My photo
Waiting in Joyful Hope

The morality of mega-salaries

A reader wrote to ask the following question:

Recently I've learned that the CEO of our company has a salary of 900k,
and received a bonus of 1.8 million! I'm not proposing a communist system would be better, but something about that seems out of whack. I mean, what the heck could the guy be doing each day that merits that reward? Yes, yes, other CEOs make more but...

It seems to me there are two questions at stake here: (1) whether or not such a reward is merited in this case, and (2) whether it is *ever* just for *anyone* to earn that kind of money.

Regarding the first question, we need to remember that in a capitalist society the price of a good is determined by the forces of supply and demand, and not as a measure of their intrinsic worth. Air has more intrinsic worth than champagne, but we pay plenty for the latter and nothing for the former, because while the demand for air is high (and inflexible!) there is plenty of it all around us. The supply is much greater than the demand, with no delivery costs — and so, it is free.

Now a CEO is actually a fairly rare kind of person. There is a combination of leadership qualities in a CEO that is quite unusual. He (or she) must be capable of mastering several business functions (sales, finance, production, etc.), s/he must possess some sort of vision, s/he typically must be capable of intense concentration, be a good communicator and lobbyist, etc. Does these functions *intrinsically* mean s/he should earn oodles and oodles of cash? I'd say no, but that is not how our capitalist system works. Assuming there isn't some sort of high-level corruption at stake, the CEO earns a crazy salary simply because the demand for good leaders is high and the pool of good leaders is small. So the question about the morality of a CEO salary is not really about CEO salaries, it is about certain fundamental assumptions of capitalism itself and its capacity to properly express, in dollar values, the true worth of goods and services. Discomfort at inflated CEO salaries is, in my opinion, really just a symptom of a malaise regarding less-than-perfect elements of our current economic structure.

Now regarding the second question, as to whether anyone should ever earn that kind of money, I think as Christians we would do better not to protest high salaries so much as insist upon a proper sense of social responsibility. This is, again, one of the weaknesses of the capitalist system, which tends to focus on property rights with too much focus on social responsibilities. The Christian response, it would seem to me, is found in the stewardship concept. The stewardship concept starts from the idea that the world is ultimately governed by divine providence, such that everything we have and receive is actually a gift from God. While our possessions are in our care, they are really more on loan than anything else — God, in a sense, is "investing" in us by placing these goods at our disposal. It is our responsibility, then, to return these goods to God with increase, according to standards of virtue and solidarity. A CEO may earn $2.7 million dollars in a year, but the real question is not so much what he earned but what he did with it for the sake of the Kingdom of God. Is he acting as the "sovereign" of his wealth? Or does he see that he is really more of a caretaker of it, on behalf of the One who owns the whole world? So personally, I don't get too uptight about the question of quantities of possessions, but rather the quality of how they are used — and that is an issue that touches upon every Christian, indeed every human being, no matter what their salary might be.