Extra! Extra! The NY Times has a problem with CEO pay

Posted by Marc Hodak on September 26, 2008 under Executive compensation | Be the First to Comment

Nicholas Kristof got some ink for his breathless report about Richard Fuld making $17,000 per hour in 2007. For ruining a firm! Isn’t that disgusting!? Oh noes! The greed! The folly! What kind of board would allow something like that!? They must be retarded!! Kristof playfully asks: Wouldn’t you be willing to run a firm into the ground for that kind of dough?

There’s just one little problem with that $17,000 figure. It was based largely on equity that was at risk. Just like most of the half billion that Fuld has earned, and that Kristof ridiculed the board for paying him, over his Lehman tenure. It’s safe to say that that equity value is now gone.

So, let’s see, we’re down about $500 million in 2008, but that was just in the first nine months, so per hour, using Kristof’s formula, that comes to…minus $272,000 per hour. Hmm. I think I’ll pass on that job, Nick.

I understand that when those nine months were over, Fuld in fact lost over 90 percent of his personal wealth. That doesn’t exactly leave him a pauper, and I’m not playing violins for his loss. But Nick, come on down from that pedestal and honestly answer me this, when was the last time you risked 90 percent of your personal wealth on the success of a firm that you ran? Or even for a small, uncomplicated project?

That’s what I thought.

But the real reason I don’t read the NY Times, and the reason I’m over a week late in reacting to Kristof’s column, is illustrated by that paper’s choice of “Editors Picks” from the comments section. Mr. Kristof’s article garnered over 200 sympathetic responses. According to the site, “NYTimes editors aim to highlight the most interesting and thoughtful comments that represent a range of views.” One of their six picks for this article was a “thoughtful” note that referred to CEOs as “fiscal terrorists” for whom it would be “perfect justice to see them hustled off to Guantanamo and their personal assets confiscated.” I guess Kristof knows his audience, as well as his editors.