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Many people think that the high pay of CEOs is an american phenomenon. But The Economist magazine, December 2nd 2006, volume 381 number 8506, page 71, article Creative construction describes how the Bouygues family enriched itself by controlling Bouygues SA, a french conglomerate. The article says Martin Bouygues invested nothing in subsidiaries of Bouygues SA in the 1980s, and in 2006 this investment had increased in value to 2.7 billion english pounds. Since Martin Bouygues did not actually invest any money, the profits are not a return on investment. Therefore the profits are the equivalent of CEO pay. 2.7 billion english pounds is about 4 billion american dollars.

The article says that ordinary investors in Bouygues SA increased their investment sixtyfold from 1979 to 2006, 27 years. So X to the 27 power equals 60, X is 1.164. So ordinary investors earned 16.4 percent per year.

So how much did Martin Bouygues pay himself each year to accumulate 4 billion dollars after 20 years? Let's assume that Martin Bouygues gets a 10 percent pay raise every year. I think that CEOs usually get larger pay raises then ordinary workers, but I am not sure how much larger. I picked 10 percent because that is an easy number to work with. Let's also assume that Martin Bouygues invested all his pay in Bouygues SA and earns the same 16.4 percent as other investors.

A perl program to calculate the 20 year total:

``````
#!/usr/bin/perl
\$t=0;\$c=0;\$p=18000000;
while(\$c<20)
{\$t=(\$t*1.164)+\$p;\$c=\$c+1;
print("year \$c pay is \\$\$p, total is \\$\$t\n");\$p=\$p*1.1}
``````

Then we try different values for \$p, and we find that setting \$p to 18000000 gives a twenty year total of about 4 billion. So Martin Bouygues started paying himself 18 million dollars per year and ended paying himself 110 million dollars per year.

This underestimates Martin Bouygues' pay, because we assumed that Martin Bouygues spent no money and received no fringe benefits or perks. So we need to increase these estimates of Martin Bouygues' pay by the amount which Martin Bouygues spent and by the cost of Martin Bouygues' fringe benefits and perks.

Martin Bouygues was paid more than most american CEOs.

Most of the profits of Bouygues SA came from contracts and deals with the government of France, which makes me suspect that the profits were merely corporate welfare, money stolen from the taxpayers of France and not earned at all, but that is irrelevant to the issue of CEO pay.