What is a Biblical View of Executive Salaries Today?

In reading the Wall Street Journal’s Friday, October 31 article, Banks Owe Billions to Executives (subscriber content), I was asking myself what, if anything, the Bible would say to these executives and the market at large about their large compensation packages. Similar to the Lee Strobel’s book, What Would Jesus Say, I was asking myself what the Scriptures have to say about these Executive compensation packages. My post here is an attempt to answer that question.

As a guy who believes in the free market, my first reaction to my question is this: “let the market decide”. If the business and its’ board (and by extension its’ stockholders) agree on a compensation packages for executives, then who am I to interfere with this? Why should the government have any say in a totally voluntary transaction between consenting parties? If an individual stockholder doesn’t agree with those compensation packages, then that stockholder can sell the stock and not retain ownership in the company anymore.

This line of reasoning assumes that the stockholder is able to obtain this information, assimilate it and then engage in a responsive action. What this article clearly states is that most corporations don’t publically supply this information:

“…But the liabilities are an essentially hidden obligation. Even when the debts to their executes total in the billions, most companies lump them into “other liabilities”; only a few then identify amounts attributable to deferred pay. The Journal was able to approximate companies IOUs, in some cases, by looking at an amount they report as deferred tax assets for “deferred compensation” or “employee benefits and compensation”….J.P Morgan, for instance, reported a $3.4 billion deferred tax asset for employee benefits in 2007….[this] implies the bank owes about $8.2 billion to its own executives. A person familiar with the matter confirmed the estimate.”

The Journal goes on to state, by their estimates, that Goldman Sachs owes $11.8B, Citigroup $5.0B and Bank of America $25B to their executives in deferred compensation. With the government injecting billions into these banks to help thaw the credit freeze and get the velocity of money moving again, these compensation packages are under microscopic scrutiny.

I believe that if the banks were to fully disclose the compensation of their executives to their stockholders, then the “market” response to my question (parody above) would be valid. But the lack of full disclosure betrays both individual and collective greed that cannot be justified. Greed can come in many forms, but when those who have the power to fulfill their greed hide this fact from those trusting in them (stockholders), then there exists at least the sin of deception if not outright lying.

The Biblical Christian’s response is to recognize sin where it exists and to take action to bring it to light. Such action may involve selling stock, writing public articles, attending stockholder meetings to ask tough questions and other actions. But these actions need to be committed within a larger context. Our response should recognize a couple of other elements. First, those who don’t have a personal relationship with Jesus Christ should not be expected to behave as if they have been regenerated by the Holy Spirit. It is natural for them to be greedy and to hide it. Without the regenerating power of the Holy Spirit, this is their nature. While cultural mores may soften this in some, it doesn’t appear to have been softened much at all in the upper echelons of corporate America. Secondly, it is best to interact with those who don’t know the Lord after we recall what we were like before our acceptance of the Lord as our Savior. It’s easy to condemn others, it’s not so easy to recall that without the Lord, we would still be mired in the same nature.

These large compensation packages are really out of line. These corporations could do much more good in their communities by diverting the bulk of these packages to community and charity organizations, or by investing in additional jobs that create even more value in the marketplace. Christians should respond with firmness and love, but not be quick to condemn. We should always be quick to speak the truth in love, but do so out of a heart that remembers our own sin and the saving grace of Jesus Christ.

Bill English