world. But that's how it works, unfortunately.

CEO pay in the past, in the 1960s was limited by what people felt were "reasonable," what society could accept. Today those limitations have been thrown out the window. We have entered the era of the new robber barons. The CEO takes whatever he can get his hands on, irrespective of performance. And if the company stock doesn't increase in value, he still makes money by picking a date retroactively to price his options at a profitable level, according to the Wall Street Journal:

"The Journal's analysis raises questions about one of the most lucrative stock-option grants ever. On Oct. 13, 1999, William W. McGuire, CEO of giant insurer UnitedHealth Group Inc., got an enormous grant in three parts that -- after adjustment for later stock splits -- came to 14.6 million options. So far, he has exercised about 5% of them, for a profit of about $39 million. As of late February he had 13.87 million unexercised options left from the October 1999 tranche. His profit on those, if he exercised them today, would be about $717 million more. The 1999 grant was dated the very day UnitedHealth stock hit its low for the year. Grants to Dr. McGuire in 1997 and 2000 were also dated on the day with those years' single lowest closing price. A grant in 2001 came near the bottom of a sharp stock dip. In all, the odds of such a favorable pattern occurring by chance would be one in 200 million or greater. Odds such as those are "astronomical," said David Yermack, an associate professor of finance at New York University, who reviewed the Journal's methodology and has studied options-timing issues."

This isn't pay for performance. It's cheating and it explains why some fat cats get paid more than others. This is not a market economy; it is a kleptocracy. We probably can't stop this CEO feeding frenzy. These are the guys in power and they'll do whatever they want while the rest of the country is suffering. But we can push our politicians to improve the lot of those who have less.

The federal minimum wage has remained at $5.15 an hour since September 1, 1997. In fact, after adjusting for inflation, the value of the minimum wage is at its second lowest level since 1955. If the minimum wage in 2005 was worth what it was worth in 1968 (its peak value), it would be $8.88 an hour. That's a 42% drop in value for the people who need every cent.

This doesn't have to continue. We can show that the CEOs happily cashing their hundred million dollar retirement packages and backdating their stock option grants are the same people who don't want to give another cent to the guy on minimum wage.

Reality is that if companies can get away with paying slave labor salaries, they will. We have to shame them all into changing this and to make this illegal by raising minimum wage. Last Sunday, the New York Times reported that--for the first time--" full-time worker at minimum wage could not afford a one-bedroom apartment anywhere in the country at average market rates."

We want to get people off the welfare rolls? Start paying them a decent salary.

That's not socialism. It is common sense and decency.

And for those lucky few who make it big the old fashioned way--without cheating; congratuations. At least your stories may inspire others to work hard and make a difference in the future. Remember, it was Mr. Henry Ford who suddenly "announced that he was doubling the pay of thousands of his employees, to at least $5 a day" back in 1914.

Imagine any CEO following his example today . . .

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