Sometimes board members have even baser motives for wanting to curry favor with a company's shot-caller. It's not uncommon for directors to work at companies that do business with the CEO's company--business that CEO could take elsewhere if displeased. The chief executive also influences pay and perks for board members, which can be lavish. Hilton's board members get at least $40,000 a year, plus free rooms in Hilton properties year-round. Not bad for a gig that mainly entails attending a handful of meetings a few times a year. That can attract what Blumenthal calls "rice bowl directors." "They're there because they like the board fees," he says. "You get maybe $50,000 a year, a corporate plane picks you up for the meetings, there's an annual dinner in some sunny place...they're not going to break that rice bowl by getting cross with the CEO."
For The Record
Los Angeles Times Friday October 22, 2004 Home Edition Main News Part A Page 2 National Desk 2 inches; 66 words Type of Material: Correction
Salary figures -- An article in Sunday's Los Angeles Times Magazine about the growing salaries of lower-level executives in the U.S. said the average annual salary of surgeons was $73,100 and that the average annual salary of police officers was less than $40,000. The U.S. Bureau of Labor Statistics listed median salaries for surgeons in 2003 at $190,280. For police officers, the median salary was $44,960.
For The Record
Los Angeles Times Wednesday October 27, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 38 words Type of Material: Correction
Cessna jet -- The Oct. 17 Los Angeles Times Magazine article about the growing salaries of lower-level executives in the U.S. said the Cessna Citation X uses steel in its construction. The jet is made of aluminum alloy.
For The Record
Los Angeles Times Sunday November 07, 2004 Home Edition Los Angeles Times Magazine Part I Page 14 Lat Magazine Desk 1 inches; 56 words Type of Material: Correction
The article "Rise of the Corporate Plutocrats" (Oct. 17) incorrectly stated that the average annual salary of surgeons is $73,100 and that the average annual salary of police officers is less than $40,000. The U.S. Bureau of Labor Statistics lists median salaries for surgeons in 2003 at $190,280. For police officers, the median salary was $44,960.
For The Record
Los Angeles Times Sunday November 14, 2004 Home Edition Los Angeles Times Magazine Part I Page 6 Lat Magazine Desk 0 inches; 28 words Type of Material: Correction
The article "Rise of the Corporate Plutocrats" (Oct. 17) incorrectly stated that the Cessna Citation X incorporates steel in its design. The jet is made of aluminum alloy.
All of these factors have combined to drive up CEO pay--and pay for lesser executives too. "The CEO's pay package is like a 4,000-horsepower vacuum cleaner," says Crystal. "It sucks into its nozzle any pay package near it. But if you're a regular worker, you're so far away your tie won't even flutter."
economic forces aside, perhaps the most potent force driving up executive pay over the last two decades is something less tangible: a prodigious sense of entitlement.
It's true, as executives often point out, that by and large the companies they run and the global economy in which they operate are both bigger and more complex than they were 20 years ago. Managing a major corporation is an intellectually taxing job. But so is being a surgeon, and they make an average of $73,100 a year. It's stressful, but so is being a cop, and they make less than $40,000. A high corporate post does carry enormous responsibility, but so does being a president of the United States--who is paid $400,000 a year.
The prototype executive of the 1950s and 1960s was the gray-suited Organization Man. But in the early 1980s, with Wall Street on the rise, big-time businessmen began to assume the cachet of movie stars and sports heroes. Suddenly, guys such as Lee Iacocca and Jack Welch were writing bestsellers, grinning from the covers of major magazines and yukking it up with Leno and Letterman.
The boom in business media that accompanied the surging stock market fed, and fed on, this growing cult of the executive. "With an eye to a national audience, the business media focus not on the complexities of organizations or on rapid changes in the business environment, but rather on the actors involved ... making much of winners and losers, of who is up and who is down, of who is a good CEO and who is not," writes Harvard economist Rakesh Khurana in his recent book "Searching for a Corporate Savior." "The press has thereby turned CEOs--once as unknown to the American public as their secretaries, chauffeurs and shoe-shiners--into a new category of American celebrity."
Stephen F. Bollenbach, Hilton Hotels Corp.'s co-chairman and CEO, is an unabashed example of how expansive executives' sense of self has become. To him, the gargantuan sums he and his colleagues take home are right and proper. "By and large, executives earn what they're paid, and the market economy works to make that so," he declares.
Bollenbach, 62, is a beefy, well-groomed man dressed in a crisp white shirt and blue tie when I meet him at Hilton's Beverly Hills headquarters, a jigsaw of rectangular buildings fronted with speckled marble. His large, sunny office has floor-to-ceiling windows that look out on verdant hills to the north, a massive blond wood desk, and a sitting area with a table and green leather chairs.
"I make an awful lot of money," he acknowledges. "For me personally, I'm probably not prepared to work for less."
Bollenbach, chief executive since 1996, pulled in more than $23 million last year, most of it by cashing in stock options. His salary and bonus alone, duly approved by the compensation committee of Crown, Ueberroth et al., came to at least $3 million--more than four times what the man doing his job 20 years ago made, after adjusting for inflation.
One of the most poignant scenes of the months-long grocery strike was surely when a delegation of workers tried to take their case personally to Safeway CEO Steven Burd at his home in an exclusive Bay Area suburb. They were turned back at the entrance to his gated community.