Wall Street is a mess. Obviously. And amid all the fear and flagellation is a fight over appropriate CEO compensation. One side says they get too much, the other says they get what they’re worth. A frequently used “what they’re worth” arguments goes something like this: “Yeah, but what is $70M as a percent of net profit?!” That may be accurate—$70M is a small percentage of, say, $7B—but it’s not valid. It redirects attention away from the fundamental question: what is the purpose of business? (see number 9). The assumption in the “percentage” argument is that business’ primary purpose is to generate profit—as much as possible. To quote Michael Douglas in Wall Street: “Greed is good.”
But greed is not an effective, sustainable strategy—in the end, you’ll take too much and lose everything.
What if, instead, we got back to basics? “Business” began because someone was trying to make the world a better place. Trying to make life a little more live-able. And they were good at it: they could make their widget/service for less effort than the value we got out of it.
Profit!
Then we got distracted by all that shiny money. Don’t get me wrong! There’s nothing inherently bad about money, or even wanting it. Profit is good. Greed is not.