"Fireman" CEOs Rake in Bucks
It's time for another CEO pay survey. This one, by the Associated Press, shows that "fireman CEOs" -- those hired from the outside to pull a big corporation through a crisis -- get a lot of money.
The AP came to its conclusions after surveying documents from the Standard & Poor's 500 list. Standouts include John Thain (total pay $83.7 million last year) who tried to fix Merrill Lynch; Vikram Pandit (total pay $102 million) to save Citigroup Inc.; and Glenn Murphy (total pay $39.07 million) to resize Gap Inc.
If you are a loyal company woman or man who slogs away for years and then are called upon for corporate triage, well, you are out of luck. Insiders who make CEO emergency calls don't get all that much by comparison -- a puny average in the $8 million range.
The AP's survey more or less tracks a similar survey by The Corporate Library which recently noted that CEOs at big firms got big payouts while ones at small to middle-sized companies got pay hikes of only 2 percent last year.
Surveys such as these continue to stoke the fires for shareholder activists and, indeed, some big name investors. Billionaire financier Carl Icahn was rather blunt on the topic of board room competence when he gave the commencement address at Drexel University on Saturday. He said that many board meetings that he has attended are bigger laughs than a "Saturday Night Live" episode. "Sooner or later, we're all going to be run by morons," he said.
Icahn might have a point, but I don't think it is fair to include most management particularly in the small to middle sized business field. As anyone who has skippered a sailboat knows, smaller boats respond a lot faster when you push the tiller. Bigger organizations are burdened by bulky bureaucracies and hefty corporate cultures. In them, it is easier to hide incompetence and cling to undeserved reputations as long as that's what the conventional wisdom says.
The mentality that one always needs an over-paid ringer when things go bad is unfortunate. If the company hasn't developed possible successors and an escape plan then something is very wrong.