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Show The Sait Lake Tribune BUSINESS High Profiles Make CEOs Either Heroesor Villains Continued from E-1 the diminution of the esteem that CEOs and executives have had,”said Judith Fischer, managing director of Executive Compensation Advi- sory Services, a consulting company. Weidenbaum likened the current climate to gan “was called before congressional committees and called the devil.” ‘We haven't been through ening quite like in a long, long time,he saic Indeed, the troughs and aieila of CEOs’ standing have recurred repeatedly throughout US.history. A scant 10 years after an elderly and ailing jee was berated on Capitol Hill, the nation savored the prosperity of the 1920s. “The business of America is business,” President Calvin Coolidge declared. But today’s chief executive moves in an atmosphere far more public than thatofthe retiring Morgan. CEOs often soughtthe spotlight a few years ago and were willingly deified by media that include newspapers, TV networks and Websites devoted wholly to business news. t celebrity status has returned to haunt them, experts say. Welch certainly belongs in that group, said Michael Mazis, a professor of marketing at this” American University. A year after leaving GE, Welch remains in the public eye — in part be- cause of his pen divorce after an alleged dalliance with a journalist. jack Welch is a media star. He has a bestselling book,” Mazis said. “A guyhas an affair. Well, millions ofpeopledothis, andit doesn’t get into the newspaper. Before they became popu- larized, people didn’t know them, so their exploits weren’t really publicized.” That’s how thebiggest business story of 2002 ended upas fodder for David Letterman, among others. The comic savaged Layin this year’s “Top Ten Super Bowl Moments,” offering as No.5: “Drunk,desperate deposed Enron CEO Kenneth Laysteals commemorative coin used in opening toss.” Investors themselves have savaged CEOsfor pay packages nowoutoftune with the economy and weak corporate performance. “During the good times, no onecared,” said Fischer, the compensation expert. “Sharehold- ETrade Group Inc. was recently assailed for $80 million a to chief executive Christos Cotsakos last a him as the nation’s best: eal! tive. That distinction didn't cause the moat,’s investors to swell with pride. ETrade lost nearly $276 million in its first quarter, including a $299.4 million hit related to an accounting change. Cotsakos signed a less generous two-year deal. Severance packages that were signed in headier times can turn into bonanzas for CEOs who now leave behind a mess. Even Kozlowski at Tyco could walk away with a handful. Heleft the conglomerate June3 underallegations that he had evaded New Yorksales taxes on millions ofdollars ofMonets andotherpaintings. He has been indicted and pleaded not guilty. Tyco haslabeled Kozlowski’s previous, lucrative severance packageinvalid. Still, the company says it is negotiating a going-away package anyway. There are bets on Wall Street that Kozlowski will get something, although far less than the $100 million-plus if he hadbeenfired. Ebbers left the chief executive's office under pressure in May — buthe boxed up a pledge of $1.5 million annually for the restofhis life, provided that he keeps up payments on $400 million in loans from his former employer. Somechief executives are keenly aware that any popularity may not be lasting — and that they will get kicked in the teeth whenthings go wrong. Witness Chuck Watson,co-founder of Dynegy Inc. Last November, as Enron foundered, Watson led Dynegy into a $9 billion deal to acquire its crosstown rival. That mergerlater fell apart. Last month, Watson himself had to step down amid a Securities and Exchange Commission investigation of Dynegy’s bookkeeping. Being cast as True Hero or GreedyVillain maynotbe fair regardless of a company’s ups and downs. “The CEOs alwaysget more credit than they deserve whenthings are going well, and then get more blame than they deserve when things go poorly,” said Jeff Rich, chief executive of Dallasbased Affiliated Computer ServicesInc. “If ACS gets in trouble, then the blamefalls on me, even though lotof people would be culpable.” ACSis doing remarkably well, and “I probably get more credit now than I deserve,” he said. Thereason: “We have 35,000 employees.” A German executivevisiting Dallas noted the waythatchiefexecutivesserve as lightning rods for credit andcriticism,evenifoutside forces are more responsible for a company’s ers were happy because their pockets were being momentfortunes. filled and institutional investors were happy.” Fischerrecalls talking to a union representative a few years ago. Was he concerned, she well — you're a national hero,” said asked, that only wealthy people served on the corporation’s board? “He said, ‘No, we're concerned aboutour retirementfund.’ ” Much the same thing was happening in the nation’s boardrooms.“No one was really watching the creep that was happening in executive compensation,”Fischersaid. “The stock awards got larger and larger, and no onepaid attention. Everyone was having a big seatat the banquet.” Discontent over CEO payis now on parade. at-this- “When the markets are good, you're doing Kopper, chairman of the supervisory board of DaimlerChrysler AG, who cameto Dallasin his capacity as federal commissionerfor foreign in- vestment in Germany. The reverse is true, too, when investors frown:“You getkilled.” Even in Germany, wherethe law requires that corporations be run by executive boards, the urge to blameor hail a solitary figure is strong. “The media and everyone just focus on this chairman . . on this one individual and not groups of people,’ ” Koppersaid. CONSONUS Delivering PerformanceThrough Technology www.consonus.com + 888.452.8000 Soe wails WWM ods Sunday, June 30, 2002 |
