CEO salaries? Not the CEO’s fault.

November 20th, 2008 at 08:09pm Annette LaCross

 Published Nov. 24:

When it comes to the histrionics gripping Wall Street — and Capitol Hill, for that matter, remember this:

It’s all a matter of perspective — what you see depends on where you’re standing.

From the CEOs’ side of the looking glass, their plight has all the romance and tragedy of a Herculean drama.

These mighty titans, like the mythical Greek hero, once ruled their empires armed with nothing but brute strength and clubs. In modern parlance, that’s synthetic collateralized debt obligations.

Sapped of their strength, stripped of their status, a final indignity — the last insult to their injured pride — is threatened: The treasure they amassed during their reign will be looted.

How have the mighty fallen, to be sure.

I wonder if these guys realized, when they began begging Uncle Sam to save them, that their least favorite uncle was going to hit them where they live: their take-home pay.

From this side of the looking glass, they must have. There has been entirely too much criticism levied at the enormous sums they and just about every other CEO on the planet take home every year.

Today’s CEO takes home 275 times what the average working stiff does, according to the Economic Policy Institute, the left-leaning think tank based in Washington. That means the average CEO earns more in a day than I do in a year.

But it isn’t their fault.

I don’t necessarily begrudge those higher salaries, as long as certain provisions are met:

The CEO’s salary must be commensurate with that of his (or her) work force — which doesn’t mean the average Joe on the production line should also take home several million dollars a year.

CEOs must provide a solid return on their shareholders’ investment.

CEOs must position the company for growth, among other things.

Some of them do well with this. Oracle Corp. CEO Larry Ellison comes to mind — his annual salary is $1 million or so, although his actual take-home is closer to $72 million — or Jeff Bezos at Amazon.com, whose compensation over the past six years has averaged about $1 million but whose take-home is considerably larger.

Others, in retrospect, are so suspect as to be laughable.

One of my favorites: Angelo Mozilo, the former chairman and CEO of Countrywide Financial, which was eaten by Bank of American before it could collapse this year.

His annual paycheck averaged $66 million. But once you factor in his total compensation — including salary, bonuses, options and stock — his take-home pay neared $200 million by 2006.

His company, one of the leaders in what later turned into the subprime-mortgage mess, was among the first casualties of this brave new financial world.

From my perspective, not a great return for shareholders.

Another one: Richard Fuld, former chairman and CEO of Lehman Bros., which declared bankruptcy a few months ago. Salary: $40 million.

Stanley O’Neal, former chairman and CEO at Merrill Lynch. Salary: $46 million.

James Cayne, former chairman and CEO at Bear Stearns. Salary: $40 million.

You get the idea.

But here’s a question for you: What do those four have in common, other than being rich, white, male and fired?

They were not only the chief executive officers of their respective companies, they were also chairmen of the board of directors, which set their overall compensation packages.

And which, of course, the CEOs lead.

The only person I recall who turned down a pay raise is Al Kaline, the former ballplayer, who once famously rejected his increase because he didn’t feel he deserved it.

A quaint notion, certainly, but one to which our modern CEOs don’t, apparently, subscribe.

Congress has wasted a lot of time this year calling the CEOs to Capitol Hill, asking them to justify their salaries.

Instead, let’s find out why the boards of directors think those numbers are justified.

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