North Cole
♧ Lem
- Jan 22, 2017
- 11,827
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I know it's probably been beaten to death, but you can be the highest paid and still be paid less than your value relative to others you're paid more than.
If you're 20% better thank your next best comparable and paid 5% more, than you've technically left money on the table.
That's obviously an extremely simplified example and having not followed the conversation, I can't speak to whether others are using "discount" correctly. It's not as simple as just taking 13m*8 and comparing it to 15*7, because that doesn't take into consideration time value of money or the extra money you make resigning on the 8th year when the cap is probably 110M. An argument can probably be made that 14*7 is a better contract than 13*8 at a rate of return of 6%, as resigning for even 6m in year 8 would be the least impactful comparative income to 13m due to inflation and TVM. Almost always better to maximize income in the first 4 years than the last 4 years. That's why those Leaf guys signed psychotic high aav 5 year contracts.
I find most of the time the discussions of fair value or underpaid are generally useless, just on the basis of how many factors go into such distinctions. I would argue that on principal, it's possible to be highest paid and also underpaid within the constraints of a hard cap.
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