In 1991, Bud Crystal released the book “In Search of Excess,” a scathing commentary on executive pay. I was a newly minted Compensation Consultant in a large financial institution at the time, and nowhere near as cynical as I am now. I read the book, but it didn’t really resonate; I worked primarily with non-executive pay.
Then I was asked to complete a market analysis on the total compensation of the CFO. I did all my research and analysis as I would do for any other position, and shared it with my boss. The market data and analysis I presented did not support increasing the CFO’s compensation.
Oops. Wrong answer. This was my introduction to creative analysis. The bottom line was, the CEO wanted to increase the compensation of the CFO, ergo, he needed support for that action. I don’t exactly remember the particulars, but it went something like “a little credit” for his “other responsibilities,” tacking on a factor for his long service, and weighting the market data more heavily for a national presence rather than a regional presence, since “we were growing” and voila…the CEO got the justification he wanted. (more…)