Shut! Up!
In the long list of things an organization must do to be considered world-class, a list that is defined by the questions in the Baldrige Criteria and described in the applications of Baldrige Award winners, there is no mention of executive pay. This is something you will not see:
Question: How do you ensure that your chief executive officer is compensated well enough to make your organization world-class?
Answer: We lured him away from GE by paying him $78 million dollars. Best of all, he’s under contract with us through 2011!
I guess being declared the headhunters’ number one draft pick in executive talent by Fortune is even better than being declared pro football’s top pick by Mel Kiper. (“Nielsen’s $78 Million CEO,” Geoff Colvin, Fortune, June 14, 2010)
While Fortune was all giddy about the fortune David Calhoun claimed from Nielsen, the TV ratings company, it spent an entire column questioning the move. Shut! Up! Calhoun had a pretty good gig at GE and he was getting offers from other, bigger companies, but he chose Nielsen. This was in 2006. According to the article, the fair market value of Nielsen’s stock at that time was $10 a share. That’s important because Calhoun was given six million stock options at that price.
What did Nielsen get for its $78 million? By the end of 2009, almost three years after Calhoun took over as CEO, Nielsen figured its shares were worth $11.50. Really? Revenues for 2008 were $4,806 million but Calhoun was able to bump that up to—wait for it—$4,808 million in 2009.
It looks like Nielsen got the short end of this deal.
I’ve railed about excessive executive compensation in other posts because it demonstrates an attitude that leaders are inordinately responsible for their organizations’ success. A leader loses credibility when he tells the common folk how important they are while he’s making a thousand times more than they are. The only one who believes that is true is the leader—and maybe the people who hired him and Fortune magazine. It’s a ridiculous situation.
So the next time your ridiculously overpaid CEO tells you how important your work is, think but don’t say: Shut! Up!
To read more about these “special” people, click on these articles:
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