Graef Crystal -- where are you?

These are exciting times for compensation topics -- lower level employees continue to fail to keep pace with the even low rate of inflation while CEO's keep getting increases that far exceed the inflation rate while the organizations they are leading flounder. I am sure that CEO's complain that the $40 million or so that some of them pulled down in 2009 pale by comparison with the $1.3 billion average that the top twenty five money managers made, according to a recent front page article in The Wall Street Journal. What ever happened to the maxim proposed by the legend JP Morgan and revisited by Peter Drucker that the distance between the highest and lowest paid employees, including CEO, should not be greater than a multiple of 20 (Drucker) or 21 (Morgan).

When Fortune journalist Carol Loomis reported last fall that the evidence indicates that, with inflation taken into account, CEO pay of $40 million is no higher than it was during the depths of the Great Depression. She, like just about everyone else, ignored the CEO-to-lowest-employee spread. Needless to day it has not kept up. In fact a multiple exceeding 200 times has been mentioned recently by the Financial Times.

So what does Greaef Crystal have to do with all this? First, if you do not know who he is, I hope that you lose sleep until you find out who he is. Let me just say that with all the discussions about what is the appropriate pay level for CEO's we are all at a loss by not inviting him to participate in the discussion more.


The other day I happened to witness a Hay-sponsored panel in midtown Manhattan that included WSJ reporter, Joanne Lubin -- an expert herself on CEO pay. She mentioned he is not included since he is a columnist -- while that is true, his real profession continues to be executive compensation. Let me mention that Mr. Crystal was fired by the CEO of Time Warner when, one year in preparing his annual executive compensation survey for Fortune magazine, he named the CEO of Time Warner (publisher of Fortune) as the most overpaid CEO based on his metrics. As sooon as the magazine hit the newstand and Steve Ross saw it, Mr. Crystal was fired and his influence has been missing from major discussions on thsi important topic ever since.


Check him out on his website: http://graefcrystal.com/ and read his great book, "In Search of Excess."