You’ve probably heard that Lee Raymond, ex-CEO of Exxon, was given a half-billion-dollar retirement package that amounts to about $144,000/day for his great work. You go, Lee.
It always amazes me to deal at lower levels of organizations where, as Leona Helmsley would likely say, “only the Little People get paid for doing work.” For the Little People, pay is roughly tied to performance. If they don’t show up for work, they actually risk getting fired. And–get this–even if they’re doing a good job, they might be “outsourced” for the good of the company.
Size doesn’t matter…
The justification for this bloated pay package? In his 12 years at the helm, Exxon became the biggest oil company in the world.
First, Lee was CEO during the boomest economy the world has ever seen. Oil demand skyrocketed, so even if he’d done nothing, Exxon would likely balloon like a pustulant sore in a rain forest.
And jeez, he got there by buying Mobil. I suppose an acquisition is impressive, if only because the closing documents stretch to the top of the Washington monument. Signatures really cramp up the thumb joint, so when you think of it that way, $144,000/day really makes sense.
What else did he do? Begin pioneering alternative energy … uh, no. That was BP. Bring down prices? Uh, no, prices are twice what they are when he took over. … Well, I guess he kept them really good at doing what they’ve always done anyway. And keeping the Status Quo is also really hard work. Just ask the 16,000 folks he laid off at Christmas 19991; they’ll tell you just how hard it is to keep the status quo!
But note well the framing
But at the end of the day, it’s our beliefs that cause the disconnect. When we talk about CEOs, we totally give them credit for everything. If someone wins the lottery on their watch, we should pay the CEO.
Give me break! There’s already given you a much, much better way of thinking about it. Read carefully the word “Helm.” A CEO doesn’t do the work; the CEO decides where to go and spins the wheel. Kind of like being the guy2 when driving to Disneyworld: you drive with no map, never ever admit you’re lost, but when you accidentally drive down Main Street USA and turn Mickey into rodent road kill, you proudly proclaim your great success. (Should the woman2 actually participate in the navigation or steering, she graciously gives the guy the credit.)
Navigating and steering is so, so important. In ships, if you don’t navigate, you end up on land. Then the ship stops and everyone gets mad. But if you do navigate, no one believes for an instant that you’re somehow responsible for moving the ship. Essential? Yes. So’s the crew. So’s the ship itself (Exxon was built long before Lee took over). Giving Raymond all the credit (and a half-billion dollars) is just silly.
Can’t we turn back time, outsource the CEO job to a really capable housewife, and see what happens? Maybe she could do even better. Housewife Katharine Graham took over the Washington Post and made it one of the most respected papers in the world. Surely there’s a housewife out there who could make a dent in Exxon.
1 Let’s assume an average salary of $30,000 for the layoffs. 16,000 of them is $480 million. And Raymond’s compensation package was … nah. It’s just coincidence. But if I were those 16,000 peeps, I’d find the coincidence more than a little disturbing.
2 I am using the traditional gender designations in this example. Your relationship may vary. In my case, for example, I’m definitely the one who remains silent, nods, and smiles. A lot.