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Do business owners, entrepreneurs always have the potential to make more money? watch

    • Thread Starter

    Do business owners, entrepreneurs and owners of assets always have the chance of making more money than an employee, CEOs or other board members of a public or private company?

    For example the highest paid CEO I can think of is the CEO of McKesson, John Hammergen who was paid 132 million dollars last year (mainly in deferred stock options) his net worth may be enough to be a billionaire when the stock options vest, though not the richest person on the planet.

    If you compare this to owners of companies or executives in private companies there is a gap for example Stephen Schwarzman (the co founder and CEO if the then private company Blackstone (a private equity firm) earned 398.5 million dollars in 2006 as cash. This was part of the carried interest that he got as part of exiting Blackstone's investments. He also pulled in hundreds of millions of dollars in carried interest as cash in 2003 and 2004. Tony "Hamilton" James the COO of Blackstone and hired after Blacstones formation (thus not a business owner or founder but an executive and board member, a high level employee in a private company at the time) earned 97 million dollars in cash as part of his entitlement of the carried interest Blackstone earned that year. As a comparison Lloyd Blankfein, the CEO of Golman Sachs a much larger and older institution in a record compensation package at his firm earned 54.4million dollars half in cash half in stock options.

    It seems that CEOs and executives of public companies have their executive compensation hindered by powerful institutional investors whereas owners of companies (like Stephen Schwarzman) can pay themselves what they want and executives in private companies can also be vastly rewarded compared to their public company board member peers. The same with owners of assets as well. Thus if you want to make a lot of money is it best to own something rather than being an employee, even an employee at a high level in a public company?

    This is obviously correct but being the owner of a company as successful as some of the ones that you listed above is extremely rare (it takes a very special type of human).

    Some entrepreneurs forgo a large salary (especially in the early years) in order to allow themselves more flexibility with hours, give them the opportunity to really do something that they want to and a chance to say they did it themselves. It's a great learning curve too.

    Yes this is absolutely correct. Owner of the company earn good money because of their excellent ideas.

    we're in a economic slump now and we weren't in FYE 2006.

    this may be a be a factor in the discrepancy noted.
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