Darren Rovell of CNBC just had an interesting report on the New York Yankees and Joe Torre’s potential firing. Yankee owner George Steinbrenner had said that Torre’s job was on the line with the Yankees this season. With this in mind, Rovell came up with some three points for firing a CEO/Manager:

• Performance is slipping
• Future Growth not realized
• Losing control of team/incident

Rovell says that Torre falls victim to the first point as his “performance is slipping”. The expectation that Torre set with his last contract is extremely high. Winning a lot of games and making the playoffs is not enough. Management (Steinbrenner) only cares about championships. Rovell then compares Torre with Bob Nardelli of Home Depot – who was fired earlier this year. Both are/were judged as being overpaid for their performance.

CNBC then compared the average Yankee player salary of 6.25M vs. Torre’s 7M salary (according to ESPN). That’s only a difference of 12%. The average US employee makes $29,544 with the average CEO making 10.8M, a difference of 36,455%. This is obviously a huge gap that catches the viewers attention. We’ll get to this a little later.

The segment closed with Rovell mentioning that the Yankees could lose some players who have become fan favorites if they don’t bring Torre back. In short, if Torre goes, Mariano Rivera and Jorge Posada might go.

I have a lot of questions here. Should Torre be compared to the CEO of a company? I would argue that GM Brian Cashman is closer to the CEO title. Should Torre’s salary be compared to the average of the Yankee players (as CNBC did) or the average of all Yankee employees? I would argue the later. It seems that the better benchmark would be a middle manager compare to the people he/she manages. I imagine that gap is a lot closer to the 12% than the 36,455%.

[Update: It looks like Joe Torre turned down a one-year contract, so that’s answers that.] 

It seems like Baby Bonds are in the news. I’ve been reading at Dollar Roller and Money Smart Life. The idea seems to be that the government would open a $5,000 account for every newborn baby in the US. The money would grow and mature at the child’s 18th birthday. Through the power of compounding interest, this money could be used to pay for college or buy a home.

I love the idea. In fact, I loved it enough to propose the lazy man’s trust fund nearly a year ago. In my plan, the idea is to put $10,000 away and use it for child’s retirement. My rational is that this gives more time for interest to compound. The result is that it the initial $10,000 can cover a good portion of retirement expenses – even when you account for inflation, taxes, and investment fees.

I’m not sure I like the government’s version of the baby bond though. Where does this $5,000 come from? It has to come from raised taxes or a higher US deficit (which is already far too high in my opinion). How is the money going to be invested? If it’s safer bonds, I wonder how much buying power would be left after inflation, taxes, and administration/investment fees. I can’t see that much left over. It almost becomes the same problem that Social Security has. The funds don’t grow enough to make up for the growing number of people to take advantage of it.

Much of the personal finance community is buzzing with about this this NY Times article. The article focuses on those in the Silicon Valley who have $5-10 Million – in particular those who continue to work long hours. These people also noted that all the money doesn’t seem like a lot. It’s easy for average America to be outraged and enthralled by such a story.

As a resident of Silicon Valley for almost a year now, it got me thinking. How does this make them different from many professional sports players? What about movie stars? Does Winona Ryder really need to be in another movie? For them the money is often about respect amongst their peers. It’s a similar thing anywhere you go. If you know your job pays X, you don’t want to settle for half of X. It’s human nature to want to live in the style of those in your surroundings. I’m wondering what some of the people in the poorer 3rd world countries would say reading of life in America. I imagine they’d think that living with hot showers and enough food to actually have an obesity problem is just as unimaginable.

You can be sure that if we had $5-10 Million dollars, we’d be moving to someplace like Texas or North Carolina where we could live in quite a bit of luxury. I don’t understand why more people with million dollar homes don’t do that more often.

Even though it’s little on the old side, I couldn’t resist passing on this article. A man bought every combination of the Kentucky Derby trifecta so that he would assured to win. Unfortunately he spent $13,680 in placing bets. He came away with $440 in winnings. So if you were looking for good way to lose nearly 97% of your money in just a few minutes, I highly recommend this plan.