FDR and high executive compensationThis comment is politely intended to help us shareholders all go into what may be an eventful Founders week with a surplus of goodwill spread among us – big and small players alike. It is a topic others have covered well, but I am going to drill down as deep as possible on it in a final effort to put it to bed for good. Or at least until the $10 share price level, at which point the griping will probably come roaring back regardless how much richer we all might be by that day.
Do some people associated with FDR *appear* to be doing very little work on our behalf yet reaping massive profits? Maybe. Have said people *ever* done anything in their lives to deserve said profits? Or even profits / windfalls they might have received earlier in their lives? I have no idea.
While I doubt anyone associated with Founders falls into the category of “worthless heir”, holding FDR stock only because their family office bought it on their behalf, I concede it is possible. But anyone who thinks our executives have so far paid themselves too much may himself have wandered into the capitalist/entrepreneur club by mistake.
I would add they might be happier in the communist/statist club, but everyone (including the complainers themselves) knows that isn’t true. If you own FDR shares, you already must have a level of intelligence sufficient to appreciate history, economics, business, speculation, politics and gold / monetary science.
And the Venn Diagram intersection between those six circles. Which intersection, conveniently, is where Founders resides. Maybe we should get t-shirts printed up for the celebratory shareholder cruise. Just kidding, Colin. You know we already love you. Keep being frugal with our treasury and we’ll all get along fine.
So what exactly puts off our FDR complainers? Perhaps nothing more than not having thought through the reality of their gripes. Let me paint a picture of two contrasting worlds. Both noble and honest, and both drawn from human history.
Before the Renaissance gave us double-entry bookkeeping, “capitalists” and money lenders did exist, but the true entrepreneur of the modern age was as yet uncommon. Merchants’ sole proprietorships and partnerships could grow only gradually into mammoth operations. Modern accountants (plus the invention of limited liability corporations) set the stage for an explosive growth of the middle class. And heralded numerous self-made aristocrats.
Part of the promise of building a fortune is that your ability to create additional wealth will become exponentially easier. Your mental efforts to identify new destinations for your investment dollars bring ever greater CAGRs per minute of what Heinlein would call skull-sweat.
The world was already open to the honest labour of the plowman or guild tradesman. And maybe one day those kind of men can again provide well for their families’ future without having to also master the art of investment management.
But today, the ideal to which many educated market participants aspire is precisely to be an early investor in a company, rightly claim a board seat, and sit quietly while the profits roll in. Profits early, often, and ultimately at (FDR) buyout time.
Nor is there anything immoral about this. In fact, it is likely early directors of companies such as Founders used their insights/connections to help their firm at key turning points. Just because a man can create value without working 10 hours a day on a farm or at a desk does not require him to apologize for his efficiency.
And even if he never worked a day in his life and instead inherited all his capital, so what? That capital was his parents’ to give to him. Don’t envy him either – I’ve known enough rich heirs to be grateful my parents were middle class. The class I suspect our complainers are too.
So rejoice in the adventure we are on together with FDR as we seek to take our personal wealth piles to the next level. The journey isn’t always as much fun as the destination, but with our stock it’s sure a close comparison.