CEOs are in a state of crisis. As an adviser to CEOs, I can tell you that chief executives are under siege on all fronts…This is clearly a defining time for CEOs as an occupational class. To be clear, I’m not using the term “crisis” as it relates to dealing with the difficulties and challenges associated with navigating a recession, rather I’m talking about CEOs being able to successfully manage the intensity of negative public opinion. In today’s post I’ll share why I believe most CEOs are unfairly being vilified.
Will the actions of a few bad CEOs take down the reputations of all, or is the American public smart enough to see through the blame game currently being played by the media and the politicians? Look, I understand that Americans are upset about the economic debacle we find ourselves presently entangled in. I’m upset and outraged as well. Nobody could listen to the stories of CEO abuse that have circulated in the media of late and not have the hair stand-up on the back of their neck. That being said, not all CEOs are bad guys…in fact I’ll go so far as to say rogue CEOs are the exception and not the rule.
So, are CEOs getting a bad rap? In a word, yes. We’ve entered the blame zone of rash allegations and finger pointing in order to deflect responsibility. While I understand that no sane person could have watched the events of the last few month’s and not want to pin the blame on someone, simply assigning “villain” status to chief executives as a class because their compensation plans seem egregious to some is not the answer.
So, is CEO compensation out of control? In some cases I absolutely believe it is, but not in every case as many politicians and pundits would have you believe. I take great exception to those chief executives that take advantage of the position they hold, the shareholders they represent, and the relationships they’re entrusted with. That being said, the CEOs described in the preceding sentence don’t constitute the majority of chief executives.
I have called for transparency in previously addressing the issue of Rogue CEOs and Board Accountability. I can tell you from first hand experience that most chief executives are hard working professionals who take their fiduciary obligations very seriously. Moreover they hold the position of chief executive while incurring great personal risk and sacrifice. All one has to do is watch a CEO testify on Capitol Hill to know that the buck does eventually come to rest with the chief executive. I would be remiss if I didn’t take this opportunity to chasten the shameless politicians who use national tragedy and congressional testimony as a publicity platform to air venomous soundbites in order to transfer blame and placate their constituencies, but I digress…
At face value, I don’t care how much money a CEO does or doesn’t make. The issue is not the amount of remuneration paid out to CEOs, but rather on what basis, and when it is paid out. Simply put, CEOs that perform deserve all the compensatory benefits that accompany said performance, and to compensate them for the risk they undertake in the execution of their duties. Conversely, those CEOs who fail to perform have no business maximizing compensation to the detriment of the stakeholders they were supposed to be serving. I have no troube with a CEO using a corporate jet to conduct business that is in the best interests of shareholders. It is the CEO who abuses shareholder trust by using the corporate jet for personal gain or frivolous activities that has crossed the line. Again, keep in mind that most CEOs have never even seen the inside of a private jet…
Sure some CEOs are idiots, but so are a certain percentage of people in any occupational class. No doubt CEOs will need to work overtime in order to rebuild trust and credibility with the public…Their actions must match their words, and they need to demonstrate an understanding that holding the title of chief executive is a priviledge, not a right. All of this said, what is perhaps most important for the American public to realize is the true peril that lies ahead if we over-react and neuter CEOs such that they become nothing more than powerless figureheads. Oversight is a good thing, but where were these concerned politicians leading up to this current mess.
Bottom line…it is not wrong to assign some blame to the rogue CEOs who deserve it, but it is terribly wrong to assign blame to those good chief executives just because CEO is printed on their business card.