Why aren’t CEO’s rich?
Now, that’s an example of an attention-getting headline 😉
You see, CEO’s are rich!
At least, some of them: for example, Fortune Magazine lists the 10 most highly paid executives in the USA, listing salaries ranging from a low (!) of $48 million to a high of $71.4 million per year!
[AJC: This was published in 2005, so I am sure that it has dropped by $10 or $20 million each, per year; poor babies!]
Even when you ‘sink’ to the top US companies – in 2009, 200 such companies were surveyed for the Wall Street Journal, each with greater than $4 billion in annual revenue – CEO salaries are still a respectible $7.5 million per year (made up of: Base Pay $1,030,000 + Annual Incentives $1,523,701 + Long-Term Incentives $5,007,556).
This is in 2009, during the Global Financial Crisis; hard times, hard times ….
Clearly, you would have to define ‘rich’ very differently to most to say that these guys (and gals) are not rich!
But, we’re talking about the absolute top echelon in the field here; the top few hundred US companies (out of the 24 million+ businesses in the USA) … the same could be said of the top performers in any field: sports, medicine, entertainment, gambling, etc., etc.
We’re not at all concerned about them …
So, let’s look instead at the CEO’s of more ‘typical’ companies, as reported by Salary.com who surveyed 1,800 companies with 500 or fewer employees across 50 industries to find that these CEO’s (including Partners and Owners salaries) only earned [AJC: a debatable term] $290,000 (including: Base Salary $233,600 + Cash Bonuses $67,300) plus whatever fringe benefits they could eke out of the system.
Interestingly – according to a blog devoted solely to the salaries of doctors [AJC: now, that’s specialization] – in 2009, the average pay for a ‘hospitalist’ (apparently, the hot new term for Internists and hospital physicians) was $226k per year.
Now, is $226k per year rich?
Before I sold my businesses I took a salary of $250k – but, my cars were provided by the company, and my house was already paid off yet there was never very much left over at the end of the month …
… nothing left over to provide an emergency fund or to provide for retirement. So, I guess I was rich, as long as I could keep drawing the salary.
Except, that I already had $7 million in net assets, ‘just in case’ I got sick or my business went under. I wonder how many of these other ceo’s do?
So, I guess a ceo’s salary is ‘rich’ … but risky 😉
I would just say they have high incomes- they may actually be deep in debt as it is possible to overspend no matter how large your salary.
I consider someone rich once they can quit their day job and still maintain their lifestyle.
-Rick Francis
I like the definitions of ‘Rich’ as defined in terms of salary or income and ‘Wealth’ defined in terms of how long you can sustain that level of ‘Rich’ without working for that income. 😉
I think rich as someone who can contribute to others and deeply empathize with the plight of mankind. Don’t look at me like that!
“Before I sold my businesses I took a salary of $250k – but, my cars were provided by the company, and my house was already paid off yet there was never very much left over at the end of the month …
… nothing left over to provide an emergency fund or to provide for retirement.”
AJ, thats a “rich” life-style. 🙂
Burning through $250k gross with free wheels and no mortgage?
So what were your big spending categories if house & car were covered?
Did you get a grill? 🙂
http://www.icedoutgear.com/grillz-gold-teeth.php
@ Scott – I use ‘rich’ as an absolute term: it’s a threshold dollar amount where you can buy what you want. $1 billion is definitely rich … $100 million is borderline, these days.
To be regarded as a ‘millionaire’ these days (i.e. the common view that you are pretty rich) is at least $10 mill. to $20 mill. … I know, because I am well over $10 mill., but don’t feel at all ‘rich’.
What I do feel is ‘wealthy’, and I define that as having enough yearly income (thanks for this distinction, Scott) to live my Life’s Purpose, without needing to work.
About $350k per year is enough for me …
@ Jake – No bling-infested grills (mine was a Costco, and I changed it over from gas bottle to piped gas myself … dangerous, but true!). But, that’s my point: I consider my level of spending Upper-Middle-Class to Lower-Upper-Class only: major ‘over the top’ expenditures:
Travel (one trip back to Aus, plus one family vacation in the US or overseas per year, say $30k combined; eat out every Saturday night $150 per week; one child in private school $15k per year; maintenance on a large house $15k per year; that’s about it!)
I think Scott has a really good term(definition) of the term rich.