Re: Bye-Bye to the >H Right Wing

From: Robert J. Bradbury (
Date: Sun Feb 03 2002 - 16:48:34 MST

On Sun, 3 Feb 2002, Olga Bourlin wrote:

> No envy here. I just don't understand how some human beings (one not
> essentially different from another) are worth billions and some are barely
> valued at all (no matter how hard they work - and by "work" I mean doing
> something that takes away from one's leisure and personal time).

If you look at anyone who is really wealthy, most of that wealth
was generated by capital appreciation and not from salary. If you
look in detail at SEC reports, you will find that the "income"
that top executives get is heavily weighted as value from the
appreciation of stock options. They get rich because they are
making other people richer.

> That some human beings are worth a BIT more than others I can
> understand. But the HUGE earnings gap by those at the top to
> those at the bottom - that I don't, and looks like I never
> will - understand.

I'll give you a first hand story. As many of you know during the
1980's Oracle and Sun were very high growth companies. After they
went public the "expectations" were that they would double in size
and profits every year. Well it doesn't take a Doug Jones to figure
out at some point that has to be an unrealistic assumption. But
when the "street" expects you to do it corporate executives are
on the hook to perform. Around 1991 Oracle "hit-the-wall". But
because the pressure was on the VP of sales, some corners were cut,
some sales were booked before they actually took place, etc. When
the dust settled the earnings had to be restated and a near Enron-style
meltdown of the stock valuation took place.

If you go look at the chart, it appears as a minor "bump" in the
overall history of the company. But at the time it wasn't at all!

The repercussions were not insignificant. There were a number
of shareholder lawsuits. The company did make payouts to the
shareholders. People were calling Larry and telling him he had
just cost them their entire retirement accounts, etc.

The reason executives receive high compensation is because they
are playing high stakes games. And at times the pressure gets
to be too much as the recent ex-Enron executive suicide shows.

> I've read the explanations (written by the hunters, not the hunted),
> but they don't make sense to me. Human beings are not that different
> one from another, and that's that.

But human beings *are* different in the positions they hold, how
much "wealth" they are responsible for, how creative they can
be (for better or worse), etc.

Individuals who receive extraordinary compensation or who have
extraordinary net worth are those who have demonstrated they
can see the opportunities, steer the ship and return value to
the people who bet on them.


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