April 15, 2006
How Good Are These Guys??
On the front page of the NYT we learn that Lee R. Raymond earned $144,573 a day as CEO of Exxon. [He gained a total of $686 in compensation from 1993 to 2005.] Juxtaposed with this is the testimony of Skilling in the Enron case; Skilling, on direct for Pete's sake, looks like an incompetent fool. His management decisions were based on impulsive personal choices. Couple this with the embarrassing testimony of both Eisner and Ovitz in the Disney case trial and Ebbers in the Worldcom trial and I am getting the image of senior executives in major American corporations who are petty, vain and thin whenever they are exposed to the world in the harsh light of a trial. Can someone point me to testimony of a CEO in the last ten years in which the CEO actually looked good?
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Full disclosure. I have spent many years in boardrooms and corporate offices, so I don't operate with a presumption that (a) corporate CEOs or corporate executives are petty, vain and thin until proven otherwise, or (b) Eisner, Ebbers, Skilling, et al. can be taken to represent the entire universe of CEOs, any more than the GC at Tyco could be taken to represent the many, many honest and honorable GCs with whom I've dealt over the years. That isn't to say that there aren't problems with executive compensation that are the result of the usual human motives mixed with the structure of our public markets.
Having said that, if you are looking for shining examples of the best the world of CEOs and executives has to offer, is a trial setting in which the CEO is a defendant, and which, because he or she is testifying, generally speaking, plaintiffs or the prosecution has made out a prima facie case, the place to look? Your conclusion is a foregone conclusion from the sample set.
1. I would believe that very few among the class of civil and criminal defendants as a whole (not just CEOs) look good when they are either testifying on direct or being cross-examined.
2. Very few witnesses PERIOD look good when being cross-examined. Having said that, what do CEO look or sound like when they are testifying but not as defendants or in companies accused of wrongdoing, say in less controversial and publicized commercial litigation? I have seen some good ones and some bad ones.
3. Very few witnesses look good. Testifying is not a natural act. I'm not sure I would want to judge somebody I loved, much less a person I don't know, by the "harsh light of a trial." If I were to expand the set of public appearances by which I might judge how a CEO "looks" or "sounds" I think I would include Congressional testimony, public speeches (for a nice example, look up B. Kenneth West, the former CEO of Harris Bank, as an author on SSRN), addresses at shareholder meetings, responses to crises (e.g., Bill Ford a few years ago when there was a terrible accident at Rouge Steel or the J&J CEO during the Tylenol crisis).
4. Nothing substitutes for character (or the lack of it) in CEOs, corporate executives, and their lawyers. I wonder how many times a corporation has done something wrong, the CEO wants to make an apology, and a lawyer has said not to do it because it is an admission of liability.
But I agree: one rarely sees a CEO who has presided over a debacle of personal greed or breach of fiduciary obligation or misguided empire building or pathological micromanagement, when called to account at trial, the prosecution or plaintiff having met its prima facie burden, and the CEO now testifying on his or her own behalf, being cross-examined by a top flight trial lawyer, look good.
Posted by: Jeff Lipshaw | Apr 16, 2006 10:36:42 AM
He gets $100/day for running Exxon and $144,473 for taking flak from the NYTimes and every idiot with a keyboard.
Posted by: Robert Schwartz | Apr 16, 2006 3:00:34 PM