[Submitted/published State Journal-Register]
Just read last Friday’s opinion from Milford Franks Jr. expressing his outrage over John Deere CEO Robert Lane being paid $52.4 million and suggesting Mr. Lane “rebate” half of his compensation back to the Deere workforce.
Hmmm. As Deere employs over 47,000 people, that’s just over $550 apiece before taxes. Certainly not chump change, but that’s about a 1 or 1 1/2 percent bonus for people who already have those coveted well-paying manufacturing jobs that are the holy grail of economic debate. So, what’s that accomplish?
Without rehashing the whole free-market thing, can we agree that the CEO’s primary responsibility is to return value for the owners of the company? Really, it is. So, how should the owners feel about Mr. Lane’s deal? Here’s how…
If you’d bought $1,000 of ownership in Deere in early 2003, after 5 years Mr. Lane would’ve grown it to $4,063 while also returning $84 in dividends. Your share of that salary of 50 large would’ve been one dollar and thirty-eight cents last year (including the half Mr. Franks is willing to let him keep). By comparison, $1,000 invested in the S&P 500 over the same period would’ve grown to approximately $1,580. So, Mr. Lane got you an extra $2,567 — for $1.38.
In summary, if someone wants to dictate the salary of company executives, they can — just buy a majority of the stock. If they can’t swing that, they can secure proxies, attend annual meetings, etc. to effect change (people do that). But if you’re not an owner, why should you have any more interest in the topic than Mr. Lane does in what you make?
So, I’d urge Mr. Lane to keep the whole $52 mil and do whatever he wants with it — he earned it.