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Post 0

Tuesday, September 24, 2013 - 11:57amSanction this postReply
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That's an great little video - I was wishing it would go on and on. It was too short. Binswanger did an excellent job!

Post 1

Tuesday, September 24, 2013 - 12:36pmSanction this postReply
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I think Binswanger had a point, but also overstated his case. There are probably some crony capitalists and unproductive heirs in that top 1%. And why should the productive ones in the top 1% get a tax break, but not productive people not in the top 1%?

Post 2

Tuesday, September 24, 2013 - 3:01pmSanction this postReply
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There are probably some crony capitalists and unproductive heirs in that top 1%.
Yes, that thought occurred to me as well. But I liked his 'overstated' case... It was a striking way of making people rethink the old religious premise that wealth is evil, and the progressive/socialist class warfare on the wealthy.


Post 3

Wednesday, September 25, 2013 - 11:05amSanction this postReply
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More Binswanger with Blodget. Prima facie Blodget fabricates. At least in the video Binswanger does not say "CEOs deserve all the credit."
(Edited by Merlin Jetton on 9/25, 11:06am)


Post 4

Wednesday, September 25, 2013 - 2:57pmSanction this postReply
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Dr. Binswanger does a excellent job of defending his position.

[edited to give Dr. Binswanger his proper title]
(Edited by Steve Wolfer on 9/25, 7:17pm)


Post 5

Wednesday, September 25, 2013 - 6:19pmSanction this postReply
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Doctor Binswanger: Ph. D. in philosophy from Columbia.

And it was not all that good. You go on a show like that, you are being served up. Two hosts: tag team, but only for one side.

(Edited by Michael E. Marotta on 9/25, 6:37pm)


Post 6

Thursday, September 26, 2013 - 6:08amSanction this postReply
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How much pay does a CEO deserve? There are very different opinions about that regarding the CEO of Oracle (link). Oracle has 120,000 full-time employees. Mr. Ellison owns about 24% of the stock, and outside investors about 62%.

Post 7

Thursday, September 26, 2013 - 8:42pmSanction this postReply
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Merlin,

How much pay does a CEO deserve?

From your link:
Mr. Ellison received compensation valued at $76.9 million in the fiscal year that ended in May. ... Profit rose by 8% to $2.19 billion, as revenue ticked up 2% to $8.37 billion.

So ... the dude pulls $77 million in personal profit while the entire company is banking $2190 million in profit (after paying 120,000 workers, insurance costs, research & development costs, legal costs, etc.) out of a total of $8370 million in sales. That means that 3.5% of the profits are getting funneled into his pockets (which is less than 1% of total sales).

Musings (my attempt to actually provide an answer to your question)

That doesn't sound like a lot to me. Especially if the guy is putting good numbers up onto the board (a profits boost of 8% per year). I'm a firm believer in the Rule of 6000. A CEO should be "allowed" to make up to 6000 times what the company employees make, but not any more than that (because that's just 'too crazy').

If you suck so much as a CEO that you cannot adjust factors of production and then find help which is good enough to bring obscene profits to the company (i.e., if the only help you can find after you adjusted the factors of production, leads to a marginal productivity of labor that only allows for a worker's pay of ~$13,000/yr or less) -- then you don't "deserve" $77 million.

In the Stone Age (before the marginal productivity of labor dramatically increased) that kind of a thing would be okay. It would have been perfectly fine to make more than 6000 times what you pay the workers. That is because there wasn't a very good marginal productivity of labor back then. Hell, just building a stone axe took forever. And building a golden temple -- let alone the pyramids at Giza -- was like pulling teeth! Someone whom I admire is going to kill me for saying this but ... er', it's already too late for me (I'm already going to get creamed for what I've said!) ... so ... nevermind. Aaaaaaaaaagh!

:-)

Is Mr. Ellison making anywhere near 6000 times what his employees do (i.e., Do his employees earn less than $13,000/yr in total compensation)? If not, then move along please (because then there is no value to the debate). If he hits the 6000 mark, get back to me though*.

Ed

*One reason where it may be "appropriate" for a CEO to make more than 6000 times what the workers make, is when he is overburdened or under a lot of duress from economic interventionists. This usually takes the form of taxation and regulation (red tape). Under the burden of fully-socialist -- or even semi-socialist -- central planners, the Rule of 6000 would not apply. Rand once talked about an Ethics of Emergencies, and being in business under socialism would qualify as being smack-dab in the middle of an emergency. It is not, nor could it ever be, a normal course of affairs.


Post 8

Friday, September 27, 2013 - 4:29amSanction this postReply
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Ed,

You could make your defense of Mr. Ellison's pay (for a year) even stronger by comparing it to $11,082 million net income for the fiscal year rather than $2,190 million net income for the fiscal quarter.

Regarding the shareholders, I suspect their discontent is more about Oracle's stock price, which has been disappointing the last 3 years. (Net income was good.)

Post 9

Friday, September 27, 2013 - 6:30pmSanction this postReply
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Oops, my bad! Thanks for the correction.

If you take the numbers for the fiscal quarter and extrapolate out to a year (which is admittedly problematic), then profits would be $8760 million and total revenues would be $33,480 million. That means that Ellison personally pocketed less than 1% of all profits (and less than 0.25% of all revenues). That doesn't sound like a lot to me.

Now, if the amount (capitalist) and type (entrepreneurial) of capital invested per worker was nearly ideal -- an achievement which requires good management --  then the marginal productivity of labor would skyrocket and the workers, working inside the compu-tech market, should each be generating 6 figures in company revenue every year. Ellison's workers were each generating $280,000 in revenue ($33 billion divided by 120,000 workers) -- which means that he is a good CEO for the compu-tech market. Being good, he should be paid more than rival CEOs who don't measure up.

Well, that's just a quick and dirty attempt to justify the gobs of money thrown his way. Not being an expert, I could not tell you the ideal amount and type of capital invested per worker for this market. Heck, if I could, I would own an island!

:-)

Ed


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