6 Examples of Wildly Overpaid Rich Folks (And the Teachers We Could Have Gotten for That Money)
Eric Schmidt, executive chairman of Google.
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Economic outcomes aren’t produced in a vacuum. They reflect the politics, culture and values of the people behind them. Today those forces aren’t saying good things about us as a society. Think about it: since when is a failed Silicon Valley executive worth nearly 2,000 times as much as a teacher?
Yet, sadly, that’s the kind of economy we live in. The money certain types of people command in the marketplace tells us something about our society—and nowadays, it’s not telling us much that’s very good.
Here are six examples of individual incomes which demonstrate that our priorities have gone completely out of whack.
1. Number Two at Yahoo! gets $109 million for 15 months of failure.
Okay, run this by me one more time: A human resources expert told Forbes magazine that nine-figure severance packages for Number Twos are “as scarce as golden hen’s teeth.” But Yahoo! CEO Marissa Mayer still offered a very sweet one to her short-lived second-in-command, Henrique De Castro. It’s worth an estimated $64.5 million, according to published reports, which means that De Castro’s unsuccessful 15-month tenure will net him an estimated $109 million. De Castro’s golden parachute is “ one of the biggest ever,” according to Forbes’ Jeff Bercovici.
De Castro’s severance package, which can be seen as a guarantee against personal failure, would have been considered large even for the Number One at a large corporation. It’s especially generous given the fact that the New York Times reports that “Mr. de Castro was particularly ill-suited for the job, according to ad-industry executives, analysts and people who worked with him at Google and Yahoo.”
It paid off extremely well for De Castro, whose parachute unfurled less than 15 months after he was hired. As Bercovici notes, De Castro was paid $244,000 each day of his Yahoo! employment, including weekends and his final months, during which he was reportedly rarely on the premises.
The average teacher’s salary in the United States was $56,383 last year. De Castro’s severance package was more than 1,933 times that amount. He was paid more to go away than America’s teachers are paid to show up—and to grade papers on their weekends, too.
2. Former Google CEO is reportedly worth $8 billion (and change).
How did executive worth get so inflated in Silicon Valley? Consider this: de Castro’s (and Mayer’s) former boss Eric Schmidt is reportedly worth $8 billion after serving as Google’s CEO for a number of years. Schmidt famously earned a $1 salary and negligible bonuses while he was CEO, but clearly he was being compensated more than fairly.
In his current, more nebulous position as “executive chairman,” Schmidt has twice been awarded $100 million in stock. Last month he was also given $6 million in cash.
Schmidt’s a bright guy. But $8 billion and change in net worth? Why, exactly? Schmidt didn’t invent Google. Sergey Brin and Larry Page did. He ran it reasonably well, and deserved to make money for that. But $8 billion? For 10 years’ work?
On the “teacher scale” (and with a little estimating for inflation), that’s more than 15,000 times what the average teacher would have made over the same 10-year period.
3. $19 billion to buy WhatsApp.
WhatsApp duplicates what instant messaging does, but independently of phone carriers. It’s a good idea, but it’s not revolutionary. While it was well-implemented, by all accounts, its design and execution didn’t require any technical breakthroughs.
Good, competent engineers and managers deserve a good payday for the work. And the WhatsApp team deserves some extra payback, karmic as well as financial, for refusing to accept ads and taking a firmly pro-privacy and anti-Big Data stance. “People need to differentiate us from companies like Yahoo! and Facebook that collect your data and have it sitting on their servers,” said CEO Jan Koum. “We want to know as little about our users as possible.” (They tell us that won’t change—at least for now.)