A Classification of American Wealth
History and genealogy of the wealthy families of America - Sponsors

 Part 1 : Colonial and Mercantile America  Part 2 : America in the Gilded Age
 Part 2 : America in the Twentieth Century  Encyclopedia of American Wealth

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  Part III-Chapter 18 : Hail to the CEOs  >   Index and Introduction  :    « Previous  12 - 3 - 4 - 5 Next »

Highly 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.

Chauncey 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 to 1911.

In 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) .

Walter 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.

Finally, 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.

Other 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.

A 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  >   Index and Introduction  :  « Previous  12 - 3 - 4 - 5 Next »

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