One of the things about Big Business that provokes skepticism and hostility is just plain bigness, the sometimes incomprehensible scale of modern multinational enterprises.
For example: General Electric, a company that has been struggling, has just made two announcements: One is that its revenue for the fourth quarter of 2018 was stronger than expected even as its profit declined more than expected; the second is that it has reached an agreement in principle to pay a $1.5 billion settlement to the federal government over its now-defunct subprime-mortgage business. GE shares went up about 17 percent, which added more than $14 billion to the market value of the company.
Put another way: GE has agreed to pay what amounts to a $1.5 billion fine — and GE is having a very good day.
There isn’t actually anything wrong about that, but it’s easy to understand how that just seems wrong to some people.
I am generally skeptical of heroic CEO narratives — not that there aren’t a few of those that are true — but those boggling executive-compensation numbers make more sense in the context of the overall scale of these firms. A course of action that adds 1 percent to the value of a $100 billion company is a pretty big deal. GE’s CEO has a contract that could be worth up to $300 million — if GE share prices go up by 150 percent, which would represent a financial gain of which $300 million is a very small share. Again, I am not saying that this is necessarily sensible — there’s a lot more to a company like GE than its CEO — but the compensation figures make more sense when understood against the scale of so financially vast an enterprise.