CEO Pay -- A Case Study -- May 14, 2021

Years ago I went through this exercise. 

With all the stories (again) on CEO pay vs pay for employees, yada, yada, yada.

I get it. I understand. I understand the frustration. I understand the anger. 

XOM's CEO:

• salary: only $1.5 million last year (pretty paltry in the big scheme of things)
  
• total compensation: $16 million last year

XOM has 4.23 billion shares outstanding.

$16 million / 4.23 billion shares = 0.38 cents share 

That's not 38 cents, that's 0.38 cents.

$16 million / $256.235 billion (market cap) = 0.00006 or 0.006%

$256,235,000,000 market cap + $16 million = $256,251,000,000

$256,235,000,000  / 4.23 billion = $60.575650118 / share

$256,251,000,000 / 4.23 billion =  $60.579432624 / share

Delta: 

$60.575650118 - $60.579432624 = $0.0037825 / share or 0.4 cents / share

That's not 40 cents, that's 0.4 cents.

My daughter is being paid $3.48 / share to hold XOM. 

Number of XOM employees: 70,000.

$16 million / 70,000 = $230 / year or $20 / month, and after taxes, SS, medicare, union dues, etc, about $15 / month. 

Bottom line:

I don't know if the CEO is "worth it." I don't know if he is a great CEO or a mediocre CEO. I doubt if anyone really knows. 

But pay him absolutely nothing in compensation -- zero, nada, zilch -- and all things being equal, the company would be "worth" 0.4 cents/share less. 

Jealousy is a sad way to live one's life. Being jealous about someone else's pay is a sad way to live one's life. 

Biden, AOC and the like will cost Americans a lot more than $20 / month. 

Quick: how much did it cost you to fill up your SUV this week?

Meanwhile, investing in XOM seems like it would be so much more productive.  

By the way:

• 2017: 69,600 employees
• 2019: 74,900 employees

Delta: this CEO added 5,300 new employees between 2017 and 2019. 

5,300 is almost 8% growth. And most of these jobs were high-paying jobs with great benefits.