Recent headlines about increases in CEO pay and entrenched, never changing boards -- see http://online.wsj.com/article/SB10001424127887323664204578607924055967366.html?mod=WSJ_hppMIDDLENexttoWhatsNewsSecond raise an interesting question: Do things that happen on a large leadership scale, either bad or good, ever change anything? The obvious answer is yes. The larger answer is the more things change, the more things adapt in self interest -- at least when the topic is corporate leadership circles. Consider the following example.
Back in the model T days of CEO recruiting (2000), a fast growing Fortune 500 company searching for new leadership hired someone who had been passed over for another top job. Being passed over is normally not a good sign, but in that day and age, anything went. At the time the person was held up as an A-level performer who had helped make his employer, General Electric, and its former CEO, Jack Welch, famous in management circles. That CEO's name was Bob Nardelli. His counterpart who also was passed over to replace Welch later went on to become CEO of 3M and then Boeing where current CEO Jim McNerney still resides. After failed runs at Home Depot and Chrysler, Nardelli is the former poster child of CEO pay, which won't be repeated anytime soon. Or least not if more discerning boards have anything to do with it.
Fast forward 10-15 years. Is anything different about CEO pay or the boards that reward their pay? The biggest change may be better risk management of "bad optics" of situations such as what led to Nardelli becoming a maligned public figure. It's difficult to imagine a modern day board that would sign off on a pay package that rewarded hundreds of millions of dollars in severance pay. Especially to those who are under-performing or at the helm of under-performing companies when activist investors are breathing down their necks. Then again that group includes a lot of CEOs and companies over the last decade, including ironically, GE.
Despite periodic cycles, there's a fair amount of resignation on the pay issue and that favors those who don't want anything to change. Public outcries over say on pay and policy changes aside, not much is different now vs. then. Until a clearer mandate emerges, the issue will remain status quo -- with or without a new Nardelli lookalike. And that's too bad, considering how great that example was for aspiring leadership consultant brands. The change also won't be led among those on the inside, such as search firms which publish studies that simply confirm their own hypothesis. Effective brand building tools, yes. Truthful disclosure that amounts to change, no.
Note: Recent widely reported Equilar numbers citing a 16 percent increase in CEO pay in 2012 included a 200 percent gap between CEO pay and the salaries of the rank and file. If those numbers are accurate, anyone's guess at this point, then that represents a 200 percent decrease in the gap since 2004. Progress, anyone?
Back in the model T days of CEO recruiting (2000), a fast growing Fortune 500 company searching for new leadership hired someone who had been passed over for another top job. Being passed over is normally not a good sign, but in that day and age, anything went. At the time the person was held up as an A-level performer who had helped make his employer, General Electric, and its former CEO, Jack Welch, famous in management circles. That CEO's name was Bob Nardelli. His counterpart who also was passed over to replace Welch later went on to become CEO of 3M and then Boeing where current CEO Jim McNerney still resides. After failed runs at Home Depot and Chrysler, Nardelli is the former poster child of CEO pay, which won't be repeated anytime soon. Or least not if more discerning boards have anything to do with it.
Fast forward 10-15 years. Is anything different about CEO pay or the boards that reward their pay? The biggest change may be better risk management of "bad optics" of situations such as what led to Nardelli becoming a maligned public figure. It's difficult to imagine a modern day board that would sign off on a pay package that rewarded hundreds of millions of dollars in severance pay. Especially to those who are under-performing or at the helm of under-performing companies when activist investors are breathing down their necks. Then again that group includes a lot of CEOs and companies over the last decade, including ironically, GE.
Despite periodic cycles, there's a fair amount of resignation on the pay issue and that favors those who don't want anything to change. Public outcries over say on pay and policy changes aside, not much is different now vs. then. Until a clearer mandate emerges, the issue will remain status quo -- with or without a new Nardelli lookalike. And that's too bad, considering how great that example was for aspiring leadership consultant brands. The change also won't be led among those on the inside, such as search firms which publish studies that simply confirm their own hypothesis. Effective brand building tools, yes. Truthful disclosure that amounts to change, no.
Note: Recent widely reported Equilar numbers citing a 16 percent increase in CEO pay in 2012 included a 200 percent gap between CEO pay and the salaries of the rank and file. If those numbers are accurate, anyone's guess at this point, then that represents a 200 percent decrease in the gap since 2004. Progress, anyone?
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