It is June and time for that twisted corporate introspective agony called the Annual Employee Performance Review. There is something slightly Maoist in the idea that, once every year, each employee-supervisor pair should turn on each other and start rank ordering their superlatives and deficiencies like some poor couple in marital therapy. It’s been my experience that more harm than good comes of this. Since I also do my own scathing self-review (Organization: Abysmal. It is demotivating to many of those who work around me to see to what degree my own work is in a shambles.), I had a chance to comment on my own compensation.
I make $300,000 per year running a company of about 300 people with global annual revenues of about $40 million. Fortunately, the New York Times recently reviewed CEO compensation in a piece that I picked up on Twitter, allowing me to make some comparisons and develop two simple guidelines for setting appropriate CEO pay.
- The CEO should never be paid more than 1% of gross revenue. At an astonishing 47% of gross revenue, the leader of the NYT survey is consuming his parent company feet first and his lips are slurping at his own ass.
- The CEO should never be paid more than 10 times the compensation of the lowest paid entry-level college graduate in that company. I don’t care how stuffed your Rolodex, how merrily you multitask, how bluetoothed your smartphone and laptop, how energized you emerge in the office at 5:00 am after leaving a mere 4 hours earlier—you don’t do the work of more than 10 people. No, you don’t.
Virtually all of the corporate CEOs compensating themselves at rates shooting past $100 million each year are doing so not because they have earned it or because they deserve it—they do it because they can. That is the same reason Viktor Yanukovych built himself a mansion containing a white Steinway piano modeled after the one presented to Yoko Ono by John Lennon. That is also why Muammar Gaddafi and Saddam Hussein [fill in any excess you find most grotesque].
The role model of the CEO should be that of a statesman, not a tyrant. His personal ambitions should be modest, while his ambitions for his staff and their enterprise should be unlimited. So if you want a raise, masters of the universe, add $5 million to your corporate sales, add $5,000 to the pay of your newest and brightest—and I’m sure you can do the math from there.
Note added in proof: Application of these CEO rules to my own pay caps compensation at $340,000/yr. However, it was determined that my pay change will be 0.0%. The time being wasted writing and researching irrelevant topics for my personal blog as well as the time spent idly chatting on social media such as Twitter were duly noted. That is, performance issues have delayed the full actualization of my reward potential. Only HR could make it sound so positive.