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Bob Buford
Entrepreneur/Nonprofit Leader

Bob Buford

The former CEO of Buford Television, Inc. and current chair of The Drucker Institute, Bob Buford has founded two faith-based organizations -- Halftime and The Leadership Network -- in addition to writing several best-selling books.

Compensation Limits

There is an existential, social ecology aspect of fairness and integrity as well as an economic aspect to pay.

When I was CEO of a television broadcasting/Cable TV company (a position I held for over 30 years), the ratio of my compensation to the average compensation for my company never exceeded 10 to one. We never took a dividend.

In contrast, the CEO of EDS served for three or four years and, when fired, left with a $35 million golden parachute. The CEO of Home Depot was paid $200 million to leave, having wrecked the company with job cuts and cost cuts. Look at those run-for-the-exit-before-the-deal-closes bonuses at Merrill Lynch. I did get a big payoff at the end, when I sold my company in order to cash in, to make a season-appropriate change from success to significance as the primary loyalty of my life but I was at risk the whole time for the value of the equity in various markets.

Peter Drucker, the best mind in management, spoke over and over about the social and moral consequences of these multi-million dollar payoffs. How do you think these huge bonuses make working people feel?

I don't know about coaches who lead unpaid students, but I can comment from experience on companies where everyone works for pay. To put it in James Carville inspired terms, "It's the ratio, stupid." The ratio is a signal that begs the value questions, "What am I worth? What is the CEO worth?" There is a fairness question here.

Organizations are human in nature. Humans have feelings. Feelings affect morale. Pay is symbolic as well as economic. For research and reference on this, read Jim Collins' best selling book, Good to Great, and his exposition on Level 5 Leadership. Collins' research found two elements in these leaders: humility at a personal level and absolute, sold out, no-matter-what dedication to the mission of the business.

Would I trade positions with Bernie Madoff? I don't think so. And it's not just because he got caught!

By Bob Buford

 |  March 13, 2009; 3:41 PM ET
Category:  Compensation Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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