paid CEOs are not an entirely new phenomenon. America’s economic
history is full of examples of top executives who accumulated
sizeable fortunes and became large capitalists.
Mitchell Depew, the Vanderbilts’ lawyer, who became president of
their New York Central & Hudson River Railroad in 1885 and chairman
of the board in 1898, left an estate appraised at $16 million in
1930, the equivalent of $216 million in 2008. Depew was also
prominent as a politician, serving New York as US senator from 1899
August 1930, Eugene Gifford Grace, the president of Bethlehem Steel
(from 1913 to 1945) made the headlines of scandalized newspapers
because he received a $1.6 million bonus ($22 million in 2008), 135
times his base salary. In 1956, Grace, then Bethlehem Steel’s board
chairman, was still among America’s best paid chief executives,
earning $800’000 ($6.3 million in 2008) .
Percy Chrysler got a whopping $1 million salary per year to direct
the fortunes of Willys-Overland in 1919, the equivalent of $11.5
million in 2008. He kept the job for two years, successfully
reorganizing the company, which had been on the brink of bankruptcy,
then took over Maxwell, which he turned into his own automotive
group. From his involvement in Chrysler Corporation, he accumulated
a multi-million dollar fortune but that was more the result of bold
entrepreneurship than compensation for mere management functions.
Alfred Pritchard Sloan jr, president (1923-37) and chairman of the
board (1937-56) of General Motors accumulated a fortune estimated at
$300 million in 1957 ($4.3 billion in 2008), leaving the bulk of it
to his namesake foundation . But besides being CEO of the nation’s
largest industrial corporation for 33 years, Sloan had acquired a
large block of General Motors shares when the latter bought United
Motors, a part supplier which included the Hyatt Roller Baring
Company, of which he had been the owner.
General Motors top executives accumulated similarly large fortunes,
including Charles Stewart Mott (previously an axle manufacturer),
Charles Franklin Kettering (whose Dayton Engineering Laboratories
Company – DELCO became another part manufacturing subsidiary of GM),
and Larry Peter Fisher (one of the Fisher Brothers who sold their
bodyworks to General Motors, and the head of the Cadillac Division).
Although they definitely benefited as managers from GM’s pioneering
management incentive programs, all these men where also early
automotive entrepreneurs who made a substantial part of their
fortunes, selling their enterprises to the group.
comparison of yesteryears’ exceptions with the CEOs of today shows
the extent top executive compensation has soared during the last
three decades. If expressed in dollars of 2008, Walter Chrysler’s
truly exceptional 1919 salary falls below the average compensation
of an S&P 500 CEO in 2008. And Eugene Grace’s bonus, which made
headlines in 1930, would rank him only 75th on the list of best paid
CEOs (2008). Finally, with his $300’000 pay ($2.2 million in 2008) ,
Crawford Greenewalt, a Du Pont son-in-law and CEO of E.I. Du Pont de
Nemours in 1959, made less than 2/7th of Charles O. Holliday jr, the
present CEO, although back in the 1950s, Dupont was still a top
performing company and during Holliday’s tenure it brought just 2%
return to its shareholders.
Hail to the CEOs
1 - 2