There has been a lot of criticism in this space of executives who look out for themselves and not their companies and shareholders, especially in circumstances where their companies are troubled.
Which is why we found a recent piece by New York Times columnist Thomas L. Friedman so interesting. He wrote that what he found most impressive about cyclist Lance Armstrong, “besides his sheer willpower to triumph over cancer, is the strategic focus he brings to his work, from his prerace training regimen to the meticulous way he and his cycling team plot out every leg of the race.” The ability “to meld strength and strategy - to thoughtfully plan ahead and to sacrifice today for a big gain tomorrow,” Friedman wrote, seem s “to be such fading virtues in American life” and business.
He wrote: “John Mack, the new C.E.O. at Morgan Stanley, initially demanded in the contract he signed June 30 that his total pay for the next two years would be no less than the average pay package received by the C.E.O.'s at Goldman Sachs, Merrill Lynch, Lehman Brothers and Bear Stearns. If that average turned out to be more than $25 million, Mr. Mack was to be paid at least that much. He eventually backed off that demand after a howl of protest, but it struck me as the epitome of what is wrong in America today.
“We are now playing defense. A top C.E.O. wants to be paid not based on his performance, but based on the average of his four main rivals! That is like Lance Armstrong's saying he will race only if he is guaranteed to come in first or second, no matter what his cycling times are on each leg.”
Which is why we found a recent piece by New York Times columnist Thomas L. Friedman so interesting. He wrote that what he found most impressive about cyclist Lance Armstrong, “besides his sheer willpower to triumph over cancer, is the strategic focus he brings to his work, from his prerace training regimen to the meticulous way he and his cycling team plot out every leg of the race.” The ability “to meld strength and strategy - to thoughtfully plan ahead and to sacrifice today for a big gain tomorrow,” Friedman wrote, seem s “to be such fading virtues in American life” and business.
He wrote: “John Mack, the new C.E.O. at Morgan Stanley, initially demanded in the contract he signed June 30 that his total pay for the next two years would be no less than the average pay package received by the C.E.O.'s at Goldman Sachs, Merrill Lynch, Lehman Brothers and Bear Stearns. If that average turned out to be more than $25 million, Mr. Mack was to be paid at least that much. He eventually backed off that demand after a howl of protest, but it struck me as the epitome of what is wrong in America today.
“We are now playing defense. A top C.E.O. wants to be paid not based on his performance, but based on the average of his four main rivals! That is like Lance Armstrong's saying he will race only if he is guaranteed to come in first or second, no matter what his cycling times are on each leg.”
- KC's View:
- While Friedman was making a broader point about politics and business, this struck us as a highly relevant column when you think about companies and retailing leaders that don’t seem to be in touch with market realities. Sometimes, “pay for performance” seems to be a quaint notion from America’s past, not a rule of thumb for business today.
