Sunday Funnies: Business should have NBA type salary cap

It is free agent season in the NBA and teams are making their moves to lock up talent for next year and beyond. The right player can have much more of an impact on a basketball team then most CEOs (Buffett, Gates, and Jobs not withstanding), yet there are limits to compensation.

Now my favorite quote of the week. "What can I do for my family with $127 million that I can't do with $111 million?" asked Gilbert Arenas. One of the top free agents in the NBA agreed to re-sign with the Washington Wizards for $111 million over six years, forfeiting millions of dollars so that his team could have more financial flexibility in signing other teammates.

We know that many company boards do not know what they are doing because we have just witnessed many fire their CEOs for major failures in leadership. They too have failed, because they overpaid these guys when they were employed, did not do a very good job of oversight, and then overpaid again when they gave them the boot.

If they really had a clue they would seek out the top 100 senior vice presidents and store managers and young rising stars instead. They could also reward shareholders with dividends and save some cash for a rainy day. There is no telling the good that can be done with the wasted money thrown at overbloated, egotistical executives that in many cases have been compensated beyond any rational amount.

I want to laugh, and cry, when I read that someone got $50 million dollars to accept a position at a new company when he may have only been receiving $5 million (a pittance) in his previous position. Like he would have rejected $30 million.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.