Sunday, September 22, 2002
Planet of the CEOs
Jack Welch says perception matters.
I guess we chumps who pay for our own toilet paper might perceive that with a $900 million nest egg, plus a $9 million a year pension he could afford his own transportation, personal items and basketball tickets.
Instead, General Electric's directors gave their former chief use of jets and helicopters, plus a driver and limo. GE also paid for a cook, wait staff, toiletries, food, wine, flowers, laundry, courtside seats for the Knicks, satellite TV and newspapers.
He's greedy. But he didn't steal this stuff. GE's board handed it over. What planet were they living on? The answer, of course, is the Planet of the CEO. Or, as the president of the Federal Reserve Bank of New York calls them, the inner circle of the business elite.
They are the ones with the perception problem. No wonder.
GE's current board includes Scott McNealy whose Sun Microsystems paid him nearly $20 million last year, not counting $258,748,406 in options from previous years. Another board member, Ralph Larsen of Johnson & Johnson made more than $5 million with options of $90,152,600.
In seedier circumstances, former Tyco executives were charged with stealing $170 million from the company and making off with another $430 million through securities fraud. Dennis Kozlowski, Mark Swartz and Mark Belnick have been accused by the SEC of failing to disclose tens of millions in other piracy.
Tyco filed suit against former director Frank E. Walsh, Jr., for accepting a $20 million finder's fee unbeknownst to the rest of them. Don't these people ask questions at the board meetings? You know, something besides, Do you have a tee time?
Those who are supposed to keep an eye on the cookie jar at Tyco include board members such as Mackey McDonald whose VF Corp. paid him $8,473,400 last year and Brunswick Corp.'s CEO George Buckley, who made $10,783,447.
Sadly, all too many members of the inner circle of the business elite participated in the over-expansion of executive compensation, the Fed's William McDonough said, adding the average CEO of a publicly traded company makes more than 400 times the pay of a production worker, up from 42 times 20 years ago.
Fat executive packages were supposed to result in increased value to shareholders, including workers through their retirement plans. Employees at Enron report that this strategy didn't work.
Jack Welch says he'll begin paying for the perquisites he negotiated. In a column Monday in the Wall Street Journal, Mr. Welch said he feared the perks could be misportrayed as an excessive retirement package. His decision came as the SEC began asking questions.
In these times when public confidence and trust have been shaken, Mr. Welch wrote, I've learned the hard way that perception matters more than ever.
Meanwhile, how do you perceive your 401(k) these days?
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