By Tibor Machan: FNM columnist
Most top executives draw pretty reasonable salaries, maybe up from $250K to several million per year.
This isn’t unlike how professional baseball and football players are hired and compensated, especially the stars among them.
Some people are sought out eagerly and promised exorbitant pay, including bonuses above the regular salary, and all this is agreed to from the outset, after heavy negotiation.
Contracts usually specify the terms, some of them unconditional. If bonuses are promised no matter how the company is doing, this will be binding, just as such contracts are binding in professional sports.
With the current brouhaha about high payouts in bonuses to company executives whose companies didn’t manage to be successful, it may appear to be unjust to pay as per the terms of the contract, but it isn’t. A promise is a promise.
Where trouble arises is when a company is receiving public funds in order to remain in operation, and a sizable portion of these funds is used to pay bonuses agreed to before the bailout.
What has happened is the company’s authority to pay the bonuses has diminished since the original contract was drawn up independently of the public intervention and subsidy.
That, of course, could also have been taken care of by the terms of the contract. It could have specified that regardless of whether the company receives bailout funds, the compensation to the executive will remain the same.
I think looking at the matter along these lines should clear any confusion about the current furor of executive compensation. But, sadly, the executive compensation issue seems to be a fodder for once again tearing down capitalism. And this time out of rank envy.
Why all the fuss about the high pay executives get so long as they aren’t stealing it? Makes you sick to see all these people fret about how well their fellows are doing. Oddly, in sports this attitude doesn’t appear to be dominant.
But when CEOs make big bucks from their closed offices, never mind what goes into their work, how much aggravation, preparation and anxiety, they immediately get attacked. This is precisely what makes some of us concerned about Obama and Co., this attitude of always looking at how others are doing, how well off they may be and how this cannot be tolerated.
It is the typical socialist mentality, one that was evident all over the Soviet bloc when I lived there — the snooping, the worry about how well others are doing.
I recall when I came West from communist Hungary I enjoyed all the wealth that surrounded me despite having hardly any of it myself. What a great thing, I thought, that people can make lots of money and obtain what they needed and wanted for themselves and their loved ones.
But not long thereafter I realized, to my dismay, that even in the West, even in America, too many people are green with envy and would rather work on bringing down their fellows than getting up there themselves. Shame on them all.
Tibor Machan advises Freedom Communications, parent company of this newspaper. E-mail him at: TMachan@link.freedom.com