In the past few months, Occupy Wall Street protesters and many Democratic leaders emphasizing inequality in America have turned to the controversial topic of executive pay. Occupy protesters have been bashing the high salaries that management personnel of many large companies receive while most Republicans have defended this compensation as being fair and necessary for corporate success. The focus on executive compensation intensified last week after Apple CEO Tim Cook received a $376-million restricted stock option, half of which would become unrestricted in five years and the remaining amount in 10 years. Upon hearing this figure, I had to pause for a moment to think about the scope of this number. Paying any individual this amount of money seems excessive, but it happens all the time and not just in the business world. Just a few weeks ago, it was announced that Albert Pujols, a Major League Baseball first baseman, had signed a 10-year contract with the Los Angeles Angels worth $240 million. Why, I wonder, has there been so much controversy and debate lately over the amount CEOs and other corporate managers are paid and not over the massive contracts that have been signed by many sports stars over the past few years? This is the result of a double standard that is rarely discussed but ought to be.
Athletes and corporate executives have many commonalities. Both occupations require specific skill sets that place many tough demands on the individual. Athletes tend to be drawn from a pool of physically superior men and women who, depending on their work ethic and the popularity of their sport, can use their natural physical talents to entertain thousands or even millions of fans over the course of a season. Corporate executives are required to have a demanding skill set in a different, but still ultimately similar, sense. They must perform under substantial pressure from both a board of directors and shareholders to run a successful company. At the end of the day, the implications of an executive's decisions will be far greater than just a win or a loss in a sporting match. Their performance will affect the livelihoods of all those whose jobs and lives are influenced by the company they lead.
Additionally, the product that athletes offer is no nobler than that which a CEO can offer. Although sports are an integral part of the lives of millions of Americans and billions of people worldwide, sports, at their core, are nothing more than a form of entertainment. They bring joy and despair to fans, sometimes at the same time. But they do not produce material goods, nor do they result in substantial progress for our civilization. On the other hand, CEOs, especially the good ones, can bestow substantial benefits on our society. Through their leadership, the companies they oversee may develop critical new drugs that improve life expectancy or may invent revolutionary objects that allow for a higher quality of life. In this way, it is evident that corporate executives are much more important to society than athletes.
Some would argue that athletes and corporate executives differ because many executives aren't up to par with the salary they may be receiving. Sure, at times poor corporate executives can receive the same undeserved exorbitant pay as superior executives. But so can athletes like Albert Haynesworth, who promptly turned from being an All-Pro National Football Player to having no job after signing a $100-million contract with the Washington Redskins in 2009. Companies and teams alike will do what they believe is in their best interest at the time. If a corporate executive or athlete's performance does not warrant his or her pay, that will be reflected in his or her next offer. But the contributions that talented athletes make to our society aren't even in the same league as the offerings of a good corporate executive.
So before we allow ourselves to cry foul over the executive compensation in this country, let's make sure that we have our values straight. For those who believe that corporate managers are overpaid, please remember the benefits that CEOs like Steve Jobs and, hopefully, Tim Cook offer us and how much greater value those benefits offer to society than any sports achievement Albert Pujols may accomplish.
