When executives were asked what would be most embarrassing: (1) being terminated or fired or (2) being given a paltry severance package, they overwhelmingly reported the paltry severance package would be most embarrassing. We found that compensation was far more important to the executive than any other accomplishment. It is small wonder that these financial awards take on the word "golden." They are commonly called a "golden sendoff," "golden parachute," "golden package" and even the "golden boot." The word "golden" symbolically sends the message that they have received a financial sendoff that will sustain their economic status, but above all they want those in their social group to know they have done well and will continue to be "well off," and they want their families to know their social status will remain intact. In American culture it is the measure of one's worth that is important and it is strongly connected to how one is perceived in their community.
Exhibitionism and CEO's
In American culture the need to appear wealthy has a strong relationship to the perception of success. Several years ago a social critic commented, "Instead of manufacturers neatly tucking their label inside our apparel, they somehow have convinced the American consumer that it's necessary to boldly display the label on the outside. It seems that every American is now a 'walking billboard'." Americans have been convinced that they could present themselves as independent and successful individuals if they could portray themselves as having wealth. Proudly displaying the logo of very expensive apparel is one small way of demonstrating to others that one has wealth. If wealthy people could flaunt their wealth, poor people could also flaunt the appearance of wealth, even if it meant sewing an expensive label on a cheap piece of clothing or buying a "knockoff" made in China. To some these displays are the great equalizer. It was similar to the man living in a tenement apartment and drives his expensive car on weekends and pretends he is "something" and appears successful. What we have is a powerful element of pretense at play within American culture, where one is primarily concerned about the presentation of "me," even if it is deceptive. It is as if everyone is on the "promenade," showing off. This promenade is not limited to the streets, it is also found in the corporations and among friends and associates at "the club."
We also find exhibitionistic elements at play
here. As American culture has dramatically moved away from modesty, to the Facebook world of celebrity and transparency, so have CEOs. Along with technology,
the internet, and celebrity focused media, Biswas-Diener (2006) suggests
that modesty as a cultural value in America is very much on the decline. With
the prevalence and popularity of social networking services one can't help but
ask, is the new modesty simply exhibitionism? When people of all ages engage in
an array of ploys exposing themselves, is modesty -- as a concept or social
value -- even relevant or useful anymore? A young MBA student proudly announced
he got his dream job and the HR Director who hired him found him "mooning" with
a beer on Facebook and told him "You're a pretty normal guy and you will fit in
fine here."
We may have reached a new definition of normal where aspirants cannot find jobs because they do not have Facebook accounts. When young and old adults spend thousands of dollars getting bodies in perfect shape, get their Brazilian wax and perfectly tanned bodies ready to don the skimpiest of outfits and flash at spring break or the nude beach, we have ample evidence of blatant exhibitionism. According to Grohol (1992) only 13.6 percent of Americans believe the virtue of "modesty'' as being "very important.'' We now have a new species of human fauna: "homo sapiens inalambricus," characterized by airing all passions and feelings in public. These people not only have limited or no modesty, but love to exhibit themselves to all possible audiences. This culture is clearly found inside the contemporary corporation, less so at the lower levels of the corporation where one must appear modest while engaging in subtle self-promotion and attention-seeking behavior. The higher one goes up the ladder where the modesty cloak becomes dysfunctional and one is free to flaunt and become highly visible while demonstrating those behaviors we call "executive." At these levels the executive is now free to engage in the exhibitionistic displays they learned from watching their idols. These are the CEOs they read about in B-school and who appeared on the cover of magazines. Most occupations have their superstars and this certainly includes those who call themselves executives. These are the celebrity CEOs.
The wish to become a Celebrity CEO
Main Street bloggers and the press like to call these wealthy executives names like greedy hogs filled with hubris and avarice or pathological narcissists. They are none of these. Their desire to show off and get more for themselves, even if it's at the expense of others, is a function of corporate cultures and the development of the executive role that has evolved since the 1980's. These executives see themselves as filling a role and they are meeting the expectations and requirements of that role. Consider what would happen if a CEO stated that his role model was Jiang Jianqing, the CEO of the world's largest bank -- the Industrial and Commercial Bank of China. In 2008 he made what amounted to $234,700. His compensation was less than 2-percent of the $19.6 million awarded to Jamie Dimon, CEO of the world's fourth-largest bank, JP Morgan Chase, and Jiang takes the bus to work and eats in the employee cafeteria. If an American CEO tried this he would be ostracized, condemned and would probably be out of a job in a month. Executives and managers and maybe even a few employees want their CEO to be special and the more notoriety he/she gets the happier they are. Why? They want to see behavior they have come to associate with being a CEO and they want to identify with the CEO and maintain the dream that they too may obtain lofty CEO status and, better yet, they want their CEO to be a celebrity. Just as Americans have a love-hate relationship with sports and show business celeb, they feel the same about their CEOs.
