Ever have almost a surreal conversation . . . like you think you're being played while you're holding out for the punchline? Well, I have. This is how it went yesterday in a conversation with my buddy, Borg-Biller:

Me: "Borg-Biller, how ya been? Still Borg-Billin over there at that Big-Box firm?
Borg-Biller: "Yeah, you know me. Billin, billin, billin!"

Me: "Wow, so what's your commission over there?"
Borg-Biller: "Well, I take home 40% up to $250k, 50% after that up to $500k, and then 65% above that."

Me: "Well, I know you've averaged $1 Million USD per year over the last 2 years. So if I do the math, that looks like a W-2 of $550k? And what do the taxes on that look like?"
Borg-Biller: "Yeah, I bring home about $550k on $1 Million USD . . . but Uncle Sam took half of that last year."

Me: "Wow, Uncle Sam took 50% of your take-home last year? Crap, I only paid 18% in total taxes!"
Borg-Biller: "That's impossible."

Me: "No, it's not. It's called owning your own firm and only paying taxes on what's left over after operating expenses."
Borg-Biller: "That's over my head, man."

Me: "So, you've billed $2.5 Million USD for that Big-Box over the last 3 years . . . meaning you have some equity now, right? Surely, you've earned some ownership . . . "
Borg-Biller: "Equity? What do you mean? As far as ownership, I only get that if I purchase stock through our ESOP . . . "

Me: "Borg, let me see if I'm hearing this right. You billed a cool mil . . . only earned commissions on that of $550k . . . and then gave half of your remaining commissions to Uncle Sam? . . . so you gave 45% total to the firm owner, then 50% on what was left over to the government . . . and you have zero ownership in your firm unless you buy it?"
Borg-Biller: "Well, I never thought of it like that . . . but yeah."

Me: "Borg, I like you, so I have to tell you something. I could bill 1/3 of your cool mil, pay significantly less taxes than you . . . actually take home more on my W-2 or Sched-K . . . oh, and by the way, I own the firm!"
Borg-Biller: "That's impossible . . . I think. But either way, being a Big-Biller comes at a cost sometimes!"

Me: "Does it really matter if you're a Big-Biller, but a Little W-2'er?"
Borg-Biller: "Huh?"

Closing Remarks: In the day and age of managing more for stock price than profitability (as the majority of executive comp is tied to stock value and not actually profitable performance), somehow we've missed the boat. There is a huge difference between growing the top-line and growing the bottom. I've seen many cases where organization grows the top (appeasing Wall Street Analysts) . . . only to see little to no benefit on the bottom (you'll see this called, "breaking even on margin.")

Will the day come when Big-Billers are evaluated on their business acumen and what they actually bring home versus what they bill for the firm?