I am not sure where I fall on the issue of egregious CEO compensation, but there is never a shortage of people attacking CEOs for making too much money. Like a lot of things in life, the issue itself doesn’t excite me as much as trying to understand the extremes on both sides. So I was particularly intrigued to read the comments on a recent article highlighting 3Ms CEO selling his stock worth more than $33,000,000.
For any intelligent person that follows the stock market in any meaningful way they would likely understand that he amassed these shares through stock options utilized as compensation. Yahoo Finance points out succinctly,
A regulatory filing shows that 3M Co. chief executive George Buckley plans to sell almost one-third of his company stock, worth more than $33 million.
The prearranged plan would have Buckley sell about 350,000 shares of 3M common stock over the next two months. The shares were acquired through stock-option exercises and will be sold in accordance with minimum price thresholds.
The comments didn’t fail me, however, one in particular really caught my eye:
I have a tendency to react immediately so I thought to myself that “GreyBeard” is just another one of those near retirees that is pissed off because they didn’t save enough for retirement. I tried to stop myself from judging a book by “his” cover but then I looked up 3Ms generous stock options for employees:
3M’s combination of savings, retirement benefits and financial education resources help you plan for and manage your financial well-being at all stages of your life—both during and beyond your 3M career.
After two months of service at 3M, our General Employees Stock Purchase Plan allows you to contribute 3-10 percent of your after-tax pay to purchase 3M stock at an option price that is 85 percent of the fair market value of the stock.
3M’s Retirement Program provides a solid foundation of retirement benefits, which includes a 401(k) Plan with a company matching contribution, employer contributions to a Retirement Income Account and a Retiree Medical Savings Account (RMSA) to help offset the cost of pre-Medicare medical coverage in retirement.
So this individual could have bought 3M stock for 85% of the asking price for 34 years:
Look at those dividend payouts and stock splits. If one share was purchased in 1980 for $5 it would be equal to 8 shares today for a total of about $800 and that is ignoring reinvested dividends! IGNORING REINVESTED DIVIDENDS if he bought 1,358 shares over the first 6 years of working at MMM (before the first split) he would have had over $1,000,000. Is it $33mil? No but it would have been a start.
Do you work at a Fortune 500 company that offers a way to cheaply invest? Do you take advantage of it? Do I judge too much?