Executive Pay As Maximum of Proportion

When the controversy over executive pay erupted and some talking heads considering this one of the instigating factors in the financial disaster, I pondered on it a few days.   Suddenly a simple solution came to me.  Just allow the executive compensation level be related to other compensations in the same company.   The easiest formula is to allow executive pay to be a maximum multiple of the lowest earning pay level in the company.  Thus, C = bL, where C is maximum compensation, L is lowest level, and b is a scale factor.  This applies to bonuses, stock options, and free saunas in the company jet.  This factor can be fixed, per industry, or legislated.

How would this work compared to the current ratios?  The table below shows a best case scenario (from the standpoint of the CEO).  I got the pay values from this article, “Top Five Highest-Paid, Worst-Performing CEOs” that has data for 2008.  I used $15K as the lowest pay rate.  See how the multiplier is now in the thousands!  But, in the fifth column I put in what the other employees should have made at a more sane multiplier of 40.

Company Employee CEO Multiplier If multiplier were 40
Oracle $15,000 $557M 37133 $600,000
Blackstone Group $15,000 $702M 46800 $600,000

If we were using a multiplier of 40x, then each employee should have minimally made $14 million so that the CEO was justified in his salary. Obviously each wage or salaried employee cannot each make 14 million; what if there are thousands of them, as in multinational companies.  Thus, starting the other way, using the lowest wage, the CEO would be capped at $600,000, as shown in column 5.

That is a big problem with such simplistic approaches as mine.   What happens to the other levels of compensation, the middle managers?  Seems that to re-balance the low/high compensation proportion all pay “grades” must be adjusted.  How?  Also, if CEO have an effective cap, does that reduce CEO effort? On the other hand, just thinking of the problems on how to balance such a high executive pay is itself an indication of how unreal corporate capitalism has become and the size of companies has become behemoths.

Any advantages to this alternative?

  • No cap on pay.  Want to earn more, pay the ones who do the real work more.
  • Not based on financial voodoo such as stock ownership timing and recalls.
  • Would even satisfy some pinko leftist extremists.
  • Sounds moral.  Even Jesus would run his conglomerate this way.
  • If the robber baron at the top makes a killing so do the people stoking the steam furnaces in the basement.
  • Etc.

Of course, what the heck do I know.   If I was CEO of a company I would want big bucks too.  So, I was reluctant to post this on my blog.  Then this morning while listening to the radio on this topic, somebody in Canada, Michael, called in to give just this very idea.  He sounded like he knew a thing or two.  He said that thirty years ago, the multiple was like 40 times minimum wage.  The radio show was:  On Point with Tom Ashbrook.

In a free capitalist economy should government have a say in big pay?  Well, we have laws against child labor, have a minimum wage, and plenty of laws to safeguard employees.  If you don’t think there should be limits, just read “The Jungle” by Upton Sinclair or many of Charles Dickins’ books,  or visit a  sweatshop in any big city.   We may not have many inhumane deplorable work conditions, but normal people are not living large; some may see the income extremes as another form of exploitation.

Some links I found easily.  I notice most references talk of income caps.  That’s not what I advocated above.

Disclaimer:  None of the above represents the views of current or future employers of mine or my attitudes about employers.  It won’t represent my view either in a few days.  Live and learn.

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Medical marijuana clinics? We don’t have aspirin clinics.

This article irked me: Civic activists in L.A. have growing appetite to curb medical marijuana clinics — latimes.com.

It sort of made plain some of the trepidation I feel about this new grassroots effort.   To me it seems like a new effort to quasi-legalize drugs.  Sure there may be legitimate medical benefits to many natural substances, but we already have  distribution channels for legal drugs: pharmacies.   And, these channels can accommodate this “new” drug.  There is no issue with freshness or packaging; our supermarkets distribute perishable produce daily.

In fact, these clinics are nothing more then today’s speakeasys.  In the past, you just got a prescription by asking the local bookie or wiseguy, now you’ll just complain to your doctor, “Doc, my vision is not too good lately, I think to avoid glaucoma later I should get a prescription for some devil weed.” As I read the news article I cringe at the “connoisseur quality” selections, the menu, and the photo showing young ‘sufferers, “oh, can’t sleep, the boogie man scares me”.

Well, I’m sure this is a losing battle.  If some can say that the constitution guarantees the right to bear high caliber assault weapons, I’m sure some will find justification for being stoned and getting the munchies.  So lets get the unintended consequences out of the way.  Such as, are these legally stoned on pot people allowed to drive?  Its bad enough some drunk can decimate my family on the road, now I have to worry about pot heads too.  Can we dispense with the years of medical studies and jawboning that will inevitably follow and just determine right now if it causes cancer, makes you stupid, or really does lead to dangerous drugs like discount wine?

Ok, some psychologists have found that certain psychoactive drugs are beneficial for psychological issues.  Here come the Psych Joints!  On the menu: Mushrooms (no trans-fats), LSD, Angel Dust, hashish, and Shaman juju dust.  Would you like to try our new hookah, we are running a sale today?

P.S.  Of course, I respect the needs of people with health issues and that must give alternative treatments a fair trial.

P.P.S.  Further evidence of shadiness of this is the news that in Colorado a place has a want ad out for a “Pot Critic”!  I have never heard of a ‘Pharmacy Critic’.


  • “Long-term cannabis use can double risk of psychosis”, link
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Computer vision landmark by Google Labs

I was reading this post on the Groovy research blog.  Very interesting.  They ” … present a new technology that enables computers to quickly and efficiently identify images of more than 50,000 landmarks from all over the world with 80% accuracy”.  Of course, they use massive computing resources and multiple sources to create humongous databases so that one can do image comparisons etc.

While reading I thought of an alternative method, and since this is not my field probably a very naive mess too.   Anyway, I would create a system that would generate the base images dynamically.   For example, the actual target object or model of the target is put inside a sphere where one of more digital cameras can move.  These cameras would take snapshots from their respective 3D angle and feed the results to a process that would index them and “clean” them up.  By controlling the radius of the sphere and the snapshot per travel (FPS), different resolutions of the same target object are made available.  Now that an object has many images, they can be manipulated, such as low light conditions, occlusion, and so forth can be added as filters during an actual search for identification prior to the actual image matching tasks.

I’m sure my idea is not new.  Probably related to Stereolithography, MRI imaging, ray-tracing, and other powerful computer graphic subjects.

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The celebrated man in the street

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