Why Do They Want So Much Dough, Anyway?
Oh, the headaches of being a loaded CEO. Not only do you have to deal with the daily pressures of running a company, you have to find a place to park your jet. Consider the plight of Larry Ellison, CEO of software giant Oracle. Officials in San Jose, Calif., recently denied his request to land his $40 million Gulfstream V at the city's airport after hours. The fight isn't over yet: Ellison's lawyers plan to go to civil court to challenge the town's curfew, which bans large planes from touching down in the wee hours.
Whether it's finding a runway or hiring an accomplished chaffeur for their Bentley, many CEOs have problems that most average people would consider unique. In fact, today's corporate chieftains have more money than ever to spend. The average CEO pay at 365 of America's largest corporations hit $13.1 million last year, according to BusinessWeek's annual compensation survey, up 6.3% from 1999. That works out to about $50,384 for every day at the office (for execs who punch in five days a week).
True, some 530,000 U.S. households now boast a net worth of $5 million or more, up 150% since 1995, according to market researchers at Spectrem Group. But there's no disputing that last year's CEOs are the cream of that group.
So the question is: After these folks buy the Gulfstream, the vacation home in St. Croix, and the his-and-her Ferraris, what's the motivation for gathering more and more loot? "When pay becomes so fabulously large that a person can't even spend it, you start wondering why they need it," says William Pollack, a psychologist at Harvard Medical School.
Some people crave an eight-figure paycheck simply to feel good about themselves. For these "power junkies," says psychologist Richard Hagberg, "self-worth becomes entangled with personal worth." Getting a fatter wad of cash each year "proves to all those jerks in prep school that you could succeed."
America's money-obsessed culture feeds that desire. Many people, CEOs included, judge themselves relative to their peers. It isn't good enough to get paid $100,000 if your buddy in the same line of work earns $150,000. "We teach people how to make money, and what to do when you don't have enough money," Pollack says. "But we don't teach people that you can be successful without getting hooked on making more and more."
"FILLING AN EMPTINESS."
Making money can even become an addiction, displacing something else that's eating away inside a person, Pollack adds. He recently worked with one 40-something executive who had made millions in the software business. When asked why he persisted in accruing more and more, the executive told Pollack that he was afraid of what he might discover about himself if he stopped. In fact, his family life had fallen apart because he was always tied up with work. "He was filling an emptiness inside with dollars and options," Pollack says.
The executive ended up ditching his high-powered corporate job to spend more time with his kids. He put his fortune into a trust and is now starting a new career as a teacher. In fact, many top dogs don't hoard all of their money. A survey of 150 wealthy technology execs by U.S. Trust found that nearly all gave to charity in 1999. On average, each donated 6% of their aftertax income, or roughly $20,000.
Not all CEOs, of course, are out to claim bragging rights as the highest-paid in all the land. These other executives, experts say, stay in the game because they love the work. Creating a legacy -- not a billion-dollar bank account -- is what matters to them. "It's not about the money," says Vivian Golub, a consultant to Silicon Valley executives. "They love being part of a deal. Work is their passion." Jeff Christian of executive search firm Christian & Timbers tells of one CEO who made a fortune when he sold his company, then went to live in Italy for six months with his family.
Living la dolce vita, however, didn't suit his type-A personality. He quickly tired of drinking chianti in Tuscany and now wants to get back to work. "Leaders need to lead. That's what drives them," Christian says. "Sitting on their ranch and following their stocks [on TV] doesn't cut it."
So if money isn't a factor, why don't highly paid executives take millions less, and maybe save some of the jobs they're eliminating this year? That's easier said than done after someone has tasted true wealth. Because of -- what else? -- executive peer pressure.
Harvard's Pollack once consulted for a large law firm where morale was low among junior associates who felt that the partners were only concerned about making money. Performance was beginning to suffer. One of the firm's co-founders gathered the partners to talk about the problem and suggested that they all take a pay cut. The cut was approved, but there were grumbles at the back of the room. Recalls Pollack: "Someone whispered, 'He must only be on his second divorce.'"
By Jennifer Gill in New York