Why life at the top is generally very short
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