Good Reads

A Home Run of a Smash Against CEO Excess

A spirited demolition of the rationales for paying our executives king-sized compensation.

A review of Pay Check: Are Top Earners Really Worth It?, by David Bolchover, Coptic Publishing, 2010. 150 pp.

By Sam Pizzigati

Pay CheckDavid Bolchover, a widely published business writer, likes sports. He follows sports all over the world. He can wax knowledgeably about American football, European soccer, and Indian cricket.

Bolchover puts all this expertise to good and witty use in this spirited new book, an engaging attack on the enormous treasure that has, for three decades now, been cascading into corporate executive pockets.

What has sports to do with these lavish rewards? Maybe everything. The case for our CEO pay status quo, as Bolchover rather convincingly details, rests on the assumption that top executives, just like sports stars, possess an irreplaceably rare talent that enterprises must reward prodigiously — or face sure doom.

The best way to shatter the sheer nonsense of this “talent” defense? We need only compare our corporate world with the world of sports.

In sports, we can readily rate individual performance and how well that performance contributes to team success. In large companies, by contrast, we face “the near-impossibility of measuring individual contribution.” A firm, Bolchover notes, may perform well “despite its leadership, not because of it.”

This contrast between sports and business, Pay Check suggests, can help explain why we never hear sports figures make the case that they “deserve what they earn because they need to be properly motivated, or because they work exceptionally hard, or because they work under pressure, or because their reputation is at constant risk.”

CEOs, on the other hand, regurgitate arguments like these on a quite regular basis. Why don’t sports stars? They don’t suffer, says Bolchover, “from the same deep-seated insecurity borne out of a lack of clear measurability of personal value.” Sports stars simply have no need for  "tortured justifications.” Unlike CEOs, they have talents “both clearly valuable and extremely difficult to replace.”

Bolchover gets at the same point with a fascinating discussion of Faking It, a popular British TV show now broadcast worldwide. In Faking It, the show’s producers take a volunteer from one walk of life, give that volunteer a four-week crash course in another field, and then have the volunteer compete against three veterans from that new field before a panel of expert judges.

These judges are supposed to identify which of the four competitors is “faking it.” But, sure enough, they routinely fail. Bolchover, building on this history, asks us to imagine a Faking It-style exercise with sports stars and CEOs.

“If a fit, very tall, young man who played some basketball in his spare time was asked to play for the Los Angeles Lakers,” the author asks, “do you think he would be more or less able to ‘fake it’ once he stepped onto the basketball court than would an intelligent, well-educated, 52-year-old white male asked to perform the role of a chief executive?”

Similar insightful — and delightful — analogies appear throughout the pages of Pay Check. Bolchover takes on, at one point, the financial industry claim that “rain-making” bankers who have brought in $20 million in new business surely deserve at least a few million of those dollars in bonus.

“What does ‘brought in’ mean?” Bolchover wonders. “Can we attribute that revenue specifically to one person? Would that banker have ‘brought in’ $20 million of revenue if he had been working on his own, or for a company relatively unknown in the marketplace?”

And since when, Pay Check adds, do we pay people more money because they deal with great sums of money?

“Nobody seems to be suggesting,” Bolchover quips, “that cashiers in high street banks get paid large amounts of money because they handle it all day, or that successful shoe salesmen get given a mountain of shoes.”

Bolchover’s antennae, unfortunately, fail him on questions broader than the reasonableness of executive pay. He remains convinced that some people — sports stars and especially entrepreneurs who start their own companies — truly do deserve to become “extremely rich.” Their riches, he believes, can even be “very healthy” for a society. All evidence, of course, points to the exact opposite.

Bolchover quite rightfully dubs corporate executive pay “an elaborately constructed theft, the results of which are hugely damaging to society as a whole.” But we can say, and should say, the same for all grand concentrations of private wealth, in sports or anywhere else.

So take this book with a grain of salt. You don’t have to swallow it whole. Just learn from — and enjoy — the delicious demolition of corporate executive pay you’ll find in these pages.

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