The idea of celebrity CEOs came into prominence in 1982 with the publication of the world's largest selling business book, In Search of Excellence, by Thomas Peters and Robert Waterman. They identified 43 corporations as "excellent" along with their "top performing" CEOs. These CEOs became household names as B-school professors and every aspiring manager studied them. However, as early as five years after publication, one-third of the corporations identified as "excellent" were in financial difficulties. According to Schurr (2002), many of yesterday's magazine-cover CEOs now grace Most Wanted posters. Of the 92 CEOs on the cover of Business Week from 1997 to 2001, 49 are gone. But this did not stop the growth of awards given to CEOs and their companies: "Excellent Companies," "Best Companies to work for," "Visionary CEOs," "Top Ten Corporations," "Best CEO Golfer," "CEO of the Year" and "Best Corporations." Business publications, and then consulting firms, jumped on board the "award giving" circuit where CEOs could gain the spotlight. In addition, they eagerly sought photo opportunities, and exposure in publications attesting to their leadership skills. In a study of 1,500 companies from 1997 to 2005, Fritz, Hayward and Larsen, (2008) looked at how often CEOs appeared in the press and popular magazines. They found that every time a CEO's name appeared in a major publication, his or her salary increased $650,000. Getting one's picture on the cover was worth an extra $1.1million. It did not matter if the company was failing or succeeding; for example, McLean and Elklan (2003) found that Fortune named the scandalous Enron Corporation the "Most Innovative Company" six years in a row and CEO magazine selected Enron's board as one of the top five in corporate America. This was shortly before its collapse and the discovery that the board engaged in little or no oversight.
Business Schools love celebrity CEOs; they want them on their boards, for guest lectures and, if they are alums, the school shamelessly posts photos, and accomplishments. Business schools teach their students that image is vital and B-School deans place public relations and marketing experts on their payrolls for the purpose of winning awards and moving up in the "best of" rankings. Maybe these CEOs were emulating their B-School deans who believe that looking good is better than being good.
It is not surprising that the creation of the celebrity CEO coincides with the exceedingly popular television show "Life Styles of the Rich and Famous" where Americans got to observe how the rich and famous lived. Following In Search of Excellence in 1984, this show featured the extravagant lifestyles of wealthy business moguls and others. The shows' host Robin Leach ended each episode with the phrase, "May you have c hampagne wishes and caviar dreams.
Every CEO wants to be like Jack
Consider the prototype of the ideal CEO, named by Forbes "Manager of the Century," the only CEO to have two B-Schools named after him. The CEO who was so envied his books make the best seller list among business books and he is paid thousands to give "How I did it" speeches. His name is Jack Welch of GE fame and his retirement package is the dream of all CEOs. There is considerable confusion about his bizarre retirement package. Why? Possibly because GE has been secretive and has been under fire from shareholders, or because he gets so many perks it is difficult to keep track. But it also may be that the package has been so mythologized by CEOs and business writers that it continuously undergoes a transformation as they project their fantasies of the perfect "golden" package onto Welch's package. This is what he most likely gets: A $9 million a year pension and every imaginable perk, including free toilet paper, NY Knicks tickets, flowers, dry cleaning, permanent access to a corporate jet, NY apartment, chauffeured limousine, a leased Mercedes-Benz, offices in New York and Connecticut, free consultations with estate-planning and tax advisers, personal assistant, fax, phone, and security systems at his four homes, bodyguards for his speaking engagements and book tours, access to VIP seats at sporting events broadcast by GE's NBC, cellular phones for five cars, satellite television in four homes, five computers complete with technical support, dues for three private golf clubs, including Augusta. This may not be complete compensation; reports on top executives filed with the SEC can be complicated and many are 40 to 50 pages of bad reading, leaving plenty of room for conjecture, speculation and projection.
In his last year with GE, Welch earned $16.2 million. He also holds 22 million shares of GE (which, at $28 a share, in 2002 was worth $616 million).
During his tenure from 1981 to 2001 Welch shut down factories, reduced payrolls and cut unprofitable old-line units. Welch's philosophy was that a company should be either #1 or #2 in a particular industry, or else leave it completely. He also adopted an annual forced choice performance review process where every year he would fire the bottom 10 percent of his managers and reward the top 20 percent with bonuses and stock options. Welch was called "Neutron Jack" for eliminating employees while leaving buildings intact. In his book, Jack: Straight from the Gut, Welch states that GE had 411,000 employees at the end of 1980, and 299,000 at the end of 1985. Of the 112,000 who left the payroll, 37,000 were in sold businesses, and 81,000 were terminated in continuing businesses. In return, GE had tremendously increased its market capital.
Welch was a champion of paying executives well and was not concerned with the growing gap between executives and their employees. He believed CEO compensation should be dictated by the free market. Welch made over a billion dollars during his tenure at GE (Heller, 2005).
It turns out the "manager of the century," like many celebrity CEOs, left a mess behind. Since his departure in 2001, the company has spiraled down, selling off many parts to sustain itself. In December 2009, GE had to sell its popular jewel NBC Universal to Comcast for $30 billion to survive. In March, 2009, GE's stock had lost 83 percent of its value. As many assessors of CEO talent maintain, "It's easy to be a great CEO in good economic times; try being a great CEO in bad economic times."
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