Highly Compensated Employee

Yeah, yeah. We all wanna be one. But how do we get there? And what does the notion of a highly comp'd employee even mean?

Well, at the very high end of the world, CEOs, tech stars, and other movers and shakers get paid in a few different ways...and salary is almost always vastly the lowest element of their pay, almost a rounding error in most cases.

The CEO of a major investment bank might make $4 million a year in salary. But in a normal year, he'll make $30 million in "earned bonus money." And if that was a good year, he'll have his publicly traded stock appreciate such that his ownership stake in it goes up by $100 million. It matters to track these numbers, because this elite talent is so expensive to retain by companies that they're a meaningful element of the income statement as an expense.

Oh, and that comp? It's per year. Compound it a while and it's serious bank. And that CEO is "just" a hired gun. The founders of eBay, Google, Netflix, Facebook, Workday, Amazon, Oracle, Microsoft, and dozens of others, in a good year, can see their stock value in their companies go up by several billion dollars. With a "b."

So yeah. You want to be them. But, uh...they're crazy smart. Crazy lucky. Crazy gutsy. Crazy talented. And...probably a little crazy.