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As Bob Dole once famously asked, "Where's the outrage?" For the 50 percent of Americans who own stock, no matter how small their holdings, the gains of the late 1990s have been nothing to sneeze at, and there has been barely a murmur of complaint about exorbitant executive pay. And among the half that has no stock at all, wages for most have been rising faster than inflation. So, who's left to complain?

Graef Crystal, for one. The one-time compensation consultant became so disgusted with executive greed that he now regularly hurls broadsides against his former clients. In a recent Bloomberg column, Crystal pointed out that even General Electric's Jack Welch -- who has arguably done as much for his stockholders since 1981 as any CEO in the land -- had lifted his salary and bonus in the 1990s at a rate (45 percent a year) higher than the return on G.E.'s stock (32.2 percent). And that figure doesn't even count the $800 million in stock options he received.

The problem, Crystal argues, is what you might call the "Welch effect." Other Fortune 500 companies feel they must compensate their executives at the peer group average, which gets lifted to obscene heights by the likes of Welch. "That those other CEOs are running smaller and much less successful companies is conveniently overlooked," he wrote.

Smaller and less successful is a good way of describing Raytheon, the defense contractor with plans, approval pending, to produce the Clinton administration's scaled-down, and probably unworkable, Star Wars anti-missile defense system this summer. The company slashed 14,000 jobs in 1998 and an additional 3,800 last year. Raytheon's stock plunged from a 52-week high of $72 to $22 last Friday.

But a stock that's fallen like a failed test missile hasn't done much damage to company chairman Dennis Picard's paycheck. In 1998, Picard raked in a combined salary, bonus and stock option package worth $9.5 million, up from $7.7 million the previous year.

But the latest and, arguably most absurd, chapter in executive excess is now being written in the dot-com world. In its latest issue, Forbes hails the arrival of the $100 million CEO. Like No. 1 basketball draft choices who pull down multiyear, multimillion-dollar contracts, these are second- or third-ranking executives at established companies who are being lured in the hopes that they will parlay their management accomplishments at blue-chip brands into start-up success. According to Forbes, at least three dot-com executives have received $1 billion compensation packages: George Conrades of Akamai Technologies ($1.8 billion), Richard Braddock of Priceline.com ($1.1 billion) and Margaret Whitman of eBay ($1 billion).

Of course, the $100 million CEO is a paper phenomenon -- built on stock options and equity stakes that may turn out to be worthless. But as the New Economy continues to grow, it's certain that at least some of these pay packages will set a new standard for jackpots in the casino society of today's business world.

Where will it stop? Each year, shareholder activist groups like United for a Fair Economy file resolutions seeking to cap executive pay. And bills currently under review in Congress would limit corporate deductions for bonuses and stock options -- legislation that extends an existing law limiting salary deductions to $1 million.

But let's get real. The bills and resolutions have no chance of passing -- at least not as long as the most popular show in television remains "Who Wants to Be a Millionaire."
salon.com | March 23, 2000

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