Saturday, June 7, 2008
I've written before about my compassion for the CEO's position - the need for continual optimism, the total loss of personal time - but I never expected the Wall Street Journal to understand.
Wedensday's blog post Mean Street: Spare a Prayer for the CEO by Evan Newmark posits that while some CEOs don't deserve your respect many do. From his own experience, and from watching other CEOs closely, Evan sees CEOs who are work obsessed, passionate about the success of their companies and bearing the burden personally of the jobs and futures they are responsible for.
As a "builder CEO" in Evan's lexicon, I can tell you the weight of responsibility is unrelenting. And it's responsibility to many constituencies: my employees who have trusted me with their careers while they are with me, my investors who have trusted me with millions of dollars, my family who have trusted me with their livelihood as I pursue my vision and my customers who effectively invest in early stage products on the trust that they'll help them be more effective today and will improve over time.
But then there are news items which muddy the public's view of the CEO. Yesterday's news about Henry Nicholas, former CEO of Broadcom, surrendering to the FBI was saddening. Broadcom was my customer and Nick was a legend for his driving personality and passion for Broadcom. I can't say whether any of their allegations are true - but I do remember needing a meeting with him to review a new product and it's potential impact on Broadcom design. The only time he'd give me to meet was 2am at his house. He offered me the choice of Opus ( a fabulous red wine) or coffee - I chose coffee much to his surprise and we made the pitch through the middle of the night, although we didn't make the sale. And I can tell you Nick is fun at weddings, but he got into the cross hairs of the Feds because of the option backdating issues at his company.
Back to the WSJ article - the comments following the post make revealing reading too. So much vitriol for CEOs, and for their pay. So little understanding of the pressures of the job.
I chair the compensation committee at a public company (Rambus) and see lots of research on CEO pay and what the market is. What I don't think the critics understand is how competitive the market is for good CEOs and what companies, and private equity firms, are willing to pay to get good talent. As a board you have a responsibility to ensure that you have a strong CEO for your company, but that you also pay a fair market rate with incentives which are aligned with the shareholders interests. But given the compensation market, and the shortage of good CEOs, it's a complex cash and stock puzzle to solve for what are often hard, thankless jobs.
Of course there are some egregious cases that make me gag, but the majority are paid fairly by thoughtful boards who are balancing the issues to keep good talent at the top.
So, at the end of the WSJ article and in response to the vitriolic comments, I'd change Evan's ending comment "Next time, Jim Cramer or some other talking head calls for the firing of another CEO, pause for a moment. To err is human, to forgive divine" to
"Next time, Jim Cramer or some other talking head calls for the firing of another CEO, pause for a moment - and suggest they be a CEO for 6 months and then ask them what they'd recommend".