Why life at the top is gen­er­ally very short

The Star Early Edition - - COMPANIES & NEWS - Matt Levine

WHEN Marissa Mayer left Ya­hoo af­ter mak­ing about a quar­ter of a bil­lion dol­lars and fail­ing to turn its core busi­ness around, a lot of peo­ple said mean things about her, to the ef­fect of “that’s a lot of money for fail­ing”.

Then there was a back­lash to the back­lash, ar­gu­ing that Mayer did a pretty good job in a hard sit­u­a­tion, and that the mean things peo­ple said about her were mo­ti­vated by sex­ism rather than sub­stance.

But it was hard for me to feel sorry for Mayer, be­cause, in Don Draper’s words: “That’s what the money is for!”

If you get paid a quar­ter of a bil­lion dol­lars for do­ing any­thing, suc­cess­fully or other­wise, then peo­ple are go­ing to crit­i­cise how you do it, and if you don’t like that, well, you can put on your gold-plated noise-can­celling head­phones, hop on your pri­vate jet, and ig­nore them. This is in gen­eral how I think about the trade-off be­tween pay and un­pleas­ant­ness for public-com­pany chief ex­ec­u­tives.

The job should be ter­ri­ble! That’s why you’re get­ting paid so much! If you want a long ten­ure, a good life­style, and the un­crit­i­cal ad­mi­ra­tion of ev­ery­one you meet, you should be a fi­nan­cial news­let­ter writer in­stead.

The rea­son chief ex­ec­u­tives get paid so much is not that they are unique and ir­re­place­able tal­ents. Quite the re­verse: They’re be­ing com­pen­sated for be­ing so re­place­able, for the risk that some ac­tivist will come along, say ex­tremely hurt­ful things about them, and force them out of a job.

Any­way, “the bosses of Amer­ica’s big­gest and best­known com­pa­nies are learn­ing a com­mon les­son this year: The pay is great, but job se­cu­rity has rarely been shakier.”

In the first five months of 2017, 13 com­pa­nies with mar­ket val­ues of more than $40 bil­lion (R534.88bn) in­stalled new chief ex­ec­u­tives – in­clud­ing Amer­i­can In­ter­na­tional Group, Ford Mo­tor, and Cater­pil­lar, ac­cord­ing to an anal­y­sis for The Wall Street Jour­nal by ex­ec­u­tive-re­cruit­ment firm Crist/Kolder.

That is more than dou­ble the chief ex­ec­u­tive changes at mega-cor­po­ra­tions in the same pe­riod last year.

This chief ex­ec­u­tive churn re­flects a broader re­al­ity for the coun­try’s busi­ness elite: an ar­ray of chal­lenges – from in­creas­ing im­pa­tience on Wall Street and in board­rooms to a cor­po­rate land­scape rapidly trans­formed by new tech­nolo­gies and ri­val up­starts – has made the top job tougher and more pre­car­i­ous than just a few years ago, top ex­ec­u­tives say.

Even the big­gest com­pa­nies are vul­ner­a­ble to share­holder dis­ap­proval and com­pet­i­tive forces that their size and stature once helped them fend off.

Part of the premise of high chief ex­ec­u­tive pay is that it is sup­posed to be linked to per­for­mance. This is de­bat­able, but cer­tainly the premise of high chief ex­ec­u­tive pre­car­ity is that it is sup­posed to be linked to per­for­mance: You per­form, or you’re out. I am not sure that that is ac­tu­ally a good way to run a com­pany – per­haps sta­bil­ity, trust, longterm vi­sion and mod­est pay are a bet­ter com­bi­na­tion – but it is in a sense an ob­vi­ous way, one with quan­tifi­able re­sults and demon­stra­ble re­spon­sive­ness to share­holder de­mands. And so the life of a modern chief ex­ec­u­tive is sup­posed to be one of con­stant strug­gle, soli­tary, rich, nasty, brutish and short. – Bloomberg

Ya­hoo Pres­i­dent and chief ex­ec­u­tive Marissa Mayer. Ya­hoo jet­ti­sones Mayer. She won’t be paid her an­nual bonus nor re­ceive a po­ten­tially lu­cra­tive stock award be­cause a Ya­hoo in­ves­ti­ga­tion con­cluded her man­age­ment team re­acted too slowly to a se­cu­rity breach dis­cov­ered in 2014.

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