An Indelicate Balance

To read about the “unstoppable climb in CEO pay” is to be disheartened. Notwithstanding censorious public opinion, and increasing income inequity, and even some times their professional performances, CEOs’ median pay package in 2012 was 16 percent higher than in 2011. Corporate boards moreover are tone deaf – or maybe simply indifferent to what shareholders say on executive pay.

But the status of business leaders in 21st century America is more tenuous than these astronomical earnings – the median is over $15 million a year – would seem to suggest. CEOs are not as vulnerable to slings and arrows as their political counterparts. But neither they are invulnerable, impervious to the temper of the times.

Let me name just four ways in which corporate leaders are more precariously perched than they were, say, a decade ago.

First among them is a level of anger against corporate America that while not generally in evidence in the streets, nevertheless is palpable. A 2013 survey of trust in the professions found that business people and bankers ranked last, along with politicians.

Second is the way leaders in business are being constrained. CEOs are being watched as never before. They are being monitored as never before. And they are being tethered as never before. As an example of the last, in 2012, more than 20 percent of companies in the S&P 500 Index reported appointing an independent outsider as their chairman, up from 12 percent in 2007. And as another example, the Shareholder Rights Project, located in the Harvard Business School, is working with some measure of success to persuade companies to eliminate classified boards – boards whose directors do not have to stand for election each year.

Third is the stakeholder situation, much more complex than it used to be. Corporate leaders currently have to cope with stakeholders more numerous as well as more demanding. Among them are boards, customers, employees, governments, regulators, industry watchdogs, special interest groups, consumer groups, and the public at large.

And fourth is the larger global context about which I regularly write – in which leaders generally are getting weaker and followers stronger. Suffice it to say here that the tenure of CEO’s has been halved, from about ten years in the last decade of the 20th century to about five and a half in the first decade of the 21st.

So whatever the level of their material success, America’s corporate elite is not exempt from the larger forces that impinge on their power, authority, and influence. They would do well to bear in mind this bigger picture, as they sit in the counting house counting out their money.

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