Friday, November 22, 2002

More exec compensation

MH wrote in pointing out that simply subtracting CEO compensation ($6B) from market cap ($9.1T) is wrong -- one is a single year expense and the other is the cumulation of all future performance. Arnold Kling corrected my calculation by treating the $6B expense as a perpetuity, multiplying it by 25x (or 20x at a 5% discount rate) giving you a grand total of...$150B. More to be sure, but just 1.6% of total market cap.


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